People's United Financial, Inc.
Q3 2016 Earnings Call Transcript

Published: 21 Oct 2016

[Operator:]

Good day ladies and gentlemen and welcome to the People’s United Financial, Inc. Third Quarter 2016 Earnings Conference Call. My name is Andrew and I will be your coordinator for today. At this time, all participants are in a listen-only mode. Following the prepared remarks, there will be a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I'd now like to turn the presentation over to Mr. Andrew Hersom, Senior Vice President of Investor Relations for People’s United Financial, Inc. Please proceed, sir.

[Andrew Hersom:]

Good afternoon and thank you for joining us today. Here with me to review the third quarter of 2016 results are Jack Barnes, President and Chief Executive Officer; David Rosato, Chief Financial Officer; Kirk Walters, Corporate Development and Strategic Planning; and Jeff Hoyt, Chief Accounting Officer. Please remember to refer to our forward-looking statements on slide one of this presentation which is posted on our Web site, peoples.com under Investor Relations. With that, I’ll turn the call over to Jack.

[Jack Barnes:]

Thank you, Andrew. Good afternoon and as always we appreciate everybody joining us today. The Company's performance continue to reflect business momentum generated through our consistent solution oriented approach to banking. We’ve always partnered with clients to deliver thoughtful, straightforward solutions that address their financial needs. During the quarter, I spend time meeting with our relationship managers and their clients across the footprint. As I often do throughout the year and a very much enjoy. These visits enable me to see firsthand how well we are meeting client needs. Once again, I came away impressed with the strength of our relationships and the quality of the clients we do business with. The feedback I continually receive is that our approach to banking differentiates us in market. The combination with our extensive suite of products and services, this approach has enabled us to deepen existing relationships and develop new ones. As a result, we have grown the loan portfolio for 24 consecutive quarters, while maintaining exceptional asset quality and over the same period nearly doubled our deposit base and increased wealth management assets under discretionary management by approximately 40%. Now turning to the overview of the third quarter on Slide 2. Our results for the third quarter reflect further improvements and profitability and continued growth and earning assets. We are pleased to report record quarterly net income of $74 million, which increased 8% from both the linked and prior-year quarters, as well as generated a return on average tangible equity of 10.7%. The efficiency ratio of 59.9% reflects a continued gradual improvement in this metric and demonstrates our focus on enhancing operating leverage through ongoing revenue growth and proactive expense management. Solid growth in both net interest income and noninterest income grow revenues higher by 3% on a linked-quarter basis and 4% compared to the prior year quarter. Expenses of $218 million which exclude $3.1 million of merger related costs, were up approximately 2% from both the second quarter and prior-year quarters, primarily as a result of higher compensation and benefits costs. In the third quarter, we continue to optimize our branch network with the clothing of four branches. Since the beginning of 2011, we have closed 65 branches, which were mostly traditional branches. During the same timeframe, we have opened 26 branches, majority of which are more cost efficient in store branches. We remain confident in our ability to further control costs as the mindset of actively managing expenses has become very much ingrained in the culture of the Company. The loan portfolio continued to benefit from our diversified business mix. Annualized loan growth during the quarter was 5%, particularly strong results in residential mortgage, as well as commercial and industrial lending. On an average basis, annualized loan growth was 8%. Looking ahead, the fourth quarter historically has been our strongest quarter in terms of loan origination with pipelines ending the quarter at very solid levels, our current view is for the trend to continue. Our success gathering deposits was evidenced by annualized growth of 9% from the end of the second quarter, while the cost of deposits declined 1 basis point. Recently released FDIC deposit data show our market share percentages either increased or remain consistent in each day we operate. We are particularly pleased with our continued number one market share position in Fairfield County Connecticut and the State of Vermont. Before turning the call over to David, to discuss the quarter in more detail, I want to take a moment to comment on our pending acquisitions. The closing and integration processes of the Suffolk Bancorp and Gerstein Fisher transactions are progressing very well. We're working closely with teams at each firm to execute our time-tested acquisition approach. We expect to close Gerstein Fisher in early November and continue to move toward closing Suffolk, pending regulatory approvals. As a result of these integration activities over the past few months, we have come away even more excited about the expected benefits of each of these transaction, particularly the talented people that will be joining us. Each of these transactions will further grow and strengthen People's United in the New York Metro area. Since the beginning of 2010, we have made substantial progress in expanding our New York franchise, both organically and via acquisitions. Over this time, we build C&I and commercial real estate teams in the New York Metro area, entered Manhattan with a branch on Park Avenue and incorporated our broader set of products and training into the branches we acquired in the 2,010 Smithtown and 2012 Citizens Branch Transaction. Additionally, we've hired local talent that both knows the market and is well known in the market. Collectively these investments over the last six years have enabled us to significantly grow our New York loan portfolio and deposit base. This progress gives us even greater confidence in our ability to successfully continue to move our franchise forward in the New York Metro area. With that, I will pass it to David.

[David Rosato:]

Thank you, Jack. Turning to Slide 3, net interest income increased $5.3 million or 2% on a linked-quarter basis, primarily driven by ongoing loan growth. Net interest income also benefited $1.7 million from an additional calendar day in the third quarter and $400,000 from lower deposit costs, primarily as a result of higher average non-interest bearing deposit balance. Furthermore, it is important to note the increase in LIBOR rate at a modest favorable impact on net interest income of approximately $1 million in the third quarter. The primary offset to these increases was a $1.4 million decline in accretion from runoff of the acquired portfolio. Net interest income was also negatively impacted by $800,000 in higher borrowing costs and $500,000 from lower yield on the securities portfolio. Moving to Slide 4, net interest margin of 2.80% increased one basis points from the second quarter. A higher loan portfolio yield and the additional calendar day in the third quarter each benefited the margin by 2 basis points. While the lower securities portfolio yield, higher borrowing costs, collectively reduce the margin by 3 basis points. On Slide 5, you can see loan balances increased $330 million or 5% annualized from June 30, with growth in both our retail and commercial portfolios. Originated loan growth for the quarter totaled $376 million. Retail contributed $234 million of originated loan growth, which was driven by continued strong residential mortgage growth of $249 billion, partially offset by lower balances in the consumer portfolio. As we’ve grown our residential mortgage portfolio in recent years, originations continue to be very high quality. The portfolios LTV and FICO metrics have remained consistent and the overwhelming majority of business retained on the balance sheet continues to be hybrid, adjustable rate mortgages. For originated loans added to the portfolio during the first nine months of 2016, the average LTV is 68% and the average FICO is 7.62. Originated loans in the commercial portfolio increased $142 million driven by C&I growth of $141 million. We experienced solid production across several C&I categories, including large corporate, middle market and asset-based lending. While end of period mortgage warehouse balances of $1.2 billion were consistent with June 30, average balances for the quarter were up $117 million. We experienced acquired loan runoff of $46 million this quarter compared to $73 million in the second quarter. The remaining balance of the acquired portfolio at quarter end was $645 million. Slide 6 shows the change in deposits by segment. Deposits grew $657 million or 9% on an annualized basis during the third quarter, primarily due to higher noninterest bearing and municipal balances. Commercial continue to benefit from franchise wide deposit gathering efforts and grew $755 million or 32% annualized during the quarter. As expected, the seasonality in our municipal business had a favorable $255 million impact on quarter end commercial balances. Retail balances declined $98 million or 2% annualized as the third quarter represents a seasonal low point for retail deposits. Following historical trends, growth is expected in the fourth quarter. On Slide 7, we look at noninterest income which increased $5 million or 6% compared to the second quarter. Insurance revenues increased noninterest income by $2.8 million, reflecting the benefit of recent acquisitions, as well as the seasonal nature of insurance renewals, which are higher in the first and third quarters of the year. Noninterest income also benefited from several categories, including increases of $1.1 million in operating lease income, $1 million from net gains on the sales of residential mortgage loans and $600,000 in bank service charges. In addition, the $2 million dollar increase in other was driven by higher income related to a distribution from an acquired equity investment partnership. The primary offset to these positives was a $2.1 million decrease in commercial banking lending fees, primarily due to lower commercial real estate, prepayment fees, resulting from a reduced level of pre-activity in our market. On Slide 8, we illustrate the key components of changes in noninterest expenses on a linked-quarter basis. Excluding $3.1 million of merger related costs, which are reported in professional and outside services, third quarter expenses were $218.3 million, an increase of $5.4 million or 2.5% from the second quarter. Compensation and benefits increased $4.7 million, primarily reflecting the impact of an additional work day and higher benefit related costs in the third quarter. The higher benefit related costs were driven in part by one additional payroll in the quarter. The largest offset to these increases was $1.8 million and lower professional and outside services cost, due to the timing of certain projects during the quarter. Before moving to the next slide, it is important to mention the FDIC will requiring banks with over $10 billion in assets to be responsible for recapitalizing the deposit insurance fund, which became effective on July 1. We anticipate the impact of the surcharge is expected to increase regulatory assessment expenses by $2.5 million to $3 million per annum. On Slide 9, you can see our efficiency ratio in the third quarter of 59.9% , improved 50 basis points from the second quarter and 180 basis points from a year-ago. As Jack referenced earlier, this result demonstrates our continued focus on enhancing operating leverage through ongoing revenue growth and proactive expense management. Slide 10 is a reminder of our exceptional credit quality across each of our portfolios. Originated nonperforming assets as a percentage of originated loans and REO at 63 basis points remains below our peer group and top 50 banks, and has continued to improve from recent quarters. Net charge-offs improved from already low levels to 4 basis points, the lowest level in over nine years. These levels reflect the minimal loss content in our nonperforming assets. As shown on Slide 11, return, once return on average assets and return on average tangible equity improved for the second consecutive quarter. Return on average assets was 73 basis points increased three basis points on a linked-quarter basis and was consistent with the prior year quarter. Return on average tangible equity of 10.7% increased 60 basis points in the second and 20 basis points from a year-ago. Notwithstanding these improvements, our returns continue to be impacted by the low interest rate environment. Turning to Slide 12, capital levels at both the holding company and the bank continue to be especially strong in light of our diversified business that. History of exceptional Risk Management. As previously discussed, we plan on issuing 200 million to 250 million of preferred before year end enabling a more optimal capital structure and enhancing our already strong capital position. All of our regulatory ratios are above internal long-term operating target, this issuance will further bolster ratios in the range of 60 to 80 basis points to support continued growth. On Slide 13, we display our interest rate risk profile for both parallel rate changes and yield curve twist. As you can see, we remain asset sensitive, though slightly less than the last quarter. We remain well-positioned for an eventual increase in interest rates, particularly in an immediate parallel shock scenario, as our loan mix continues to trend towards floating rate loans. At quarter end, over 44% of the loan portfolio was either one-month LIBOR or prime-based compared to 43% at June 30 and 41% a year-ago. Sustained lower long-term rates remain a headwind for our risk positioning as evidenced by our long and down scenario on this slide. Before passing the call back to Jack to wrap up, I wanted to point out we revised our estimate for the full-year effective tax rate, a 30.6% for the third quarter. The effective tax rate through nine-months of 2016 is 32.4%, a decrease from 33.4% for the full-year of 2015. Due to our continued investment in tax preference item. With that, I'd like to pass the call back to Jack for closing remarks.

[Jack Barnes:]

Thank you, David. In summary, we are pleased with our third quarter performance, which includes record quarterly net income improvement and the efficiency ratio to 59.9%, continued loan growth, highlighting our diverse business mix, sustained exceptional asset quality and strong deposit growth along with lower cost deposits. Our integration and closing were with Suffolk and Gerstein Fisher acquisitions are progressing very well. We are studying about the executive benefit of each of these transactions. Continue to build our readiness for us $50 asset special, through our B50- project, and we discussed in detail last quarter. Our goal is to complete this process internally over the next few years and avoid unusual one-time costs. We remain committed to consistently returning capital to shareholders and today the Board declared a dividend for the 93 consecutive quarter. As such, the Board and management understand the importance of the dividend and the significant impact that it has valuation of company shares. Therefore it is important to remind both card and perspective shareholders, not -- we will not move, the Company pass the $50 billion asset threshold without knowing we have regulatory support for our dividend. This concludes our presentation. Now we would be happy to answer any questions that you may have? Operator, we are ready for questions. [Operator Instructions] Your first question comes from Ken Zerbe with Morgan Stanley. Your line is now open.

[Ken Zerbe:]

Okay. Thank you. Jacky you seem very positive on the growth in New York, going forward just, I’m looking at the portfolio, want to make sure, obviously there has been wide growth in C&I and very literal in CRE. When you think about the opportunities in New York, is it solely a C&I kind of opportunity or would you expect to accelerate CRE growth given potentially other firms pulling back?

[Jack Barnes:]

We are very optimistic on both parts. We have a great C&I team there and we made nearly great, I would call, study progress through that timeframe. Both are really nice team and have good customer base and I also think the Suffolk team joins and get integrated. I see a lot more progress on that front. When I think about we have, I know we mentioned now very recently the addition of Senior Executive in the New York market, and Mark Melchione and he has brought in a very experienced team and we are very excited about their progress. We had some closings already and we’ve a very strong pipeline looking forward to the positive impact there. That is what we would call our traditional three book, we are looking for relationship customers that will have multiple transactions with us and deposit relationships very similar to what we’ve a financial process and the rest of the franchise. So we do continue to move away from the New York year multi family, smaller transactional piece. So we see a lot of opportunity as we move forward.

[Ken Zerbe:]

Got, understand. Okay. That makes sense. And maybe your comments about the tax rate, if right to very end there. Does that imply that tax rate is going to be lower in fourth quarter?

[Jack Barnes:]

No, it will be in the same. 32.4%, so we were accruing at 33.5% at the beginning -- through the first two quarters and we true that up. That’s all it is.

[Ken Zerbe:]

Okay, so third quarter is a bit lower and fourth quarter is back to the full-year, I understand. Got it. Okay, and then just one last question on the merger costs. I think Suffolk is remember right with somewhere around $38 million of merger costs. Does that already include like the 3 million that you took this quarter and what’s the timing of how those my comment over the next few quarters?

[Jack Barnes:]

The $3.1 million included costs associated with both Suffolk and Gerstein Fisher. You will probably see a small amount of thoughts were order and then the restructuring charges when we close the deal, which should be first quarter.

[Ken Zerbe:]

Okay. Thank you very much.

[Jack Barnes:]

Ken, I just want to remind that, maybe give you more perspective on the New York lending, just to make sure I interpreted your question right, but we really have New York customer base that includes the customers in ABL, equipment finance, there is -- lot of business, thanking activity. So, while you had about C&I and creative you think about our total business across the New York metro area. It includes all of our business lines.

[Ken Zerbe:]

Got it. I Understood. Yes, I think I was just mentally building like in ABL etcetera into the C&I bucket. Broadly, okay. All right. Perfect. Thank you guys.

[Jack Barnes:]

Thank you, Ken.

[Operator:]

And our next question comes from the line of Bob Ramsey with FBR Capital Markets. Your line is now open.

[Bob Ramsey:]

Hey, Good afternoon. Thanks for taking the questions. Curious first, which line items of the $3.1 million of merger charges will run through?

[Jack Barnes:]

Went through professional and outside services.

[Bob Ramsey:]

Got it. Perfect. And you’ve mentioned the increase in FDIC assessment industry wide. Is that -- that’s already in this quarter's number though? Is that right?

[Jack Barnes:]

Yes, yes.

[Bob Ramsey:]

Okay.

[Jack Barnes:]

700 -- actually $700,000.

[Bob Ramsey:]

Okay. And then, I guess, if I back out the merger charges, I get earnings of about $0.25 this quarter, that annualizes to about a $1. Is there any reason to think that next year earnings wouldn’t be at least at that level, excluding the merger charges next year as well?

[Jack Barnes:]

They were not compared to get any guidance for next year and this morning.

[Bob Ramsey:]

Okay. For modeling purposes, is it fair to put Suffolk sort of at the very start of next year. Would you think it might be closer to the end of the quarter as the first quarter.

[Jack Barnes:]

I know you that in our hands at all in very difficult to call. So given the assets, I think that’s a position yourself. It's purely in the regulators hands and we’ve no idea when will get any final answers.

[Bob Ramsey:]

Okay. Fair enough. And then, I guess on the preferred issuance you guys have been talking about this for some time. Any sense of timing on when that will actually take place?

[Jack Barnes:]

Well, as we said and what we’ve been saying consistently for at least a year and a half to a is the size and in the back half of 2016, but on the calendar continues to move forward, but we can only be as specific as before the year is over.

[Bob Ramsey:]

Okay. All right. That’s a narrow enough window. That’s fair. I guess last question on how about, but obviously had a good quarter for provision expense, something previously you all have been talking about a number more like 10 million to 12 million. Is that still a good way to think about the fourth quarter or do you think where the world sits today, it could come under that?

[Jack Barnes:]

I think that’s still a good place, in terms of looking at it. I think everybody recognizes now and through our history, we’ve had very low nonperforming levels and charge-offs and it gets pretty bumpy at these levels. Every once in a while you’ve and asset that turns back, so I think planning in the range you’re talking about is appropriate.

[Bob Ramsey:]

Great. Thank you very much.

[Greg Foster:]

Thank you.

[Operator:]

And our next question comes from the line of Collyn Gilbert with KBW. Your lifestyle is now open,

[Collyn Gilbert:]

Thanks. Good evening, everyone. Just back to the discussion on loan growth. So Jack, I appreciate your comments about New York, that's very helpful. But if we just think about sort of how the composition of loan growth has evolved so far this year, CRE balances are down from the beginning of the year, consumer balances are down, but resi mortgage balances are up quite a bit. Can you just, is that strategic in nature, is that more just where the market is kind of taking the portfolio. Can you just kind of give a little bit more color as to what might be driving sort of the shift in some of those loan balances?

[Jack Barnes:]

Sure. So, I will go to where you started first with the CRE, I think and there is a dynamic taking place right now that involves the pullback from the New York Multifamily portfolio, that’s running off. And we are still gauging the pace of that probably somewhere between $20 million and $40 million a quarter. But we'll see how that goes, it slowed as of late. On the other hand, we have a --obviously a wired customer base across the rest of the footprint and now a very strengthened group in New York and we are getting, I would say, good origination, I expect we will up start seeing some growth and CRE as we go forward. And the only contrary, I guess, or signal I'd give there the market does seem to be a little slower, a little softer in terms of transactions this year. So that’s CRE. And C&I is very steady across the middle market, starting to see actually a little better progress on business banking. ABL is having a very strong year. Mortgage warehouse is having a very strong year, even though had a flat quarter, if you will, or modest quarter. And in equipment finance is also doing reasonably well, although slower overall. Than it has been in the past. And so on the residential and consumer side, the residential side there is a shift [ph], as the shift going on, the mix of purchase and refi is kind of 50-50 lately and the volumes strong, the pipelines are strong. The branches tend to a little less refi -- sorry, little less purchase, so the refi as it slowdown I think is affecting that. We are getting a lot more activity through the mortgage originators, the mortgage account officers and we’re adding as we told you in the past, mortgage account officers, particularly inside 495 in Boston and in New York. So those are the numbers of mortgage originators are up, fairly considerably. And then our wholesale business is seeing a good amount of activity as well. So, it’s a mix of kind of the channels, if you will, in the residential area. And the consumer I think consumer has been flat and continues to be on the flattish side and it tends to build [ph] as we build households and it tends to pull back when refi is more active and people tend to roll their home equities outstanding into fixed rate longer terms. I just want to correct, I said $20 million to $40 million a quarter, and it’s monthly.

[David Rosato:]

The $20 million to $40 million of multifamily write-off is per month.

[Collyn Gilbert:]

Okay. That’s helpful. That’s good. Thank you. Thank you, Jack. And then, David on the margin, so two basis points benefit this quarter, because of the calendar. I mean, do -- is it sort of fair to assume that if we back that out, then maybe what the trend we see kind of moving into the fourth quarter, lower securities yields, perhaps, and you got the pick up as you mentioned from LIBOR that we could see some NIM compression coming in the fourth quarter or do you think we’ve kind of had a low point and maybe we stabilize here.

[David Rosato:]

If you notice, you’ve seen the craze of NIM compression slowed dramatically. And then, this quarter actually went up a basis point. It's too early to call a bottom in there now. There still is a small and shrinking differential between the existing loan portfolio and you guys have -- and you’re correct. You saw that an 8 basis point decline quarter-over-quarter and security portfolio yield. So, the way I would answer the question is, why are we buying guidance on the margin with 275 to 285 in July and it looks like we are on track to the right there in the middle of that guidance.

[Collyn Gilbert:]

Okay.

[David Rosato:]

Plus or minus.

[Collyn Gilbert:]

Okay. That’s helpful. And then just the other income line for you guys is just really good building quite a bit. What’s in that line and is there anything in particular that’s causing that build?

[Jack Barnes:]

Well, we -- I did call out that $2 million increase is driven by a applied private investment partners. So there is a little bit of that in that line, that was -- little over a #3 million in the quarter. There is a lot of little things that go through there, credit card, fees is probably the one of the larger drivers that’s been growing, we talked about that before where, a few quarters ago we entered an agreement with the long and we’re getting a lot of traction in our customer base that’s often that are credit card offering that we now had, that was almost non-existent over the last couple of years. That’s the primary driver, but the rest of the stuff are fees around some retail, home equity feedlots, accounts, things like -- things of that nature.

[Collyn Gilbert:]

Okay. Okay that’s helpful. And then just one final question on Gerstein Fisher merger that’s coming in early next month. Should we be -- is that going to have a material impact on the model at all, as we think about the influence on fees and expenses, if that comes in?

[Jack Barnes:]

Well, what we said when we announced that deal in Q&A is from a -- [indiscernible] annual run rate of revenue is about $17 million. We also said that it was modestly accretive to 2017.

[Collyn Gilbert:]

Okay. All right. Thank you very much.

[Jack Barnes:]

You’re welcome.

[Operator:]

And our next question comes from the line of Casey Haire with Jefferies. Your line is now open.

[Travis Potts:]

Hey, good afternoon. This is actually Travis Potts on for Casey. I just had one follow-up question on loan yields. You had a nice spike in C&I. If I assume like most of that $1 million LIBOR impact was in that C&I and accounts for I think about half of that increase, can you just talk to what else is kind of driving those loan yields higher, so any kind of lumpy fees this quarter or anything?

[Jack Barnes:]

Well, its spreads. It’s a combination of LIBOR which we called out and then spreads. That entire portfolio is not one month LIBOR base. We got a little better spread performance during the quarter.

[Travis Potts:]

All right. Thank you, guys.

[Jack Barnes:]

You’re welcome.

[Operator:]

And our last question comes from the line of Matthew Breese with Piper Jaffray. Your line is now open.

[Matthew Breese:]

Good evening guys.

[Jack Barnes:]

Hi, Matt.

[Matthew Breese:]

Just on the Suffolk Bancorp deal, just curious what are some of the challenges you’re facing getting that deal closed on time and is it normal regulatory delays or does it have anything to do with incrementally putting the balance sheet closer to $50 billion?

[Jack Barnes:]

I don’t believe it has anything to do with that. It really is the normal process that you probably are aware the process is an extended on a post crisis and I think it's generally getting slightly better treat more as of late, but what we see is transactions taking six to nine months and we're in that timeframe. We are certainly hopeful to be on the shorter end, but we as I said, it's nothing in our control. So now to get to the nature of your question, I don't think you should view it as taking longer than the normal.

[Matthew Breese:]

Okay, understood. And then going back to your comment around maintaining the dividend as you cross 50, could we talk about and provide a little more color around that? I mean, is that to imply that you will cross with the dividend or potentially consider other strategic alternatives like a sale of the bank if you can't keep it?

[Jack Barnes:]

No, I wouldn’t over complicate that. We have gotten regulatory support to maintain our dividends and our approach to dividends over an extended period of time, our dividend payout ratio continues to improve, if you will, to get lower over time. And as we move through -- go forward the next few years, we expect to continue to improve profitability, to improve that ratio, and we also expect that the regulatory view of levels of dividend payout ratio for all banks our size and banks in that 50 will evolve and it has been evolving. So trying to be clear that we believe that we will continue to reduce that payout ratio and we believe that we in our dialogue with regulators that we will get support. We obviously can't predict exactly where the payout ratio will be or exactly what the regulatory view will be, but we’ve got very good communication and relationships with our regulators and we will approach those dialogues, I should say we have them regularly and we will continue to have them regularly. That issue will get discussed.

[Matthew Breese:]

Understood. Thank you for that commentary. That’s all I had. Thank you.

[Operator:]

And ladies and gentlemen, since there are no further questions in the queue, I would now like to turn the call back over to Mr. Hersom for closing remarks.

[Andrew Hersom:]

Thank you again for joining us today. We appreciate your interest in People's United. If you’ve any additional questions, please feel free to contact me at 203-338-4581. Have a great night.

[Operator:]

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Good day.