Cadence Bank
Q1 2018 Earnings Call Transcript

Published: 27 Apr 2018

[Operator:]

Welcome to the Cadence Bancorporation First Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. The comments are subject to forward-looking statement disclaimer, which can be found in the press release and on Page 2 of the financial results presentation. Both of those documents can be located in Investor Relations section at cadencebancorporation.com. After today’s presentation, there will be an opportunity to ask questions. I would now like to turn the conference over to Mr. Paul Murphy. Please go ahead, sir.

[Paul Murphy:]

[Technical difficulty] Toalson, and Hank Holmes. I’m pleased to report that our one year anniversary of our IPO was in April and we feel like we had a great first year as a public company. Our loans were up 14%. Core deposits have increased 21%. Revenues up 17% and most importantly of all the earnings were up 31%. So as we passed the one year market, the stocks up approximately 40%, really a great start. So it gives me -- really great pride in the team and our many accomplishments. We got some new initiatives underway. We're opening a Dallas office with Todd Cornelius leading the effort there. We're expanding our Dallas Trust team and we are adding some technology bankers in Austin and healthcare bankers. I’d like to recognize our commercial real estate team who received a prestigious James Moran Legacy Award from a company in Houston which is a real nice compliment to the [indiscernible]. Also recognized Jerry Toney, our Mississippi President and LPL Advisor, he was named one of top LPL Advisors among 240 program managers. So let's go ahead and turn our attention to Page 3 of the presentation, noted a few numbers here. Net income $38.8 million, $0.46 a share, ROAA of 1.44% and 15.2% return on tangible common, really nice growth from last year. Operating revenue $116 million, is up 2% from the fourth quarter, so that's nice. Net interest margin of 3.64%, up 5 basis points linked quarter. Period end assets [indiscernible] at $11 billion. Our efficiency ratio for the quarter [indiscernible] at 53.4%. We had $3.1 million in extraordinary expenses, our nonrecurring expenses in the quarter. And so that will get us closer to 50.7%. Many of you will recall our goal have been to get in that 50% to 52% range, and so now that we're there we want to stay there and look to how we can improve that in future periods. Credit is a good story. Net charge-offs of 2 basis points, NPA is down slightly, good credit metrics, non -- past dues on the originated portfolio are very low at 14 basis points. So good story there. Let's see, turning to Page 4. I think there's a lot of good numbers. We probably hit the highlights for you there. Page 5 continues to be one of my favorite pages. I think it shows key shareholder metrics and the trends that you see there, obviously we're helped from the new tax rates at a much lower rate. Really flows through nicely through our numbers, but pleased with the trends you see on Page 4. And Page 6 is another page that I think really demonstrates solid trends, good loan and deposit growth. We would point out that the loan growth in the quarter, first quarter typically can be a little flat, and so we feel really good about the risk activity in the loan demand in the first quarter and nice diverse pipelines that we see looking around the franchise. Page 7, its again a good refresher on bit the diversity of the loan portfolio. Let me hit Page 8 just briefly. Nonperformers, 71% of our nonperformers are energy and about 85% of those are paying in accordance with their contractual terms. Our energy book is about 57% midstream and you may recall that we had zero charge-offs lifetime to date in the midstream portfolio. So, all in all, a good start to the year. Very pleased with where we are today and I'll turn over to Sam, ask him to comment on the deposit section.

[Sam Tortorici:]

Thanks, Paul. I will be referring to Page 9 of our presentation. As Paul noted, one of the things that we're most pleased with not just this quarter, over the last few quarters has been our performance in core deposit growth. Total deposits increased $1.2 billion or over 15% from a year-ago. Linked quarter growth was up $37 million or one half of 1% on a period in basis. But average deposits grew $377 million or 4.4% from the fourth quarter of 2017. Our deposit growth is the result of ongoing focus of our bankers for the past several quarters on multiple initiatives to help build our core deposit funding. The primary drivers of the expansion of commercial deposit relationships largely driven through our treasury management platform, along with retail deposit growth. We grew core deposits, which is total deposits excluding broker about one $1.5 billion or 21% from the prior year. And we grew core deposits linked quarter by $16 million or 0.2%. Total growth has allowed us to reduce our broker deposits, which came down by $246 million over last year, bringing our broker deposits down to 9% of total deposits. All of our bankers at Cadence are really keenly focused on growing core customer deposits. We're again pleased with our results in this area and the resulting improvement in our deposit mix during the quarter, net interest-bearing deposits as a percent of total at 23%. With that let me turn it over to Valerie to go through our quarterly performance in a little more detail.

[Valerie Toalson:]

Great. Thank you, Sam. Turning to Slide 10, we’re very pleased with our net interest margin in the first quarter as they continues to reflect the benefit of our asset sensitive balance sheet in the rising rate environment. Net interest margin in the first quarter was 3.64%, up 5 basis points from the fourth quarter and 18 basis points from the same quarter a year-ago. The increases were due to the originated loan yields partially offset by reduced accretion, increased cost of funds and a reduction of course in the tax equivalent adjustment on tax free municipal bonds related to the lower corporate tax rate in 2018. Explaining recovery accretion on our acquired impaired loans which as you know can be a bit bumpy quarter-to-quarter, our net interest margin actually increased 14 basis points to 3.62% in the first quarter of 2018 compared to 3.48% in the fourth quarter and increased 19 basis points from 3.43% in the prior year's first quarter. As a reminder, we got about 70% of our loan portfolio that’s floating rate and it largely is LIBOR driven, reflective of the C&I business focus. As you know LIBOR rates in the first quarter were impacted by both the December rate move and really the anticipation of the March rate move. As a result, we saw a significant positive momentum in our loan yields in the first quarter largely due to this dynamic, but also due to the new growth that we had in the loan portfolio in bringing those loans on of course in the current environment. Total loan yields for the quarter were 4.94%, an increase of 22 basis points over the fourth quarter and an increase of 60 basis points over the prior year's first quarter. Included in that the originated loan portfolio yield in the first quarter was 4.81%, a 34 basis points over the fourth quarter and a 67 basis points over the first quarter a year-ago. In addition to our loan yield, we’ve seen nice improvements in the first quarter. Our deposit comps also continued to be well-managed with total deposit costs increasing only 6 basis points from the prior quarter to a total of 75 basis points for the first quarter and representing a 26 basis point increase in the same quarter a year-ago. Likewise, our total cost of funds which includes holding company debt, increased 5 basis points from the prior quarter to 94 basis points in the first quarter, up 23 basis points from a year-ago quarter. Our total deposit beta is running about 20% on a year-to-date basis and 28% over the last five quarters since December of 2016. That’s compared to the originated loan beta which we saw at 132% year-to-date and then 72% since December of 2016. So we're clearly receiving the benefit of that differentials in our net interest margin. And to clarify, given the nature of our balance sheet repricing more heavily, driven off of LIBOR, we’ve calculated our betas by dividing the change in yield of loans, change in the cost of deposits by the change in the average one month LIBOR date during perspective periods. Slide 11 demonstrates the performance in our broad-based noninterest income platform. For the first quarter, adjusted noninterest income was $25 million, down slightly about 3% from the linked quarter and up 3.9% from the prior year's quarter. The linked quarter's decline was largely due to a fourth quarter loan sale gain of a $1.6 million that serve to offset the nice increase of about a $1.5 million or nearly 7% that we experienced in service fees and revenue with growth across nearly all of our fee categories, particularly trust services, investment advisory, credit fees, and service charges. Mortgage revenue was down slightly in the quarter due to seasonality, the rate environment and fewer loans sold versus held on the balance sheet. Slide 12 highlights our pre-tax, pre-provision net earnings where we achieved record results this quarter of $54.2 million, up $7 million or 15% over the linked quarter and at $9.7 million or 22% from the prior year's quarter. Our first quarter noninterest expenses declined from the fourth quarter as anticipated, given approximately $4 million of non-routine items in the fourth quarter of 2017. This quarter, the first quarter of 2018 did include about $3.1 million non-routine costs including $2.2 million in legal costs as a final resolution of the same legacy bank legal matter we discussed in the fourth quarter as well as $900,000 in secondary offering costs related to our February secondary offering. The strong revenue growth in the quarter combined with this decline in expenses resulted in the improvement in the efficiency ratio to 53.4% for the first quarter. So overall certainly a very good start to 2018. And with that, operator, we would like to open it up for questions please.

[Operator:]

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Steven Alexopoulos, JPMorgan.

[Steven Alexopoulos:]

Hey, good morning everybody.

[Paul Murphy:]

Thanks for joining us Steven.

[Steven Alexopoulos:]

I wanted to start on the C&I loan growth which was really strong this quarter. Can you give first some color on what you saw is driving in the general C&I bucket? Why was it so strong this quarter?

[Hank Holmes:]

Steven this is Hank. Thanks for the question. As we previously talked about in the fourth quarter we had a really strong fourth quarter that was really across all aspects of the C&I world. It get -- usually you see it somewhat of a slowdown. The pipelines remain full in the first quarter and its very balanced throughout our footprint and also balanced throughout our specialized industries, NRC and our team -- C&I team. So we are obviously excited about where the pipelines are today, where we feel good about the growth going forward. We are going to reiterate our -- in a high single-digit, low double-digit growth. We’ve a lot of RNs [ph] out there making a lot of calls and with their ability to execute, they’re winning a lot of business and we are optimistic.

[Paul Murphy:]

So, Steven, I would add -- I think the tax change is certainly part of it. I just -- thanks for [indiscernible] and people had more money in their pocket and there are more activity.

[Hank Holmes:]

Yes, I think it’s tax, I think energy business obviously rebounding in Texas is a plus. We are giving our RNs the ability to execute timely and we do see some lumpiness in the payoffs that will be an offset to that. But overall its -- we feel good about it.

[Steven Alexopoulos:]

Following by that, where the payoffs unusually low, was that a factor this quarter or originations that much stronger?

[Hank Holmes:]

[Indiscernible] payoffs are lumpy, a little bit unpredictable. I would say they were on the higher end of average. And so I would tell you that we had a nice net growth and look forward to continuing that going forward.

[Paul Murphy:]

So the pipeline has been really strong.

[Steven Alexopoulos:]

And then on the energy book, it was nice to see that growing again. What's the opportunity to grow that further, particularly with the services companies in pretty good shape here?

[Hank Holmes:]

There are still only limited opportunity with the service sector. Things are better, but that’s a cyclical business and we’re going to be pretty conservative with our underwriting there. Midstream continues to be an outstanding opportunity. And E&P we’ve approved the [indiscernible] credits there, so …

[Paul Murphy:]

That’s correct.

[Hank Holmes:]

… structures and pricing have improved for that sector. But we kind of like the -- this 11% range, 11%, 12%, 13%. Hopefully [indiscernible] really see it growing hugely as a percentage if we have growth elsewhere.

[Sam Tortorici:]

I will just add to that, it's the opportunities in our working capital in nature short-term, lower risk with the deposit opportunity tax [indiscernible].

[Steven Alexopoulos:]

And then on the full-year loan guidance, you reiterated the prior guidance, but realistically its high single-digit even on in the cards at this point or is it really looking like low double-digit growth this year?

[Paul Murphy:]

I would say we are trying to sort of stay on the conservative end of the range with guidance. I mean we could be that, but I don’t know that we say [indiscernible]. I mean, as we get bigger 10% is harder to do every year.

[Steven Alexopoulos:]

Yes. And then just one for Valerie on the margin. You had a really nice margin expansion. How much of the LIBOR rise was captured in the first quarter and how much is coming in the second quarter?

[Valerie Toalson:]

Yes, so that’s a good question, when we got a -- we are trying to get our arms around internally as well when we saw that LIBOR increase really kind of an advance if the fed fund changes. We definitely saw some of that impact, but our portfolio has 30, 60, 90 day LIBOR resets and so part of that, yes, we got from the December and kind of the anticipation of the March, but we do expect there to be some lag that goes into the second quarter related to those.

[Paul Murphy:]

Maybe just add to that we are replacing what is being paid off with higher rated loans. And so we'll see some slight spread increases in some areas, but we are seeing positive moment there.

[Valerie Toalson:]

The other comment, Steven, I will make on the margin is we do have, if you recall about a $1.2 billion, $1.3 billion in that up CD product that does reprice every six months. So we’ve got about a $1.2 billion that reprices April 1st and this time it's up 50 basis points. So there is that factor to consider as well.

[Steven Alexopoulos:]

Okay. Terrific. Thanks for taking my questions.

[Valerie Toalson:]

Sure.

[Paul Murphy:]

Thank you.

[Operator:]

The next question comes from Michael Rose, Raymond James.

[Michael Rose:]

Hey, good morning, guys. How are you.

[Hank Holmes:]

Good morning.

[Paul Murphy:]

Thanks for joining us.

[Michael Rose:]

Hey, just wanted to start on expenses, obviously if you strip out the non-routine you guys call out, obviously very good expense control. [Indiscernible] talked about 6% is being a good guide for this year. You mentioned at the outset some hires and I know we will get the higher FDIC insurance costs in the third quarter. But is that still a good outlook and I guess maybe what are the puts and takes to that growth guide that you previously given? Thanks.

[Valerie Toalson:]

Yes, I think that we’re still pretty comfortable with that previous guidance. And obviously there are hires that we're pretty managed on our expenses and as we look at over the rest of the year we feel pretty comfortable with that guidance on an overall year basis. Like we said, there will be some lumpiness. We got a few things coming in related to the [indiscernible] billion in the latter half of the year. But on an overall basis that feels pretty good for us.

[Michael Rose:]

Okay. And then maybe just talking about the deposit growth and specifically the loan to deposit ratio, I know there's some seasonality. Can you talk about some of the strategies that you guys are actively engaged and just a little bit more color there and what we could expect from deposit costs here over the next quarters? Thanks.

[Sam Tortorici:]

Yes. Hey, Michael. This is Sam. So, yes, we do typically see some seasonality in deposits this time -- last -- first quarter of last year we were actually down a little bit year-over-year. It's good to see its actually up a little bit for this year. Again, the strategies are really around our commercial bankers partnering with treasury management and driving just core treasury management services. We're also looking at a handful of industries and sectors that are typically deposit rich and we have specific calling strategies around each of those. We are seeing that really start to payoff for us. We [indiscernible] end of the first quarter last year through the end of the year, we grew a $1.5 billion and we have again a good bit of confidence that we will see somewhat similar results for this year. Valerie, I may ask you to comment a little bit on deposit betas and what we’re thinking about there.

[Valerie Toalson:]

Yes. Well, that’s the billion dollar question right there. Its -- I think that we’ve shared before that we tend to model our deposit betas at -- about a 55% level and we're under 30% -- and so we keep anticipating that they’re going to go up and we do think that they will go up to that level over time, but the question is what amount of time. We’ve been really pleased at the rate that we’ve been able to keep that beta fairly controlled and managed. So I did think they’re going to go up and hopefully through [indiscernible] but we’re prepared [indiscernible].

[Michael Rose:]

Okay. That’s very helpful. Maybe just one more for me. Oil has been obviously at elevated levels, about two-third -- three quarters a year. NPLs are energy related, could we expect that to come down materially over the next couple of quarters, just given the redeterminations higher oil prices? Thanks.

[Paul Murphy:]

Yes, I think so. I mean, they’re in process of being restructured and higher prices helps a lot.

[Sam Tortorici:]

And I might only add to that is gas prices have not moved up. So there's a little offset from that. But we are definitely seeing with oil prices where they are today, increased activity, increased strength in the -- within the companies and that balance sheet are for the most part completely restructured. But we have a big gas component that that's holding it back.

[Michael Rose:]

Fair point on the gas prices. Thanks for taking my questions guys.

[Paul Murphy:]

Thank you.

[Valerie Toalson:]

Thanks, Michael.

[Operator:]

The next question comes from Brad Milsaps, Sandler O'Neill.

[Brad Milsaps:]

Hey, good morning.

[Paul Murphy:]

Hi, Brad.

[Brad Milsaps:]

Paul, I was just curious if -- maybe you could talk little bit about back on the C&I growth for the quarter where most of that grow -- [indiscernible] be considered snicks or where all those kind of Cadence led credit, just kind of curious kind of what the breakdown of that general C&I growth might have been?

[Paul Murphy:]

Yes. I’m glad you asked. We got a really good element to the story here. Updated snick percentage is around 28%. As you know they change the definitions, so part of that is a definitional change. But I think another more important point is that last year we led about 18 credits and in the first quarter, Hank, check [indiscernible] mid 20?

[Hank Holmes:]

Just under 20, that’s correct.

[Paul Murphy:]

We are approaching 20. So our -- as we grow and call more frequently, we’re going to be at a position where we have more control and that's good, because you know [indiscernible] business you typically get a larger share there, although we get a decent share when we are a participant as well. So we continue to like the snick business if you really want to think of it that way. I can't think of it as just a corporate banking business and have good traction there and good credit results.

[Brad Milsaps:]

Okay. Just kind of switching gears a little bit, you guys are producing some good results up to mid-teen return on tangible equity, capital strong, got some tailwinds with the margin and loan growth, valuations improved. Just kind of curious how you’re thinking about capital and if M&A is becoming something you might consider, it does sound like you added a location in Dallas, is it more adding teams at this point? Just kind of think -- [indiscernible] kind of your strategy regarding capital deployment, and how are you thinking about it?

[Paul Murphy:]

Yes. So, yes, we added some bankers and we will continue to explore that perhaps a bit more proactively than what we've done in the past. You may recall, first, we had a lot of people first and there was the first phase was kind of get to efficiency ratios and returns on equity and assets where we are to date. So we are more open to on a select basis doing some hires and we will be reporting more to you about that as we go forward. Not a huge big aggressive move there, but proactive where we can be. On the M&A front, yes, we continue to be interested in finding a few gems out there that would be good partners. Now at year-end [indiscernible] as a public company. We’ve been able to look more closely and honestly there's just not a whole lot of things that we get really excited about and we’ve great core growth that creates value for shareholders. So we’re going to be pretty selective and we’re not just interested in M&A for M&A sake. We are interested in really culture and [indiscernible] and strategy and all of it coming together, but hopefully we will find something. It's a business that takes time to develop relationships and find good fits and so we are spending some amount of time on that of course. Let's see, but there is another part of your question …?

[Valerie Toalson:]

Yes, this is Valerie. The only aspect that I would add is we did announce 12.5% dividend which is the same as in the first quarter. And so over time and like you said, as we continue to grow the earnings and so forth we will continue to look at the level of that dividend as part of our overall capital strategy.

[Brad Milsaps:]

Great. Thank you, guys.

[Paul Murphy:]

Thanks.

[Operator:]

[Operator Instructions] The next question comes from Jon Arfstrom, RBC.

[Jon Arfstrom:]

Hey, thanks. Good morning.

[Paul Murphy:]

Good morning, Jon.

[Valerie Toalson:]

Good morning.

[Jon Arfstrom:]

Couple of questions on deposits, maybe Sam for you the -- touched on the non-interest-bearing moving around a bit, but the averages were up quite a bit year-over-year. I’m just curious if you feel like you can keep that kind of pace going and it kind of gets to the stability that to core fund the bank with a good core low-cost deposits? Just curious how you’re feeling about growth from that area?

[Sam Tortorici:]

Jon, the one thing we're keenly focused on here is about core funding. And we've done a good job over the last couple of years in driving that through customer deposits, reducing broker. And -- we have good visibility into a strong pipelines that we think -- we feel reasonably confident that we will be able to continue this. It is a one thing that keeps us -- keeps me [indiscernible] I know for sure and it's an important thing for us, but right now we feel pretty good about it.

[Hank Holmes:]

Hey, Jon, this is Hank. Just to add to that, historically the pipelines in our treasury non-interest-bearing have built post the closings where we had big quarters in the loan side. Obviously with our loan growth that’s rolled right into the treasury pipeline and we feel good about that growth to continue in those pipeline [indiscernible] looks positive.

[Valerie Toalson:]

And just one more factor that I would chime in on is with the expansion of the bank led deals that we’re doing on the C&I side, that again just kind of further expand the treasury opportunities there.

[Jon Arfstrom:]

Okay.

[Hank Holmes:]

[Indiscernible] closely together in the pipeline flow, it works well and as you’ve seen in the past quarters.

[Jon Arfstrom:]

Yes. Absolutely. The fee businesses, I guess, maybe that’s the one topic that we haven't touched on in terms of questions, but what do you feel like the most optimistic there and where is that work to do?

[Valerie Toalson:]

The credit fees have been very strong. And again, it's all tied into the strong growth that we had on the credit side and those opportunities, and we could certainly see some strong [indiscernible] there. The investment advisory and trust areas, those are also doing very, very well for us. I think given the market dynamics, we’d have some soft quarters of some of the mortgage side, so that one may continue to kind of represent along those lines. And insurance can be a little bit bumpy here and there, but overall we feel pretty good about our service fee area. Now obviously they’re not going to be expanding at the pace that we’re expanding on the margin side. But we like our different lines of services.

[Hank Holmes:]

Valerie, I would add that our treasury management platform continues to grow nicely as we're growing customer relationships and you [indiscernible] treasury hitting several of these fee categories, so our card fees, service charges and the other category and so that should be one of the better growth areas for us in noninterest income.

[Jon Arfstrom:]

Okay. Okay, good. And then maybe one more for you, Hank. Any specialty businesses that you would call out as particularly strong lending businesses?

[Hank Holmes:]

Well, the technology teams really got some nice traction led by [indiscernible] but -- and the restaurant team just continues to do amazing results and some -- we’re super proud of those guys. And healthcare, I think it also got some increased momentum for their business. But I don’t know, Sam ….?

[Sam Tortorici:]

Yes, we definitely have some tailwinds in each of our specialty businesses. We had nice growth and really restaurant, healthcare and technology for the quarter -- linked quarter basis, we expect those to continue to be some believers in our growth. But I would call your attention to Slide 7, and if you look at our general C&I that was really the single biggest growth area for us. So it's great to have the specialty businesses, it's been a consistent growth -- grower for us, but whether it's Texas, Alabama, Florida, we saw really good growth kind of across-the-board from our general C&I team.

[Jon Arfstrom:]

Okay. All right. Thanks for the help.

[Paul Murphy:]

Thanks, Jon.

[Operator:]

Our next question comes from Steven Alexopoulos, JPMorgan.

[Steven Alexopoulos:]

Hey, everybody. I just had two follow-ups for you.

[Paul Murphy:]

Okay.

[Steven Alexopoulos:]

On the expense side, if the [indiscernible] bill get signed into law, will there be any material cost savings? I know you wanted to do [indiscernible]. Is there anything material to that?

[Valerie Toalson:]

Yes. Actually there is. I mean there's -- there are heightened expectations for a bank of our size on stress testing. So there are a number of things from the data management etcetera that we’ve built in and that we’re doing and so forth, that will continue. But absolutely some of the tail work into some of the various consultants and costs associated with [indiscernible] we would not have to do. So we are anxiously awaiting a positive outcome there, we hope.

[Steven Alexopoulos:]

And would those be cost, Valerie, that are already in the run rate or cost that you have to incur and may not have to incur?

[Valerie Toalson:]

That we would be yet to incur and may not have to incur.

[Steven Alexopoulos:]

Okay.

[Paul Murphy:]

Yes, Steven, we had in our prior presentation, we can send it to you, if you like, but -- its about $1.5 million to $2 million in '19 [indiscernible] cost us.

[Steven Alexopoulos:]

Yes, okay. That’s helpful. And then on the deposit side, regarding deposit competition, as you look at the whole footprint are there markets now where you’re able to more cheaply add deposits maybe where it's not as competitive?

[Paul Murphy:]

We are all thinking about that for a second here.

[Sam Tortorici:]

Yes, I mean, I would say that the Florida market is -- would be one of the most competitive. And in some of our, I guess, more non-metro Southeastern markets would be -- maybe a little less competition.

[Paul Murphy:]

I mean most of the competition is for new money. The existing clients bank with us for [indiscernible] you don't really hear a lot about [indiscernible] more rate from that group of people. But to attract a new deposit that’s such a bit of different market.

[Hank Holmes:]

Steven, I just add to that it feels pretty competitive to me. We’ve been put [indiscernible] …

[Steven Alexopoulos:]

Okay.

[Hank Holmes:]

… feel contradictory, but when you are making calls and trying to bring in new business, it is competitive.

[Steven Alexopoulos:]

Okay. Fair enough. Thanks for taking my follow-ups.

[Operator:]

This concludes our question-and-answer session. I’d like to turn the call back over to Mr. Paul Murphy for any closing remarks.

[Paul Murphy:]

Well, thanks everyone for joining us. We think it's a great start to 2018 and we got lot of motivated hard working bankers out that’s doing a great job for clients. So first year as a public company spent, a real pleasure and we are much appreciate all of our investors and supporters. With that the call is adjourned.

[Operator:]

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.