Great Western Bancorp, Inc.
Q2 2018 Earnings Call Transcript

Published: 26 Apr 2018

[Operator:]

Good day and welcome to the Great Western Bancorp Second Quarter Fiscal Year 2018 Earnings Announcement and Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Ann Nachtigal, Director of Corporate Communications. Please go ahead.

[Ann Nachtigal:]

Thank you, [Kelly] [ph], and good morning everyone. Joining us this morning on Great Western Bancorp's second quarter fiscal year 2018 conference call are, Ken Karels, Chairman, President and Chief Executive Officer; Peter Chapman, Chief Financial Officer; Steve Ulenberg, Chief Risk Officer; Michael Gough, Chief Credit Officer; and Doug Bass, Regional President. Before we get started, I'd like to remind you that today's presentation may contain forward-looking statements that are subject to certain risks and uncertainties that could cause the Company's actual future results to materially differ from those discussed. Please refer to the forward-looking statement disclosures contained in the presentation we have made available on our Web-site as well as our periodic SEC filings for a full discussion of the Company's risk factors. Additionally, today we will be discussing certain non-GAAP financial measures on this conference call. References to non-GAAP measures are only provided to assist you in understanding Great Western's results and performance trends and should not be relied upon as a financial measure of actual results. Reconciliations for such non-GAAP measures are appropriately referenced and included within the presentation. With that said, let me turn it over now to Great Western Bancorp's Chairman, President and Chief Executive Officer, Ken Karels. Ken?

[Kenneth James Karels:]

Thank you, Ann, and good morning everyone. Thank you for taking the time to join us this morning to discuss our financial results. We are very pleased with the earnings and growth in our business this quarter. A few of the underlying highlights are; net income was $40.5 million or $0.69 per share. This is an increase of 15% from last year. Loan growth remained strong, with loans increasing $173 million or 7.7% on an annualized basis. Our efficiency ratio remained strong at 48.6%, or 47.8% if you exclude an accounting gross up that Pete Chapman will expand upon in a moment. And finally, we increased our quarterly dividend to $0.25 per share. This increase of 25% reflects Great Western Bank's ability to generate excess capital due to our strong returns. Now for more insight on our first quarter financial results, I'd like to turn the call over to our Chief Financial Officer, Peter Chapman. Pete?

[Peter Chapman:]

Thank you, Ken, and good morning everybody. As Ken mentioned, within our income statement for the quarter there is a gross up of noninterest income and noninterest expense by $2.3 million that largely offsets. This is due to a contract termination cost and offsetting [indiscernible] from a vendor change. This has no real impact upon net income but does gross up our efficiency ratio by approximately 1% for the quarter. Now moving to revenue, net interest income was $102.2 million for the quarter, which is comparable to the prior quarter, driven primarily by loan interest income resulting from loan growth partially offset by higher interest expense related to deposits and borrowings and a lower day count in the March 2018 quarter. Our net interest margin was 3.92% for the quarter and our adjusted net interest margin was 3.86%. The adjusted NIM increased by 6 basis points quarter over quarter as a result of higher asset yields, mainly driven by the fact that 62% of our loan portfolio is floating or adjustable, which was partially offset by the rising cost of interest-bearing deposits and borrowings. Noninterest income for the quarter was $18.7 million, a 12% increase compared to the December 2017 quarter, which was driven by a $2.3 million contract signing bonus. Excluding this amount, noninterest income declined by $400,000, which was as a result of service charges and mortgage income being seasonally softer in the March quarter offset by higher swap fee revenue and wealth management income. Finally, noninterest expenses were $59.1 million for the quarter, or $56.8 million excluding the $2.3 million contract breakage gross-up within data processing and communication costs. This is an increase of $2 million for the quarter. The increase in expenses was driven by an $800,000 increase in salaries and benefits, included within which was a one-time bonus of $300,000 as a result of our living wage announcements last quarter, the increased OREO costs of $800,000, and increased occupancy costs of $400,000 due to seasonal property taxes and maintenance and the cost associated with new branch premises. We expect our expense run rate to be broadly in line with this quarter with the view that OREO expenses should be lower in the following quarter and also salary expense will not include the $300,000 in one-time bonuses. All regulatory capital ratios remain comfortably above the well-capitalized limits, with Q1 and total capital ratios at 11.5% and 12.5% respectively and tangible common equity to tangible assets increasing to 9.3%. I'd now like to turn over to Doug Bass, our Regional President, to discuss balance sheet activity. Doug?

[Douglas R. Bass:]

Thanks, Pete, and good morning everyone. We are happy to report a third consecutive quarter of strong loan growth. Loan balances increased $173 million compared to December 31, an annualized growth rate of nearly 8%. Growth was most robust in construction, land development, and construction non-real estate segments of the portfolio. As we flagged in our December 2017 quarterly earnings call, unfunded construction lines were 375 million higher than 12 months prior, so growth in construction and development was expected during this March quarter. We expect continued growth in this segment in the coming quarters despite some finished projects refinancing into the secondary market. The commercial non-real estate and owner-occupied real estate portfolio grew by $95 million or 4% for the quarter, which reflects our desire and focus to pursue diverse and balanced growth across our portfolio. Commercial and industrial growth represented 55% of this quarter's loan growth. Geographically, growth was distributed across our footprint with good growth in Arizona, South Dakota, Iowa, Kansas, and Missouri, reflecting the benefit of our broad geographic footprint. Deposit growth during the quarter was approximately $360 million on a net basis. The inflow was split between an inflow in consumer and business. This brings our year-to-date deposit growth to 4.6%. Our loan to deposit ratio of 99% remains well within our targeted range. Let's turn the call over now to our Chief Credit Officer, Michael Gough, who will take us through asset quality developments. Michael?

[Michael Gough:]

Thank you, Doug. Turning our attention now to the slide on asset quality, provision for loan losses was $4.9 million for the quarter, a slight increase compared to the previous quarter. Net charge-offs for the quarter were $3.8 million or 17 basis points of average loans on an annualized basis, which is lower than the prior quarter and also the lowest quarterly net charge-off rate since fiscal year 2016. Our allowance for loan and lease losses as a percentage of total loans was stable at 70 basis points. Our comprehensive credit coverage, which includes credit related fair value adjustments on our long-term loan portfolio and purchase accounting marks, remained sound at 103 basis points of total loans. Compared to December 31, 2017, we saw modest increases in Watch and Substandard credits of $7 million and $4 million respectively, which were more than offset by a $16 million decrease in non-accrual loans. We are pleased to inform you that we have completed 91.4% of all ag reviews, which would typically be completed during this review renewal cycle, and 86.6% of all Watch and worse rated credits during the same period. In addition, we have completed 90.2% of all grain producer annual reviews, which would typically be completed during this review renewal cycle, and 88.5% of all Watch or worse rated credits during the same period. In general, farmers' performance in 2017 was in line with our expectations and our previous earnings calls, with upgrades modestly outpacing downgrades. We continue to actively monitor the discussion around trade tariffs, with specific focus on soybeans and how that may impact our customers, but at this stage we do not have concerns around potential impact on the loan portfolio. If we look at soybean future prices as of yesterday, these are still higher than 12 months ago and many of our customers have forward contracted part of this year's production. The downward trend on milk prices we have discussed the last few quarters has reversed with a slight improvement in milk prices during the quarter. With that, let's turn the call back to Ken for some closing remarks.

[Kenneth James Karels:]

Thank you, Michael. We achieved solid results for the quarter. Loan growth was strong, considering this quarter's growth is historically flat. Our returns were exceptional with a 1.4% ROA and a 16% return on tangible equity. Asset quality remained stable and very much in line with our expectations. We are optimistic that the impact of the tax and regulatory reform will continue to have a positive impact on our customers and our own business. Additionally, we remain confident we will see mid to high single-digit loan growth going forward. Thank you for your continued interest in GWB and we are now happy to open up the call for questions.

[Operator:]

[Operator Instructions] The first question comes from Ebrahim Poonawala from Bank of America Merrill Lynch. Please go ahead.

[Ebrahim Poonawala:]

So, following up, thanks for the update on the impact from tariffs, but I would appreciate just because there is a fair amount of noise that comes around if we actually get to that point where there are – if tariffs are levied and this thing goes through, when you think about the impact on your customers and to the Bank, like how much of that concern is tied to credit versus growth, like that would be quite helpful in thinking about in the worst case scenario how this could impact your earnings outlook?

[Kenneth James Karels:]

I think it's not going to affect either earnings or growth on it. Michael, maybe a few points you want to make just on the tariff itself, but I think as Michael said it earlier, we have very little concern regarding it.

[Michael Gough:]

Happy to do so, Ken. So far what's been reported is exactly, you said it's a lot of talk, it's a lot of discussion that's postering so far. Other thing that we really look at is China imports about 63% of the world's soybean production or 97 million tons a year. The three biggest producers are the U.S., Brazil and Argentina, and Argentina right now is in a pretty significant drought. The market for soybean so far indicates not a lot of concern there. I think the mark was up again yesterday, and as mentioned in the presentation, the market is up for where it was a year ago. What we do think could happen to see a possible call it a distribution realignment, if you would, we have already seen Europe, Indonesia, believe that there is further demand in other than China out there to take up that production if China did indeed back off on top of that production cost dropping about 6% to 9% a year on both corn and beans, and in our footprint our producers don't have to just do soybeans, they could plant corn if they chose to. So, it's something we are very much watching and aware of, but as Ken said, don't expect significant at all effects on our loan books at all.

[Kenneth James Karels:]

And I think the other thing, Doug, maybe we don't talk about it, but a lot of our producers are forward contracting this year's production. So, Doug?

[Douglas R. Bass:]

Yes, I think when you look at the grain book and realize, Ebrahim, that's mostly in the Midwest. You have got opportunities that most are forward contracting or locking in positions through the Mercantile Exchange. Additionally I think it's important to notice, you asked about growth, and very little of our pipeline and very little of our growth would be focusing around the Midwest ag production. So we see insignificant to no headwind from growth impacts of any Midwest agricultural commodity concerns.

[Ebrahim Poonawala:]

Understood. That's quite helpful. And just back to Ken, you mentioned mid to high single-digits, so I am reading somewhere between 6% to 8% growth on a full year basis. Given like 2Q tends to be seasonally much stronger than 1Q and 1Q was quite strong relative to what you've seen previously, like how much of an acceleration should we expect in the second quarter, could we see like a 3% to 4% sequential loan growth, like if you can just talk through the ins and outs that we should anticipate?

[Kenneth James Karels:]

I think we'd probably want to stick kind of with that full mid to high single loan growth for the year. What we saw this last quarter typically was flat to down quarter. So we are quite happy to see the growth that we had this quarter and I think will help propel growth for us for the rest of the year. So, typically this next quarter isn't as strong as our last fiscal quarter on it but I think pretty confident there will be substantially higher loan growth than we had in the past year.

[Ebrahim Poonawala:]

Understood. And one last one just moving to capital, like the tangible equity is building up nicely, I see the dividend increase you announced, any thoughts at all like just discussions around M&A, I know you have been looking at potential opportunities there, or what other alternative do you think in terms of capital deployment if capital continues to build?

[Kenneth James Karels:]

I mean obviously it isn't our intent to continue building capital. So, M&A activity is picking up. There is a lot more noise and chatter and deals that we are looking at. It's obviously too early to talk to any specifics there, but I can just say the activity is picking up substantially.

[Ebrahim Poonawala:]

Got it. Thanks for taking my questions.

[Operator:]

The next question comes from Mr. Jeff Rulis from D.A. Davidson. Please go ahead.

[Jeffrey Rulis:]

A follow-up on Pete with the discussion on the expense side, just the kind of guide there that expecting some lower expenses also assumed the noise on the contract break expense, that also goes away, correct?

[Peter Chapman:]

Yes, it should. That's an estimate, Jeff. So there might be a tiny drop next quarter but I wouldn't expect material. And just generally on the guidance there on expenses, we are at 59.1, you back out the [indiscernible] expense, and then also you know as we said, OREO at $1 million was about 800,000 higher than last quarter, we hope that settles in close to about that sort of 0.5 million. So, you do that and you take out the salary and one-time bonuses, and you sort of get to about a $56 million run rate. This is sort of what we are thinking just there.

[Jeffrey Rulis:]

And then on the margin, just wanted to kind of lean into the – and I don't know if the interest rate swap costs the client if you do that sort of one-time in nature, but in other words it sounded like an encouraging, hoping to outstrip earning asset yields, outstripping deposit costs, maybe just more margin discussion about how you see the adjusted going forward?

[Peter Chapman:]

Yes, we would hope that does continue to tick up. I think our last earnings call I said a few basis point increase, and obviously the 6 basis point increase was very good. Just deposit costs and funding costs have risen a little more slowly than I thought. We have seen more competition for deposits, Jeff, but I would still expect margin to tick up by a couple of basis points for the next quarter as well, with the asset book still outpacing the deposit costs.

[Jeffrey Rulis:]

Great. And then maybe one last one, the three properties you added to OREO, any kind of additional detail there, and the whole bucket of OREO, anything headed for a quick resolution?

[Kenneth James Karels:]

Mike, do you want to go ahead?

[Michael Gough:]

I'll be happy to. With the additions to OREO, the only thing that I'd add, others certainly join in if you'd like, those are the continuations of the workout strategy where we got to the point where we got control and/or ownership of the property. So, nothing there was a surprise. As for quick wins, if you will, in that book we have got a number of the properties in OREO under contract, but in that space I would not ever say that you are going to have 100% of them always come through to fruition. You will have some of those fall out. So, all I can tell you is it's monitored extremely closely and we are having discussions on those at least every month, if not more frequently, on the larger parcels.

[Jeffrey Rulis:]

So if I were to kind of circle back to it, the workout strategy then, could we see that additional nonperforming loans transition to that OREO bucket, as you would expect for the kind of the balance of the year?

[Michael Gough:]

It's always a possibility. Right now the best information that we have as to where we are going to go is I think you are going to see a run rate in that book at or lower than what we have now.

[Kenneth James Karels:]

Yes, the 15 million is still very, very low considering the size of our Bank or $9 billion of loan. So, I mean there is always going to be something in there as we work through deals on it too. But the good part is, with economy where it is, we are seeing contracts and people looking very interested in whatever property goes in there. So it is moving fairly quickly.

[Jeffrey Rulis:]

Great, thank you.

[Operator:]

The next question comes from Nathan Race with Piper Jaffray. Please go ahead.

[Nathan Race:]

Just a question on kind of the ag growth that you saw this quarter, or perhaps lack thereof, just curious how much maybe we could see those typical seasonal tick in ag growth that you may typically see during the first quarter of the year, of the calendar year? And then just within that context, just curious kind of the uptick in ag net charge-offs that we saw this quarter, because I think they were fairly low last quarter, so it was somewhat surprising as you guys went through the seasonal process.

[Douglas R. Bass:]

Nathan, this is Doug. Let me take the first half of it and then Michael will help us on some of the charge-off reconciliation. On the growth side, we end up with some seasonal increases toward the end of the year with prepayments. We have some declines that start into play right after the 1st of the year in January. And then in the Midwest we start seeing a number of the spring startup expenses that happen around March 1. So, the averages generally were not up, but a point in time was up slightly. Most of that growth is going to be in the Southwest, again because the quality of the book, the growth in the book that we have in the Southwest, many of it being non-traditional commodity producers starting in a January-February timeframe, so a lot of that is increases in that segment of the book, not the Midwest necessarily.

[Michael Gough:]

On the charge-off side, number one, I absolutely understand where the question is coming from. [Indiscernible] for agriculture, it was 783,000 or so that we had in charge-offs there. I would only call out that it's a continuation of the strategies on individual [indiscernible] and I don't think anybody on the call would expect that's going to be exactly even every quarter of the year. But I would also add to it, while the observation on charge-offs is right, if you look at our classified loans, if you look specifically at the grain book, our classified grain loans dropped by about 30 million in the quarter, which we look at as a very positive development. Overall, I would just say it's a continuation of plans and a vast, vast, over 90% of what we charged off had already been provided for, so no real surprises.

[Kenneth James Karels:]

And Nathan, thanks for pointing that out, because I think it does show something that we have said for a long, long time, that charge-offs in ag's base is still relatively low, very, very low, and even though that's ticked up a lot, that's still a small amount when you consider the size of our portfolio. And so, that shows why we are very bullish in that space and why we think long-term that's a great, great space to be in.

[Peter Chapman:]

If I look at the first six months to be in that, year on year ag charge-offs are only 3 million.

[Nathan Race:]

Great. That's good to hear. And then just kind of changing gears and thinking about loan price, and obviously you had good adjusted loan yield expansion this quarter along with higher rates, and I think you alluded to earlier in the call that you are seeing some firmer pricing on production as well, so just curious on what you're seeing from a competitive aspect that's allowing you to get some firmer pricing, obviously within the context of what you are seeing with higher interest rates as well.

[Kenneth James Karels:]

I think we continue to work through a lot of the fixed-rate book, which I think Pete called out earlier as about a third of the loan book, we've had it with a sudden increase in treasuries over the last few months, 10-year hitting a near term high just recently. A lot of the rates are locked in. They close 30, 60, 90 days later. So, as we continue to work through the back book of fixed-rate commitments, the new origination average weighted average loan rate and the gross loan rate are going to continue to accelerate, especially more so on the fixed book with the treasury increases. So, we do expect positive on the third of the book that's fixed and continue to receive that again on the variable side as well with rate adjustments.

[Nathan Race:]

Got it, makes sense. And then if I could just sneak one last one in for Pete, I think in the past you guys haven't disclosed the swap fees and it was a decent jump this quarter, so just curious if this is a line item that we can expect to repeat going forward or if this is more one-time in nature?

[Peter Chapman:]

I wouldn't say one-time. It was a good quarter this year. I mean this quarter was a stronger quarter than usual, so maybe a little lower, maybe [indiscernible] so lower in future quarters, but we are seeing good demand, we have as Doug pointed out increasing rates, we sort of have seen some increased client demand for longer term lock-in rate.

[Kenneth James Karels:]

And I think we track a pipeline, Nathan, on the loans that we are looking at or quoting in that book, and I think again because of the surge in rates we are probably seeing an increasing pipeline. We had a couple of large closings in the quarter that helped that result, but again the pipeline continues to probably increase just based on business sentiment and maximizing interest rate risk.

[Nathan Race:]

Understood. I appreciate all the color, guys. Thank you.

[Operator:]

The next question comes from Mr. Jon Arfstrom with RBC. Please go ahead.

[Jon Arfstrom:]

Doug, maybe a question for you, can you touch a little bit more on what you think the drivers were on the commercial lending strength?

[Douglas R. Bass:]

Really when we talk about the segment, first maybe on the C&I component, would be probably three sectors. We saw manufacturing, we were able to make a couple of acquisitions of new relationships, and then a couple of expansions relative to some distribution companies on industrial expansion, and then a couple service based companies as well that also had some expansion. So, some good economic activity, probably about 50-50 in current customer expansion and new acquisition of customers new to Great Western Bank and you know was 55% of our growth in the quarter, so very strong in that pipeline, continues to be significant in that area too especially compared to year-over-year. On the non-C&I side, the book is predominantly construction projects, and as I think we have talked about before, that construction pipeline is up dramatically across the footprint and the unfunded at 375 is up year-over-year. We also look at those projects as somewhere between two to four year cycles depending on the project size because we are not the term lender, and very many of those, most of those are construction stabilization and moving on.

[Jon Arfstrom:]

Okay. And is that…

[Douglas R. Bass:]

I think led me add one more thing on that, Jon. I think the other thing we are seeing and we're continuing to see every quarter a continued lift in the pipeline and the new loan closings from the new offices we have started. I know we have talked about those in the past. We have had nine new offices over the last five years and we continue to see increased traction from those locations in several states. And I think part of the expense side, and Pete mentioned we're also seeing the expense obviously leads to revenue by several months, but we are starting to catch up and we are seeing positive improvement there from cost versus revenue in the new offices we have started.

[Jon Arfstrom:]

Okay, good. Geographically on construction, can you touch on that where the opportunities are?

[Douglas R. Bass:]

It's going to be predominately in metro areas. It's going to be a cross-section of some multi-family, which we are very cautious of depending on the market. It's going to be a little bit of some industrial, very little office, and I would say, no retail.

[Jon Arfstrom:]

Okay, good. And then the flipside of this, metro versus rural deposits I believe are about split 50-50. Can one of you maybe address the competitive nature of each of those? Is the metro market more competitive than rural, does that make sense?

[Kenneth James Karels:]

It's a very good observation. The metro markets represent a lot of communities we've been in for a number of years and would have certainly fewer competitors in those markets, very sticky long-term deposits. That's why we are in a lot of those markets. And then on the metro side, we are seeing certainly more competition and certainly rising rates in the metro markets on larger business and larger private banking and consumer relationships. And I think we have got a proactive staff that are working with customers and I think part of what you see is the significant growth we had in the quarter was a result of the relationships we had and that modestly impacted by the increase in deposit costs as well. Does that help you on the diversity?

[Jon Arfstrom:]

Yes, that helps. That's what I am looking for. So, appreciate it, thank you.

[Operator:]

The next question comes from Mr. Damon DelMonte with KBW. Please go ahead.

[Damon DelMonte:]

So just to kind of follow-up on the new markets that you have entered into recently, I think you mentioned nine offices over the last five years, obviously you guys noted the progress that's coming out of those. Have you thought about additional markets to look to expand into either during 2018 or into 2019, and if so, where about?

[Kenneth James Karels:]

We did a multiyear plan early in 2017 that we received support from the Board of Directors on that laid out a longer-term plan in 2017-18, 2018-19, and 2019 and beyond, and we are executing on that plan that started a little over a year ago. As far as new markets where we are headed, we have three applications that should be filed for new offices in two different states that are within our existing nine state footprint probably during this quarter. We are waiting for one piece of information in all three of those to finalize the regulatory filings. Those would all be full-service offices that we do not currently have loan production offices in. We additionally have three loan production offices that are in the queue and we are working on hiring opportunities in those markets, some we have got offers out, some we are negotiating on, and some we are still sourcing the person that fits the culture, but those are all plans that were laid in place in early 2017 and progressing as planned with staff hiring before we incur overhead. And I would say we are meeting to exceeding results in really all of the nine we have opened and preliminary stages of the ones that are in the queue. And until we probably have formal filings out there, we've not in the past disclosed the exact location relative to that until we put the filings out, which should be near-term.

[Douglas R. Bass:]

Really we have been successful with that. That's what has let our guidance to the mid to high single-digit loan growth. It has helped us propel growth here from what we had last year. So, it's working very well.

[Damon DelMonte:]

Okay, great, thanks. That's really good color. And then I guess just the credit trends have been very favorable the first two fiscal quarters for you guys this year. Loan growth is continuing to chug along. Just kind of wondering what your thoughts are on the provision for the last couple of quarters of this fiscal year.

[Kenneth James Karels:]

I think pretty much in line with where we have, right, Michael or Pete, anything, but pretty much in line, yes.

[Damon DelMonte:]

Okay, that's all that I had. Thanks a lot.

[Operator:]

The next question comes from Tim O'Brien with Sandler O'Neill. Please go ahead.

[Timothy O'Brien:]

Two quick questions, one, looks like investment securities balances were down 4% in the quarter, any color on that, Pete?

[Peter Chapman:]

Yes, certainly. Tim, really for us sort of we are in the 100% loan to deposit. Certainly incremental funding we'll put towards loans over securities. I wouldn't expect that sort of fall in the following quarter. I would expect that to be more flattish. But certainly we'd look to explain the loan book over the securities portfolio.

[Timothy O'Brien:]

Great, thanks. And then last question, are you seeing any delays in planning from any of your grain growers due to weather conditions?

[Kenneth James Karels:]

I think while we've had a lot of colder weather, damper weather, when you think about the varieties and various options and maturities that farmers have, they may get in the fields a week or two later, but honestly, current genetics don't impact yields and there is a lot of heat that happens yet in the summer that catches it up very quickly. So, no impacts. If we are sitting here at the next call and we are still talking about wet cold weather might be a factor, but at this time it's a non-event.

[Douglas R. Bass:]

Forecast for the next few weeks is very strong [indiscernible] warmer too.

[Kenneth James Karels:]

And we have actually got a lot of planting that's already started probably in the southern Midwest portions of our market already. So, we are looking at very modest impacts of a couple of weeks really in only the northern portions of the Midwest.

[Timothy O'Brien:]

My folks are still looking at snow. Anyway, thanks.

[Operator:]

[Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over to Ken Karels for any closing remarks.

[Kenneth James Karels:]

Thank you for joining us. Obviously we are very proud of the strong quarter we had this last quarter and looking very optimistic into the future years. So, thanks again for joining us.

[Operator:]

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