Columbia Banking System, Inc.
Q4 2017 Earnings Call Transcript

Published: 26 Jan 2018

[Operator:]

Good day, ladies and gentlemen, thank you for standing by. Welcome to the Columbia Banking System's Fourth Quarter and Full Year 2017 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session, and instruction will be given at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to your host, Hadley Robbins, President and Chief Executive Officer of Columbia Banking System. Please go ahead.

[Hadley Robbins:]

Thank you, Sharlet. Good afternoon, everyone, and thank you for joining us on today's call as we review our fourth quarter 2017 results, which we released before the market open this morning. The release is available on our website, columbiabank.com. We achieved record net income of $112.8 million for full year 2017, it was a challenging year and we are pleased with the outcome. During the fourth quarter, we reported net income of $15.7 million, which includes the expenses related to Pacific Continental acquisition and deferred tax asset re-measurement charge following the passage of Tax Reform legislation. Clint will provide more color regarding this adjustment in his comments. On November 1st, we closed our acquisition of Pacific Continental Bank and are delighted to have the talented bankers of Pacific Continental join our team. Integrating Pacific Continental into our financial statements largely explains the significant changes in loans and deposits as of year-end. Loans increased $1.9 billion to $8.4 billion and deposits are up $2.2 billion to $10.5 billion. System conversion planning has been ongoing through sometime and we are confident that we will deliver a smooth transition for our new customers. The system conversion dataset for March 12, 2018. On the call with me today Clint Stein, our Chief Financial Officer and Chief Operating Officer, who will provide details about our earnings performance. And Andy McDonald, our Chief Credit Officer, who will review our loan activity and credit quality information. I will conclude by providing a quick update on business conditions. Following our prepared comments, we'll be happy to answer your questions. It's important that I remind you that we'll be making forward-looking statements today, which are subject to economic and other factors. For a full discussion of the risks and uncertainties associated with the forward-looking statements, please refer to our securities filings and in particular, our 2016 SEC Form 10-K. At this point, I'd like to turn the call over to Clint to talk about our financial performance.

[Clint Stein:]

Good afternoon, everyone. And was certainly a noisy quarter due to the Pacific Continental close and year-end tax reform legislation. As a result linked quarter and prior period comparisons are going to be difficult. As Hadley mentioned, we reported fourth quarter earnings of $15.7 million or $0.23 per diluted common share. The significant items that impacted our reported earnings for the quarter was a DTA write-down and acquisition related expense. These two items reduced reported EPS by $0.31. The reduction in the corporate federal tax rate resulted in a re-measurement adjustment of $12.2 million to reduce our deferred tax assets. This adjustment decreased EPS by about $0.18. Acquisition related expense of $13.6 million decreased EPS by $0.13. The acquisition related expenses in the quarter were in the following line items, compensation $8 million; occupancy $966,000; advertising $266,000; legal and professional $3 million; data processing $1 million; and other expenses $347,000. Given the late first quarter timing of the core conversion we will continue to see some acquisition related expense in both the first and second quarters. Today, we have implemented about 60% of the expected cost savings. Non-interest income of $23.6 million in the current quarter was a decrease from the prior quarter of $13.5 million. Excluding the $14 million gain on sale of our Merchant Card Services portfolio in the prior quarter, non-interest income increased by $500,000 from the third quarter. Reported non-interest expense was $85.6 million for the current quarter, an increase of $18.1 million from the prior quarter. The increase was primarily due to $13.6 million of acquisition related expenses as compared to $1.2 million in the third quarter. The remaining increase was due to additional ongoing expenses resulting from the Pacific Continental acquisition. After removing the effects of OREO activity and acquisition-related expense, our non-interest expense run rate for the fourth quarter was $71.9 million. Using the same basis, this is a $5.8 million [ph] linked-quarter increase and results in a core non-interest expense to average assets ratio of 2.45% down from 2.73% in the prior quarter. Even though there are only two months of ongoing expenses related to the Pacific Continental acquisition in the current quarter, for short-term modeling purposes we expect an expense ratio in the mid-2.4% range is reasonable. Our operating net interest margin continues to expand increasing 10 basis points from the third quarter and 26 basis points over the course of 2017. Given the mix of floating and variable rate loans in our portfolio and the outlook for interest rates we feel the NIM will hold us well in the coming year. Our effective tax rate of 61.5% for the quarter was obviously impacted by the previously mentioned adjustment to our deferred tax assets. Under the new corporate tax rate structure, we expect an effective tax rate in the range of 19% to 20%. The DTA write-down reduced intangible book value by 1.1%, but we expect our lower effective tax rate to recover the tangible book value dilution before mid-year. Our bankers did an excellent job growing relationships on both sides of the balance sheet during 2017. The robust loan production in the fourth quarter will require some modest rebuilding of the pipeline, which should be augmented by production synergies from our new team members joining us from Pacific Continental. Another variable will be the weather over the next four to six weeks, which will determine when our seasonal tagline utilization will kick in. Now, I'll turn the call over to Andy.

[Andrew McDonald:]

Okay, thanks Clint. Loans increased $1.9 billion or 28.4% during the quarter due to the acquisition of Pacific Continental, and $378 million in combined loan origination. Offsetting this somewhat was a decline in revolving line utilization from 48.2% last quarter to 45.9% this quarter. That equates to about an $87 million impact. In addition, prepayment and payoff activity was $9 million higher in the fourth quarter as compared to the third quarter, which is about a $9 million impact. New production for the fourth quarter was predominantly centered in C&I and commercial real estate and construction loans. Terms loans accounted for roughly $260 million of the total new production, while new lines represented $117 million. The mix of new production remained granular in terms of size. 24% of new production was over $5 million, 28% was in the range of $1 million to $5 million, 48% was under $1 million. In terms of geography, 47% of new production was generated in Washington, 36% in Oregon and 4% in Idaho. C&I loans ended the quarter at $3.4 billion, up $642 million or 23.5% from the previous quarter and of course that includes the Pacific Continental acquired loan. New production was $151 million this quarter versus $115 million last quarter. That was somewhat offset by higher prepayments in this portfolio. Industry segments with the highest C&I loan growth in the quarter including the acquired loans were the dental book, professional services, healthcare and social services, construction and of course ag, forest and fish portfolio contracted about $31 million representing the seasonal nature of that portfolio. Commercial real estate loans ended the quarter at $30.8 billion, up $1 billion during the quarter or approximately 35.4% again including the acquired loan. Property types where we saw the most growth was office, retail and manufacturing. Commercial and multifamily construction loans ended the quarter at $372 million, up $158 million or 73.8% from the prior quarter and again this includes the acquired loans. Healthcare, warehouses, manufacturing and multifamily was where we saw growth. On the credit side, the company had a provision for the allowance for loan and lease losses of $3.3 million as compared to provision recovery of $648,000 in prior quarter. This included a provision of $4.1 million for the originated portfolio, $1.9 million for the Pacific Continental portfolio. Offsetting these provisions were releases from the West Coast and Intermountain portfolios, which combined was $1.25 million and a release of $1.5 million from the purchase credit impaired portfolio. As of December 31, 2017 our allowance total loans was lower at 0.91% as compared to 1.1% last quarter and 1.13% as of December 31, 2016. This ratio of course is impacted by our acquisitions of West Coast, Intermountain and Pacific Continental, as well as loans were acquired at fair valued. Embedded in those valuation is approximately $36 million of discount. Approximately $24.5 million is associated with the Pacific Continental portfolio. For the quarter, non-performing assets increased $35.5 million with $19.1 million in nonperforming assets coming due to the Pacific Continental acquisition. The increases were largely in the commercial portfolio and the commercial real estate portfolio. The nonperforming assets to total asset ratio increased to 63 basis points, up from 45 basis points last quarter. This increase is primarily due to one large maritime credit, so we describe it as situational rather than systemic. In summary, it was an interesting quarter that provided some mix results. Past dues came in around 28 basis point, NPAs were up a bit from 45 to 63 basis point. However, our impaired asset to capital ratio remained steady at 20% and we also enjoyed net recoveries for the quarter. I will now turn the call back to Hadley.

[Hadley Robbins:]

Thanks, Andy. We expect the Northwest to continue growing faster than the national economy, but tight labor markets are creating headwinds. The region continues to enjoy steadier migration, however the cost and availability of housing is slowing the pace of growth in the labor pool relative to demand and putting upward pressure on wage rates. Tight labor markets surfaced is the primary concern for Northwest business owners we surveyed during the fourth quarter. Survey results also revealed that confidence about business conditions remained positive yet business owners still remained uncommitted to large capital expenditures and express limited appetite for additional debt. It will be interesting to see how loan demand responds following tax reform. We do expect the tax bill will increase capital spending, not by a large amount in the short-term, but continually over time. The Northwest has a concentration of businesses that produce capital equipment and software for commercial applications. So higher levels of capital spending will certainly increase economic activity in the region. As pointed out earlier by Clint, tax reform will reduce our tax burden going forward. We plan to use future tax savings to raise our minimum wage rate to $15 per hour and expand our employee training and development programs. We believe the increased minimum wage will make an immediate positive impact on the financial well-being for non-exempt employees and expanding the training programs will help prepare employees for future career opportunities. We also intent to use allocated tax savings towards the accelerated implementation of new technologies that enhance our capacity to serve our customers. Increased community support is part of our plan as well, one component of this effort we’ll be increasing the funding of the Bank's non-profit employee direct giving program. This program helps those in need in communities where we do business. At this point, we expect roughly 65% to 70% of our tax burden fall to the bottom-line. In closing, we’re certainly pleased to be ranked 11th on 2018 Forbes Annual List of America's Best Banks. Our fourth quarter dividend of $0.22 per common share will be paid on February 21st to shareholders of record as of the close of business on February 7th. This dividend constitutes a payout ratio of 96% for the quarter and a dividend yield of 1.95% based on the closing price of our stock on January 24th. This concludes our prepared comments this afternoon, as a reminder Clint Stein and Andrew McDonald are here with me to answer your questions. Now Sharlet, we’ll open the call for questions.

[Operator:]

Thank you. [Operator Instructions] And it looks like we have a question coming from the line of Jeff Rulis. Your line is now open.

[Jeff Rulis:]

Good afternoon.

[Hadley Robbins:]

Good afternoon, Jeff.

[Jeff Rulis:]

Just to follow-up on margin holding up well, comment just kind of be engaged with that a little more color on the environment that you're assuming within that and maybe little more detail on the margin? Thanks.

[Hadley Robbins:]

Sure, as we have talked in the past, there is a lot of different variables that play into what the margin is going to do. If the yield curve is flat under our simulations that's not as beneficial to us. But when we look at where we were at from a standalone pre-Pacific Continental point of view we've done a pretty good job we’re talking about loans for floors, the repricing characteristics within our portfolio. And what we've seen now that we've combined the two companies is that our asset sensitivity is slightly less. But it's still very much asset sensitive in our view. When we look at loans that are supported by floors in the money floors on a combined basis, it's right at $900 million of in the money floors, $458 million roughly. So about 51% of those will come off their floors in the net 25 basis points of rate movement. That's I guess one of the factors that I'm looking at. The wild cards what happens with deposits. We're looking at our marketplace and it appears that so far people are remaining I guess diligent in their pricing and we're not seen a shift in the market. There is certain places where we'll see some pressure. Our cost of funds did go from 5 basis points to 8 basis points during the quarter. That's simply a product of bringing the Pacific Continental activity on. And higher level of certain types of deposits that carry a little higher price. But certainly something that we had incorporated into our model and doesn't cause us any concern or cause us to pause.

[Jeff Rulis:]

Okay. Sounds as if you’re positive ahead of PCBK and it moderated a bit, but still flat to up is kind of the expectation?

[Hadley Robbins:]

I would say, I typically tend to -- if went back to the transcripts over the years. I think that this is as positive as I've been on the margins the last couple of quarters. And I would say that I haven't tempered my thoughts around the resiliency of the margin from rather than a quarter or two quarters ago to where we're at now that as well as Pacific Continental deal.

[Jeff Rulis:]

Great, thanks. And then just one on the credit side, you mentioned the maritime credit the size of that or any other detail that you could offer I think that's a legacy credit.

[Hadley Robbins:]

Yes, it's a COLB credit that goes back many years. A large portion of their operation actually while their headquarter is here in the Northwest occurs down in the Gulf. And contract that they had associated with the oil industry finally came to maturity. Obviously activity down there has not sustained itself so they were unable to get new contracts. Some of that was mitigated by hurricane relief actions, but and that resulted things are pretty tough down in the Gulf. This is our only borrower with activity down there and then unfortunately it didn't go well. It represents about $17 million of exposure to Columbia.

[Jeff Rulis:]

Okay. And then if you look at the NPA total in general and maybe this is more specific to the PCBK portfolio. But anything lumpy in there or more headed that's quicker for resolution now that you guys are paying to run it?

[Hadley Robbins:]

We still have the large ag credit from several quarters ago. And I think when you add that with the maritime credit you're looking at a big chunk almost 45% of our NPAs give or take run a little less than that again. And both of those are going to be long term workout. So we've got some smaller stuff that will resolve itself, but we don't have anything that will be immediately impactful.

[Jeff Rulis:]

Great, thank you.

[Operator:]

Thank you. Our next question comes from the line of Matthew Clark. Your line is now open.

[Matthew Clark:]

Hey, good afternoon all.

[Hadley Robbins:]

Good afternoon.

[Matthew Clark:]

On the organic loan growths in the quarter I think when you strip out PCBK balances were down a little bit linked quarter but that's pretty standard, I think for you all. If you look back to last year as well, year-over-year compressions probably more meaningful for you. But I guess when you think about organic loan growth with PCBK and the additional production that they are going to bring with a full quarter, I guess, how do you think about kind of normalized organic growth for COLB mid to high single-digit? Is that the right way to think on that and or not?

[Hadley Robbins:]

Well the growth rates that I think make sense to think about are mid-single digits.

[Matthew Clark:]

Okay, okay. Sounds good. And then the pipeline, I guess coming into the year here just curious if you could quantify that?

[Hadley Robbins:]

Yes, the pipeline is down a little bit, part of it's that we had a lot of relatively high production in the fourth quarter, $378 million of production. About $30 million of that was stuff that was accelerated based off of some initial language in the tax reform package. And so we had some private bond -- private activity bond issues that were concerned that that vehicle is not going to survive tax reform and proactively accelerated their borrowing needs. So that pulled a little bit of the pipe from Q1 into year-end that was about $30 million. I think our production folks do a really a job of building existing relationships also going out and finding new ones. And so I guess we're not concerned about their ability to do that. We are seeing some increased competitive pressures and that certainly impacts totals. We're seeing some of the large national banks continue to move down market where they haven’t been real aggressive before. I think they are looking at small business as a way to augment some things that they’re returning in their consumer areas. And then some of the large credit union is continue to move up market and do things we've never seen them do before and with restructures that quite honestly the banks wouldn’t do. So, that's creating some headwinds for us as well and that's why no one asked about our expectation and outlook work we think in mid-single digit as opposed to the high single-digits.

[Matthew Clark:]

Okay. And just last one for me really on the margins, maybe just first, can you talk to the I guess the nuance of the core margin being above the reported I think that's the first time I have seen that? That is something unusual in the core maybe.

[Hadley Robbins:]

Yes, we have a reconciliation in the back of the earnings release.

[Matthew Clark:]

I'll go there in the slide.

[Hadley Robbins:]

Yes, I think the biggest thing you're going to see there is the correction of our premium amortization that was about a little over $1.7 million and that stems from if you think back to I believe it was 2014 when we changed how we calculate our prepayment speeds and the amortization of premiums on a mortgage backed securities. That's our service provider that does the calculation for us, they were off one decimal place when they created that algorithm back in 2014. They caught us this quarter notified us late in the quarter and we made that adjustment. So I think that's what you're seeing as that nuance between the reported NIM and the operating NIM.

[Matthew Clark:]

Okay, great. And then just on loan yields and I think they were 504 this quarter, just trying to get a sense for new business and how that relates to the competitive pressures you're speaking to?

[Hadley Robbins:]

We think about just the coupon because it takes out all of fee income noise and everything. So we’re just looking at what we’re riding it at for a note rate. The portfolio I believe was at 464 at quarter end and our new production in the quarter was obviously at 467 and we finalize the report [ph] here. So that's something that -- yes the portfolio production during the quarter was 467 the portfolio was at 464. So that’s something that we've been coming upstream against for several years during the low rate environment was to get the new origination rates above the portfolio rates. And so I think that’s a positive even that’s another reason I guess to tag on to Jeff's question as to why more we’re optimistic about the resiliency of the NIM as well.

[Matthew Clark:]

Okay. And then last one for me, just on the cost saves realized the data. I think you said 60% have been realized so far, it sounds like they're coming in a lot quicker in terms of the saves and you get the conversion coming up in May. So I guess could you just confirm the 60% and kind of what the outlook is in terms of timing for the rest of it?

[Hadley Robbins:]

Matt, the conversion that actually was in March.

[Matthew Clark:]

March, excuse me.

[Hadley Robbins:]

So, I wouldn’t say that it’s -- yes, I mean, we feel really good about the -- we implemented 60% of the saves the majority of that compensation that’s also because that’s where the majority of the estimates were or the saves were going to occur. The timing, I don't know that we’ll see a lot of reduction in that or implementation of new cost saves during the first quarter, maybe right at the very end given the big March timing version. What we will see is early second quarter once we are beyond the conversion we will start winding down some of that activity and then we’ll accelerate the rest of the cost saves. And I would say it might still be a few trailing in post-second quarter but by the end of the second quarter we’re going to have the vast majority of those in place.

[Matthew Clark:]

Okay, thank you.

[Hadley Robbins:]

Thanks, Matt.

[Operator:]

Thank you. Our next question comes from the line of Jackie Bohlen. Your line is now open.

[Jackie Bohlen:]

Hi, good morning everyone.

[Hadley Robbins:]

Hello.

[Jackie Bohlen:]

Keeping the expense question, Clint those 60% cost saves what was the timing of implementation in the quarter, was it more towards the end?

[Clint Stein:]

Yes, it was probably -- the reason I'm hesitating for two reasons, first I am trying to solve because somebody doing construction on the outside of the building and I'm not sure, if you can hear that or not. The second reason is I am thinking about where we implemented that or where we closed in, in the second month of the quarter and it was probably 15 to 30 days post-closing where we saw some of the initial cost saves come in. So to your question, it would have been later in the quarter most of them starting mid-November time frame.

[Jackie Bohlen:]

Okay, thank you that’s helpful. And then the mid-2.4% near-term goal for the expense ratio, how do you think about that ratio longer term, once everything is integrated and you are back to outward operations 100%.

[Clint Stein:]

I think that it continues to improve. I think that's why I caged it with the short-term in the past I've just said kind of where I thought the range would be. Because we kind of keep it fairly -- it doesn't move a lot from one quarter to the next and the next. But I do think that we'll continue to see some improvement once we get everything fully integrated and realize the additional cost savings.

[Jackie Bohlen:]

Okay. And then the 30% to 35% roughly of the tax benefit that you expect to fall to the bottom-line. In terms of what won’t fall the reinvestments you spoke about with the minimum wage increase and technological expenses and everything. To get that dollar value, can we just extrapolate what the tax benefit would be from your former rate to the new guidance take the dollar value and then do the 30% to 35% of that, is that a fair way to do the math?

[Clint Stein:]

Yes, I think, I want to clarify that I think it's the opposite. We expect 65% to 70% of the reduced tax burden will fall to the bottom-line. And about 30% to 35% of it will be utilized for the -- in issues that Hadley mentioned. And the reason we put the percentage in there is we don't give guidance in terms of earnings, but you all have your models and that will give you the opportunity to take where your current view is on our level of earnings and factor in what we think we're going to -- able to have fall to the bottom-line.

[Hadley Robbins:]

I was just going to say one thing to keep in mind as well is July that there the amendment will take effect and impact our interchange rather than --.

[Jackie Bohlen:]

Yes. No, definitely understood on that score. The minimum wage increase has that already take in place or is that still to come?

[Hadley Robbins:]

That will start in February.

[Jackie Bohlen:]

In February, okay. And I would guess other expenses will just be kind of layered in a bit as we go?

[Clint Stein:]

Yes, we'll have to have business plans for some of the technology for example. And those will take time. And so the expenses will drop in overtime.

[Jackie Bohlen:]

Okay, alright. Thanks for all the added color. I appreciate it.

[Clint Stein:]

You bet. Bye-bye.

[Operator:]

Thank you. Our next question comes from the line of Aaron Deer. Your line is now open.

[Aaron Deer:]

Hey, good afternoon everyone.

[Hadley Robbins:]

Good afternoon.

[Aaron Deer:]

Maybe just to start, if you could just clarify the interchange comment you just made in terms of what the income statement impact is expected to be?

[Clint Stein:]

Well before tax amount on an annualized basis is $10 million.

[Aaron Deer:]

Okay. And then one other thing Andy, I think you mentioned it, but I think it down, what was the change in line utilization from quarter-to-quarter?

[Andrew McDonald:]

Yes, just give me a second. It went from 48.2 to 45.9. And some of that is related to the seasonal nature of some of our businesses like ag. And then we saw contraction in the finance company’s book specifically the mortgage warehouse lines that we do there just seem to be a decrease in activity at the end of the year. And then one of our larger clients raised a fair amount of capital in the public market and used that money. And they're now redeploying that money in an acquisition. So we expect some bounce back in the finance company activity in the first quarter.

[Aaron Deer:]

Okay, that's helpful. And then just kind of the big picture question I guess for Hadley, with Pacific Continental now moving into the rear view mirror, where do you stand in terms of your appetite for additional deals going forward? And can you maybe give some color in terms of what geographies were might be of most interest?

[Hadley Robbins:]

Sure. Well we continue to have a strong interest in M&A as part of our go forward strategy. There is essentially going to be no change in our process for evaluating opportunities starting first with compatible cultures and comparable risk appetites. We prefer to stay in our existing footprint, but are prepared to consider new markets in the West, but that would be on an exception basis. Again we're looking for primarily end market candidates that we can partner with and continue to deepen our presence here and grown.

[Aaron Deer:]

Okay, that's great. Thank you very much for taking my question.

[Hadley Robbins:]

You bet. Thank you, Aaron.

[Operator:]

Thank you. [Operator Instructions] Our next question comes from the line of Jon Arfstrom. Your line is now open.

[Jon Arfstrom:]

Thanks, good afternoon.

[Hadley Robbins:]

Good afternoon, Jon.

[Jon Arfstrom:]

Couple of follow-ups I guess one on expenses I think Hadley, you made the comment about accelerating the tax spending. I'm just curious if there is a change in the total spend or just an acceleration? And then also just kind of where and what are you focused on there?

[Hadley Robbins:]

Are you referring to the tax benefit that we’re reallocating?

[Jon Arfstrom:]

Yes, exactly.

[Hadley Robbins:]

Okay. We considered the savings overall to fall 30% to 35% of what the benefit will be. And we approached it on the basis essentially really trying to say very compatible with the themes that run through our culture, which is employees, customers, communities and the choices we made in that regard include the $15 minimum wage. And as I mentioned that goes into effect February. On the technology side, we're looking at integrating our distribution channels and building out our digital capabilities. And we're upgrading a number of our products that we have particularly as it relates to online and mobile and with our corporate platform for treasury management. So dollars are air marked for projects that fall in that particular area. And again as I mentioned the business cases need to be fully that before we make our selections, but we have the priorities established and are prepared to go forward. And then with regard to our Community Bank’s giving we’ve got a nonprofit employee directed fund that will contribute to and allow our employees to make decision on how to support communities that they are doing business in. So the timing of that will be probably in the second quarter when some of that expense flow just through on the community side and it will be accelerating on the technology side probably in the third quarter.

[Jon Arfstrom:]

Okay, good that helps. Deposit pricing as I think you guys alluded to the fact that deposit cost where up primarily as a result of the acquisition, if you set the acquisition aside, can you maybe talk about what you were seeing from the legacy Columbia?

[Hadley Robbins:]

That's been pretty stable. We haven't seen wide spread changes in our market place and we actively track deposit pricing and TDA attrition as this lays to hone in on what's going on. We're holding of course for now, but we're ready to respond that’s necessary. We have dialog with large depositors on an ongoing basis. We’re prepared to make some situational adjustments if it makes sense. We're also positioned with product that we can rollout for select customer groups rather than replace entire customer segment. So with deposit start to move we think that we have some strategies on the shelf that we can execute. But for the time being, we're not seeing wide spread movement in deposit pricing.

[Jon Arfstrom:]

Okay, good. Good, thanks for taking the questions.

[Operator:]

Thank you. Our next question comes from the line of Jackie Bohlen. Your line is now open.

[Jackie Bohlen:]

Hi, just one quick follow-up. I wondered if you might provide an update on how the CFO search is going.

[Hadley Robbins:]

You bet. What we're doing on the CFO search is we have a very disciplined process. And we're committed to take the time required. We're still in the search. Both Clint and I are very well supported by our team members who have stepped up to help us distribute the workload. So we feel that we're well positioned to continue to search as we are. And if you know of anybody let me know.

[Jackie Bohlen:]

Sounds good I will. Thanks Hadley, appreciate it.

[Hadley Robbins:]

You bet.

[Operator:]

Thank you. And at this time, I'm not showing any further questions on the phone lines.

[Operator:]

There are no further questions coming through the web either.

[Hadley Robbins:]

Okay, thank you very much. Good afternoon everyone.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. And you may all disconnect. Everyone have a great day.