Boston Private Financial Holdings, Inc.
Q3 2015 Earnings Call Transcript

Published: 22 Oct 2015

[Operator:]

Good morning and welcome to the Boston Private Financial Holdings Third Quarter 2015 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. Please note this event is being recorded. At time I would now like to turn the conference over to Clay Deutsch. Mr. Deutsch please go ahead sir.

[Clay Deutsch:]

Thank you. Good morning everyone. This is Clay Deutsch, Chief Executive Officer of Boston Private Financial Holdings. Welcome to our third quarter 2015 earnings conference call. Joining me this morning are David Kaye, our Chief Financial and Administrative Officer; Mark Thompson, President of Boston Private and CEO of Boston Private Bank; and Varun Bhandari, Investor Relations Associate. Steve Gaven, our Vice President for Investor Relations and his wife have just given birth to twins so understandably Steve is out today and we send him and his family our best wishes. At this time, I’ll ask Varun to read the Safe Harbor provisions before we make additional remarks.

[Varun Bhandari:]

Good morning. This call contains forward-looking statements regarding strategic objectives and expectations for future results of operations and financial prospects. They are based upon the current beliefs and expectations of Boston Private's management and are subject to certain risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. I refer you also to the forward-looking statements contained in our earnings release, which identified a number of factors that could cause material differences between actual and anticipated results or other expectations expressed. Additional factors that could cause Boston Private's results to differ materially from those described in the forward-looking statements can be found in the company's filings submitted to the SEC. All subsequent written and oral forward-looking statements attributable to Boston Private or any person acting on our behalf are expressly qualified by these cautionary statements. Boston Private does not undertake any obligation to update any forward-looking statements to reflect circumstances or events that occur after the forward-looking statements are made.

[Clay Deutsch:]

Thank you all for joining the call this morning. In the third quarter our company generated net income of $13.5 million or $0.16 per share, compared with $0.20 per share last quarter and $0.22 per share in the third quarter of 2014. Return on average tangible common equity was 11% for the quarter and return on average common equity was 7% for the quarter. Before we move in to the formal earnings presentation, I’d like to offer some perspectives on our performance for the quarter. Three observations

[David Kaye:]

Thanks Clay. Good morning everyone. My comments will begin with slide 3 of the earnings presentation, and that can be found in the Investor Relations section of our website, bostonprivatefinancial.com. Slide 3 provides the summary of our key performance metrics. In the third quarter of 2015, return on average common equity was 7% compared to 10% in the second quarter of ‘15 and 11% in the third quarter of 2014. The REO decline was driven by reduced fee income and other revenues, increased provision expense and elevated tax rate for the quarter. Despite the AUM decline, the core fee and efficiency ratios both remain steady. Slide 4 walks through the consolidated income statement. Net interest income growth was solid and Mark will walk you through some of the details on that in a few slides from now. Core fees and income were down 2% linked quarter and up 18% year-over-year to 39 million. Fees decreased linked quarter due to lower AUM across all of our wealth management businesses, while the year-over-year increase reflects the acquisition of Banyan Partners and organic growth. Other income was a negative $37,000 in the third quarter 2015 and that compared to a positive 2.3 million in the second quarter of 2015. As we noted last quarter, the second quarter was unusual and that it included gains related to the Banyan earn-out adjustment and partnership investments. This quarter we had a couple of smaller items which netted roughly to a zero impact. Total operating expenses for the third quarter of 2015 were 61.9 million, that’s down 1% linked quarter. I’ll go in a little bit more detail on the next slide. But before moving on to expenses, I wanted to highlight two other items which combine to lower net income versus the prior quarters. First, the company recorded a provision expense of 2.6 million that’s driven by strong commercial loan growth and 1.6 million net charge-offs. Majority of the net charge-offs are primarily due to one New England loan. Second, the effective tax rate of 38% was unusually high for the current quarter and reflect several different items including true-ups for letting to our filing the tax return in Q3, impacts of some state tax rate changes and adjustments for certain equity compensation awards. The aggregate impact of these items was about 1.5 million of elevated expense or about $0.02 impact on the EPS. We expect our normal effective tax rate to be back in the 32% to 33% range going forward. On slide 5, we show a detail breakout of our consolidated operating expenses. As I mentioned earlier, total expenses were down 1% linked quarter and please note that the year-over-year increase is primarily due to the Banyan acquisition. The third quarter and second quarter 2015 include Boston Private Wealth restructuring expense of 1.5 million and $200,000 respectively. Excluding the restructuring charges, total operating expenses decreased 3% linked quarter and increased to 12% year-over-year. Salaries and benefits drove the overall linked quarter decline due to lower incentive compensation. Professional services decreased 11% linked and that’s driven by lower legal and third quarter consulting expenses. Marketing and business development expense increased 18% linked quarter to 2 million and reflects the timing of marketing campaigns and client outreach at Boston Private Bank and [BOS]. Moving to slide 6; the top chart says the relationship between our net charge-offs or net recoveries and our provision from loan loss. As you can see, these measures continue to be highly correlated. Again, most of the charge-offs in the third quarter are related to one note which was subsequently sold following quarter end. The chart below demonstrates the continued improvement in asset quality with criticized loans down 10% year-over-year. We also continue to maintain strong reserves with the [ALLL] for loans finishing the quarter at a 141 basis points. That concludes my prepared remarks for the morning. And I’ll now turn it over to Mark for a discussion on the Private Banking and Wealth Management and Trust segments. Mark?

[Mark Thompson:]

Thanks David. Good morning. My comments will begin on slide 7 which shows the Private Banking segment, excluding the wealth management boys and of our bank. In the third quarter, net interest income increased 3% linked quarter and 4% year-over-year to 47.4 million. The current quarter includes 298,000 of interest recovered on previous non-accrual loans, while the third quarter of 2014 includes recoveries of 789,000. Excluding the interest recovered on previous non-accruals loans, net interest income increased 5% year-over-year. Total operating expenses were down linked quarter at 27.4 million on a year-over-year basis, total operating expenses increased 2%. NII growth coupled with the expense discipline has led to a 7% expansion in pre-tax pre-provision income linked quarter and year-over-year. The efficiency ratio was 52% in the current quarter compared to 54% last quarter and 53% last year, demonstrating our ability to effectively manage expenses while at the same time investing in our select markets nationally. Slide 8 shows the best five quarters of average loan balances and deposit balances by type. Total average loans increased 7% year-over-year led by C&I up 19% and residential up 7%, while average CRE and construction loans are up 2% year-over-year. We maintain strong momentum in building our Private client franchise in Southern California. In the third quarter of 2015 and the period C&I increased 106 million or 11% year-over-year. Southern California accounted for 37 million or 35% of the total growth. Average total deposits increased 10% year-over-year to 5.7 billion, led by growth in core funding, demand deposits and money market deposits increased 16% and 12% respectively, while CDEs continued to trend lower down 1% linked quarter and 2% year-over-year. Slide 9 shows end of period deposits in region. Total deposits increased 6% year-over-year. The west coast markets accounted for more than 50% of the total deposit growth led by San Francisco Bay up 11% and Southern California up 8%. This shows once again that our Private Bank franchise is taking hold outside of New England. In addition, New England continues to post solid growth with deposits up 4% year-over-year. On the right of the slide, we show progress we made in remixing our client base since we integrated the west coast banks with Boston Private Bank and Trust in 2011. CD as a percent of total deposits have fallen from 31% to 10% in San Francisco Bay and from 44% to 15% in Southern California. Turning to slide 10, net interest margin at the bank was 2.91% in the quarter of 2015, down six basis points linked quarter and down nine basis points year-over-year. Excluding interest recovered on previous non-accrual loans, net interest margin was down eight basis points linked quarter and down six basis points year-over-year to 2.89%. Net interest income excluding interest recovered on previous non-accrual loans at the bank was 47.1 million or 3% linked quarter and 5% year-over-year. Slide 11 contains financial information for the Wealth Management and Trust segment, which operates under the Boston Private Wealth brand. The third quarter of 2014 data represents the pre-acquisition bank wealth management business, while the second and third quarter of 2015 shows the results of a newly combined Boston Private Wealth. Revenue decreased 12% on a linked quarter basis to 12.9 million in the third quarter of 2015 and the second quarter of 2015 include market value adjustments for the Banyan Partners earn-out of 500,000 and $1.1 million respectively. Excluding these adjustments, revenue decreased 8% linked quarter due to lower assets under management. Total operating expenses increased 12% linked quarter to $14.3 million. The third and second quarter of 2015 include restructuring charges related to employee severance of 1.5 million and 220,000 respectively. Excluding these charges, operating expenses increased 2% linked quarter. In the third quarter of 2015, net flows were negative 565 million. As we outlined in last quarter, we have experienced a higher than normal client attrition rate the past six months due to integration related departures resulting from the implementation of our new model. As Clay mentioned, we are happy with our new business generation and are encouraged by a strong pipeline looking in to the fourth quarter and in to 2016. Now I will turn it back to Clay.

[Clay Deutsch:]

Thank you Mark. Turning to slide 12 in addition to the Boston Private Wealth outflows Mark has just covered, during the quarter the Wealth Advisory segment experience net inflows of $19 million while the investment management segment saw net outflows of $205 million. Despite this pressure on assets under management, the financial contributions of our Wealth Management affiliates remained strong. Moving to slide 13, our wealth advisors reported a 3% year-over-year increase in revenue for the third quarter of 2015 to $12.5 million. Total revenue was down 1% linked quarter, due to the impact of market volatility. Operating expenses for the segment increased 11% year-over-year and 7% linked quarter reflecting stepped up investments in personnel and facilities, as well as the timing of marketing campaigns and clients events. As a result, EBITDA margins decreased linked quarter to 30% at our corporate target. On slide 14, we showed the total revenue for the Investment Management segment decreased 5% year-over-year and 3% linked quarter to $11.4 million, reflecting primarily the impact of market action and net outflows. Operating expenses decreased 7% year-over-year primarily due to a large decreased in professional fees, as third quarter 2014 included a one-time charge for the termination of a recurring fee trail. Third quarter of 2015 segment EBITDA margin was 34% for our investment managers compared to 34% in the second quarter of 2015 and 33% in the third quarter of 2014. This EBITDA margin remains above our 30% corporate target. That concludes our comments on third quarter 2015 performance. We’ll now open up the line for your questions.

[Operator:]

We will now begin the question and answer session. [Operator Instructions]. And the first question comes from Chris McGratty with KBW.

[Chris McGratty:]

Dave or Clay, can you remind me how of the decline in AUM was felt in that revenue this quarter, because I know there is a lag for some of the sources, just trying to figure what captured third quarter versus what we see second and fourth.

[David Kaye:]

I think within the Wealth Advisory and Boston Private Wealth segments, most of that was captured within the investment management segment, maybe you know half of that was captured just due to the client, there’s some lag there.

[Chris McGratty:]

Okay. And as you kind of look out for the next two quarters, if this trend of outflows remains a little bit choppy, what can be done or how should we be thinking about any adjustments on the expenses (inaudible).

[David Kaye:]

Well Chris we continued to look at the expenses, look at becoming more efficient in across all of our areas. There is that built in as you saw this quarter the compensation came down, we are not hitting our targets, a lot of the variable rate bonuses get pulled down and so that would be additionally happen. I don’t Clay if you have anything else.

[Clay Deutsch:]

Yeah Chris all I’d say is across the board and in specific in Boston Private Wealth, our expenses are in line with our plan. The miss is revenue miss, obviously if the revenue miss persist, we’ll have to revisit the expense side of the house. But thus far our expense tracking is right in line with everything we set out to do in the course of this year. We’ve maintained our investments in staffing and in business promotion, and we’ve been lowered to deviate from that. In Boston Private Wealth, we are now almost 20% behind in our revenue plan. If that gap persist obviously we’re going to have to adjust. But at this point, we are pretty happy with the expense management profile across our affiliates. Our primary focus is clients’ expansion and managing attrition and doing a better job on client retention.

[Chris McGratty:]

That’s helpful, thanks a lot. Just two housekeeping and I’ll (inaudible). Did the preferred dividend Dave - the runway going back to where we were in the last quarter looked a little bit light this quarter?

[David Kaye:]

No the preferred dividend its steady. We had an adjustment related to the redeemable non-controlling interest; I think that’s what you are talking about. They both flow through the same line Chris. That sometimes goes up and down. Yeah that was reflecting their sort of downturn in the revenues and the profitability of the wealth managers that the value goes down there which is actually an increase to earnings if that happens.

[Chris McGratty:]

Right, just try and modeling it right, if you didn’t run it like around 100 million bucks, that’s the way to just kind of model and then like [going forward]?

[David Kaye:]

It’s about 850,000 you should see.

[Chris McGratty:]

And then the last one, I saw on the slide that you had a $0.5 million gain on the adjustment. Is that just the earn-out on the Banyan that you guys had last quarter that the performance being a little bit softer and that’s just an adjustment to the P&L?

[David Kaye:]

Yeah, and that would be finished. There’s no other liability on the books as of the end of the third quarter.

[Operator:]

And the next question comes from Jennifer Demba with SunTrust.

[Jennifer Demba:]

On Boston Private Wealth, if you have the data could you give us the gross inflows and outflows for the last couple of quarters? You mentioned the inflows this quarter were much better than they had in the last year?

[David Kaye:]

Yeah Jen it’s not something that we typically disclose. We do have - they have been up compared to the prior quarter, and up compared to historic averages, but again it’s not something we are disclosing.

[Jennifer Demba:]

And Clay could you just give us some color on how confident you are that the client and employee attrition has sort of been contained going forward, and how many people have you lost since the [Banyan] closed.

[Clay Deutsch:]

You kind of asked two questions, employees and clients. We’re pretty pleased with where we are right now Jen on the employee front. We have done a lot since closing to expand our client facing professionals, and we feel good about where we are in terms of additional business development resources and importantly additional client advisory resources working directly on client service, client expansion and client retention. There is a bit of remaining staffing, but I call it marginal. We have some open racks in client advisory, but we feel pretty good about where we are in terms of the staffing and professional compliment. With respect to client attrition, it’s hard to give guidance on that Jen. We’ve measured it at the micro level, we’re down at the client by client by client level. Our analysis suggest we are more than halfway through the attrition phenomenon, but beyond that I’d be reluctant to give guidance. It remains something we are working very hard on, and it’s the primary variable right now in our performance. We are pleased, as I said earlier, we are very pleased with the business development and business build success across all three of our channels; the third party referral channel, the bank channel, and then Boston Private Wealth Direct client introductions through referral sources and the like. All three are ahead of our expectations and ahead of our deal model, with respect to new business generation. Redemption fighting and attrition management remains the biggest variable in our next quarter and near term performance.

[Operator:]

And the next question comes from Casey Haire with Jefferies.

[Casey Haire:]

Clay I’d like to follow-up on Boston Private Wealth Management outflow outlook if I could. Said another way, of the PMs that left, how much of their client AUM is still in-house and kind of at risk.

[Clay Deutsch:]

Well if you look at what’s left, there’s probably been in aggregate may be a quarter or a third of the overall book has left and then there’s still a little bit that could potentially be at risk. But we’re doing a pretty good job, especially where there were banking relationships. I think that when we had the comprehensive banking relationships we are doing a much better job in terms of retention on those.

[Casey Haire:]

Okay, so just to be clear a third to a quarter of that’s of the PMs that left not the entire book?

[Clay Deutsch:]

Yes.

[Casey Haire:]

Okay, got you. And then just a big picture Clay, I get the strategy trying to remix towards these ROE friendly businesses. I am just wondering how the outflows have been, I think this is six quarters in a row. How long can you sustain this strategy in trying to stabilize the flows before you consider other alternative, given that the Private Bank has got the wind at its back.

[Clay Deutsch:]

Look Casey two things, first of all, I certainly won’t deflect my disappointment in the negative flows. So I am not going to sugar coat that and argue that’s a good thing. What I am struck by in that result is the earnings resilience of those affiliates. It’s interesting that despite the double down draft of a terrible equity market. So after four or five years of double digit equity market growth in the US close to recovery, we are looking at what’s the S&P year-to-date minus 2 or something like that. So we’re looking at a double bound draft of negative market action across the board, with an uneven pattern of flows, continued advance in wealth advisory and pressure in proprietary asset management in Boston Private Wealth. Having said all that, the earnings power of those affiliates remains strong. The fact that there’s still penciling to 30 or north of 30% target margins is satisfying from an operating income and margin standpoint. To respond directly to your flows questions, being I’m as born in KLS, the Wealth Advisory segment. Strong practices, strong practice models and both actively engaged in practice expansion, pretty happy with what they are doing. In the case of the two proprietary asset managers, Dalton, Greiner and Anchor, we are pleased with the progress in development of the retail platform part of both of their businesses. The third quarter loss is re-driven primarily by institutional rebalancing and client draw downs. If you peel the onion back, 80% of that segment is Anchor Capital. Anchor is doing a very good job on investment outperformance, particularly in their flagship mid-cap fund, a very strong year-to-date performance, and their channel marketing efforts are really taking all. So while we are not happy with the negative flows, the negative flows at Anchor have been reduced by over 50% year-over-year, and we think it reflects fundamental progress in both investment performance and in the strength of their marketing effort to platforms and channels. The main event for us is Boston Private Wealth, and again not to be repetitive, but as you pass that picture, I think the power of the new and improved Boston Private model is evident in their new client introduction and new asset gathering success, and the question hanging over near-term performance is the rate at which we can stem the transitional redemption problem, which is largely a problem of client dislocation and we are hard at work on that.

[Operator:]

And the next question comes from Alex Twerdahl with Sandler O'Neill.

[Alex Twerdahl:]

Just want to not trying to beat a dead horse here, but just going back to Boston Private Wealth here. I think you said on the last conference call that there were five PMs that left in I think May that were responsible for a lot of these outflows. Have any other PMs left since then?

[Clay Deutsch:]

No, actually, nothing since May. And to reiterate something that I think Dave said, but I’ll put a finer point on it. The client losses are not losses to the departed. The client losses I believe are losses said in motion by transitional disruption, and causing clients to evaluate alternatives outside the company. And we are tracking it with a micrometer. I think we have a pretty good feel for the clients at risk, and we are working very hard to surround those clients with our new team and the strength of our new model. I am committed to what we are doing. I think we are doing all the right things there. And I wish I had a better answer for it. I know this is the central theme of the call. I believe we had to tough it out and work through this redemption trough. It’s like I said earlier, our analysis suggest we are more than halfway through it. But I am reluctant to give guidance because even though we are measuring a heck out of it in managing the heck out of it, it remains inherently hard to quantify from a predictive standpoint. So we are not being evasive, but we are trying to be honest with you about where we think we are in this transition trough.

[Alex Twerdahl:]

And then I just want to circle back to another question earlier about expenses. It seems like comp expenses went down by almost 2 million bucks sequentially. Was that all incentive related and if the markets remain pretty choppy or just say they remain flat from here on and flows are zero, is 37.9 the right level for salaries and benefits in the fourth quarter or will that have to be adjusted a little bit more?

[Clay Deutsch:]

It was primarily incentive related. I think that’s something we’re going to have to look at as we go forward and see what the right level is.

[Alex Twerdahl:]

And then just switching gears to the margin, how much of the margin was due to excess cash on the balance sheet, and do you feel like given all the outlook for the interest rate environment and potentially rates not rising this year and the fact that you are putting on all this variable rate assets, do you feel like maybe you now have a little bit of asset sensitivity to burn and maybe that you should extend a little bit on the curve just to get a little bit more margin in the near term?

[Clay Deutsch:]

We’ve been pleased with our repositioning in terms of the asset rate sensitivity, but it’s something we will continue to evaluate, whether we continue at that pace or as we said if it’s a lower for longer, maybe we do go out a little bit longer. We’ll have to evaluate that as time goes on.

[Alex Twerdahl:]

And then just the amount of the margin that was related to excess cash?

[David Kaye:]

Yeah it really was I mean linked quarter, most of it was just due to the excess cash. Although again commercial loan yields are coming, continue to come on a little bit lower, so that’s a drag on the yield as well. But I would say out of the six basis points decline, four to five of it was the excess cash.

[Operator:]

[Operator Instructions] And the next question comes from Christopher Marinac with FIG Partners.

[Christopher Marinac:]

Clay you’ve mentioned in a couple of calls now but I guess you called a secular issue where active management is moving out to positive management and the investment, and I am curious as the so [cooler] activity in the market sort of starts the reverse back trend and do we have to have more negative third quarters in the industry to sort of force that return of active management?

[Clay Deutsch:]

Well Chris I’ll give you my response and then it’s a longer. I mean we could talk for hours about the active versus passive debate and the dynamics playing out. I guess from my own standpoint, we believe there remains a very important market for value added active management, and I think the receptivity in our retail platform partners remains high. I think the primary battleground for the active/passive debate is in the institutional space and the consultant driven space. There are all kinds of headwinds that have been pretty persistent, I think in the institutional space around alternative investment vehicles, active versus passive. You name it, and all of you on the call know the data as well as I do. The secular trend has been, active has been losing, passive and alternative vehicles has been wining in terms of share of allocation. It’s important to remember though that over the last four or five years, both Anchor and Dalton, Greiner have focused very heavily on development of retail platform partners, not to the exclusion of the institutional business, but its’ been a very important focus for both firms based on our belief that those separately managed client accounts tend to have a long term investment horizon, tend to inherently more stable and interest in an active allocation remains high. Obviously the imperative which you got approved that you are adding value through active and that’s why we remain very focused when we talk about our proprietary asset managers on two thing; strength of the investment performance and strength of the marketing and distribution effort focused on the channels. But with that said, I think the macro active versus passive argument rages on. For the first time since I’ve been here, you’re seeing some counter argument in favor of active. I haven’t yet seen it though in the macro flows data, so I don’t know if it’s the triumph of hope over reality. Clearly there was reaction last quarter to some of the pricing and liquidity issues around passive. Whether that’s just a bump or the start of a counter wailing trend, I think remains to be seen. For us though the most relevant space remains working really, really hard on investment value added products through channel partners. That seems to be longer term, the more stable opportunity and the better opportunity for our affiliates who exhale the client service.

[Christopher Marinac:]

All rigth Clay thank you very much for those comments it’s very helpful. Just a quick follow-up with Dave about this on the tax rate, Dave is the tax rate we saw this quarter an aberration or is there a new level? What should we just be thinking about going forward.

[Clay Deutsch:]

No Chris, definitely an aberration due to a couple of different adjustment. It should be in 32%-33% range going forward.

[Operator:]

And the next question comes from Rick Kramer with [Voice Multi-Strategy Advisors].

[Unidentified Analyst:]

I wanted to piggy back on Casey’s question earlier, and then I guess beat a dead horse a little bit. But your stocks lagged the carry by about 14% over the last 12 months, by about 25% over the last three years. Your earnings growth is pretty much flat year-over-year may be down a little bit at the end of the year and barring something unforeseen it will probably be flattish again next year. At what point do you take a step back and say this strategy isn’t working and our returns aren’t really acceptable and earnings growth in non-existent and shareholders might be better served by selling all or part of the company, because from where I sit, there’s a lot more upside in shareholder value in a transaction versus going at alone at this point.

[Clay Deutsch:]

Well Rick, we are always evaluating the value of the company. My mandate near term remains to expand the value of the company and prove the performance case. I remain committed to that. We have been and outperform over the five year period. The challenge has been primarily this past year, and it requires us to take our wealth businesses to the next level. So to put a fine point on it, if Boston Private Wealth intercepts our performance plan, which is wholly revenue driven at this point, it adds a point to a point and a half to the ROE structure of the company. So we continue to believe that we have a solid base of private bank franchise expansion. I like the 7% PTP growth year-over-year. So if you think of us as a two part strategy, I think the advance of the bank is working and I think it’s encouraging. We’ve not yet harnessed the upside power of our wealth business and we are hard at work on that. And I think if we get both halves of the strategy, if we get both hands clapping here, I think we have upside headroom in the earnings power of the company. So that’s what we are working on.

[Unidentified Analyst:]

And is there a timeline that we can kind of associate with this to hold you to it?

[Clay Deutsch:]

Our targets remain clear, so the timeline is in the here and now. I think what we are paying the price for this year is the advance of Boston Private Wealth is now arguably more than six months behind where I thought we’d be. And to put again a very narrow lens on it, it’s a revenue development miss and its attrition and lost business driven not new business driven. So that’s what we are working through. And I continue to believe the business though is upside loaded from an earnings and margin standpoint, when we get the transitional losses out of the way and behind us.

[Operator:]

And as there are no more questions at the present time, I would like to turn the call back over to management for any closing comments.

[Clay Deutsch:]

Several of you have said, beating a dead horse. No apology required. I think the singular issue before the company is very clear. As I’ve said repeatedly, for me the encouraging thing in the quarter was the continued or even accelerated advance of our core private banking and private client business. Very pleased with the progress of that strategy, and we are going to continue to invest behind it. The issue before the company is solving for acceptable expansion of our wealth businesses, and that’s our focus and I think appropriately it was your focus on the call. Thank for your interest and we are going to keep going down the path.

[Operator:]

Thank you. Your conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.