S&T Bancorp, Inc.
Q3 2008 Earnings Call Transcript

Published: 23 Oct 2008

[Operator:]

Greetings, ladies and gentlemen and welcome to the S&T Bancorp third quarter earnings conference call. At this time, all participants in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Robert E. Rout, Senior Executive Vice President, Chief Administrative Officer, and Chief Financial Officer of S&T. Thank you. You may begin.

[Robert Rout:]

Good afternoon, everyone and thank you for participating in the conference call. Before beginning I want to take time to refer you to our statement on forward-looking statements and risk factors in the third slide of our webcast slide presentation. This statement provides the cautionary language required by the SEC for forward-looking statements that may be included with the presentation. Listeners are also reminded that a copy of the third quarter earnings release can be obtained at our investor relations Web site at www.s&tbancorp.com. Set of financial highlight slides is included with the webcast that support what we are about to discuss, but we don't plan to review the slides in detail, but would be more than happy to respond to any questions concerning them or any other aspect of our financial performance. I'd like to introduce Todd Brice, S&T's President and Chief Executive Officer who will provide an overview of S&T's third quarter results.

[Todd Brice:]

Thank you, Bob and good afternoon, everybody. As you can see from our earnings release and financial slides accompanying this webcast we had a mixed quarter. We did have outstanding growth in our core lines of business and that was somewhat masked by increased provision expense for three commercial credits that were placed on nonperforming status. Net income for the quarter was flat to last year with earnings per share of $0.57 represent a 10% decrease year-over-year. When you compare the two quarters it's important to keep in mind that we currently have 2.8 million more shares that were issued as a partial payment for the Irwin Bank transaction. And also, we had a nonrecurring benefit of about $0.03 per share in last year's third quarter related to an accounting change in our deferred compensation plan. We do continue to see tremendous growth opportunities in our markets. Our commercial loan volume is running at a record pace along with solid performances in our retail side of our business. The increase is attributed to several factors. I think most predominantly the relatively stable economy of Western Pennsylvania has not experienced a devaluation in real estate that other markets are dealing with. And really, credit issues are impacting our competitors in our marketplace in a very tight securitization market are leading to increased lending opportunities. And in addition to increased volumes, we're taking advantage of market conditions to increase loan spreads as well as structured transactions on more favorable terms. We believe that we are uniquely positioned with the depth of our lending staff to take advantage of these opportunities. While we're experiencing excellent growth in our DDA accounts, I think they're up about 13% year-to-date, our overall deposits have contracted somewhat. We talked about this last quarter. Some of it's been by design since deposit pricing has been a little irrational in our market. Some institutions have been offering higher rates in an attempt to shore up liquidity. We think our liquidity has been made even stronger by the Irwin Bank acquisition and has provided plenty of funding for our loan growth. But as that loan growth continues to grow, we're probably going to be looking at becoming a little bit more aggressive on the deposit side of our business. I would also like to take this opportunity to discuss credit quality issues. As you know, our commercial loan portfolio of $2.6 billion with the portfolio of that size, we always have a handful of relationships that are experiencing economic stress at any given time and certainly this is a period of economic stress for many businesses throughout the country. This quarter we did place three loan relationships on non-performing status. The first is a group of apartment complexes in Western Pennsylvania that have an outstanding balance of $15.4 million. The borrowers experienced cash flow issues due to difficulties really in some other real estate investments that he made that we did not finance. And due to this reduction of cash flows, maintenance was deferred on our properties and we have established a $2.6 million specific reserve on the loans in the event that our borrower does not complete the necessary repairs to the property. I do want to mention, however, that they do have a funding mechanism in place but it remains to be seen if they can execute on their plan to rehabilitate the property. One of the other large credits is an $8.8 million condominium construction project in Long Island, New York. This is with a customer that we've been doing business with for over 15 years. There were numerous cost overruns and now that's sluggish rather than its real estate market in the region, really has prompted us to establish a $1.8 million specific reserve to bring the value in line with current market conditions. The third loan is a $1.8 million project in the food service industry in central Pennsylvania. The business filed for bankruptcy and we have established a $1.1 million specific reserve. We typically try to resolve troubled loans fairly quickly and aggressively, but these three loans have fairly complex workout projects and we know with the market we're dealing with these days it's just going to take a little bit longer. So therefore we can expect to be dealing with these credits for at least the next couple of quarters. I also want to mention that with our increased loan volume this quarter of approximately $100 million, that has impacted our provision as well and that attributed about $1 million to our additional provision expense this quarter. In the past gains from our equity holdings have been a contributor to our earnings. These gains will be limited or non-existent going forward since we all know what's been happening in the equities market and particularly bank stocks which comprised the bulk of that portfolio. This quarter we were forced to take a $2.5 million impairment charge related to one of our holdings in that portfolio. The charge was offset somewhat by gains that we were able to take. But we do intend to wind down that portfolio, except for the strategic holdings where we do have potential strategic merger interests. We've got to make our merger with IBT on June 6 and I could not be more pleased with the conversion and the integration of both organizations. We feel that this has been the smoothest conversion in our history and we're very excited about our prospects going forward. We've been able to achieve or exceed most of the cost savings that we've been under our original pro forma, and the revenue synergies are now starting to kick in and their footprint really fits right into our strategic direction so really excited about that opportunity. In our fee revenue areas such as retail and card related activities, wealth management, insurance and lending are putting in solid performances despite a difficult market for everyone. And again, our market comparisons to prior periods are affected by that non-recurring benefit to our deferred compensation plan last year. We also believe that our operating expenses are running at an efficient level, especially with the synergies that we've achieved with the IBT acquisition. I think we'll all agree that the banking industry is undergoing the most profound restructuring since the great depression. We continue to evaluate all the new laws and regulations coming out of Washington on almost a daily basis and really what that means strategically for a bank like us. I think the most pressing time frame wise is participation in the treasury's capital purchase program. I think if you need the capital, it is a pretty easy decision. But for conservative banks like us that have always tried to be well capitalized it's a much more difficult evaluation. I think having excess capital could make some banks get a little bit out of their comfort zone, deploy that capital in order to minimize the dilutive effects. Really at the current time we're leaning towards not participating. However, we will be performing a complete analysis over the next few weeks on the pros and cons of participating in the program and really what that means for us. We will certainly inform folks if we decide to move in a different direction. I think in any case we can all agree that the playing field for all banks has changed almost overnight. The area of regulatory risk has taken on a whole new level of intensity. We still believe if we continue to stick with our fundamental banking principles, strong underwriting, building consumer confidence, and building customer relations through exceptional service and maintaining our strategic focus, we will continue to prosper well. As I mentioned in recent conference calls, we long ago discontinued the practice of providing specific earnings guidance each quarter. With that in mind, Bob and I would be more than happy to entertain any specific questions about our past performance or on the future outlook for our business in general. So with that I will turn it back to the operator.

[Operator:]

Thank you. (Operator instructions) The first question is from Matt Schultheis with Boenning & Scattergood. Please go ahead with the question.

[Matt Schultheis:]

Good afternoon, gentlemen.

[Robert Rout:]

Hi, Matt.

[Matt Schultheis:]

I know you went over the loans that you had to deal with. You had the $8.8 million condo. What was the first one you talked about? I kind of missed that.

[Robert Rout:]

That was an apartment project, Matt, in Western Pennsylvania. The borrower invested in some other properties out of market which we did not finance, but there have been a severe drag on cash flow and took some money out of this project to put it into some of the other projects and there is some deferred maintenance that needs to be done. He does have a funding mechanism in place, but we just took a conservative approach if he can't execute on his plan, we are going to have to spend some money to get the apartments up to speed.

[Matt Schultheis:]

Okay. What was the dollar figure of that?

[Robert Rout:]

15

[Todd Brice:]

$15.4 million outstanding and $2.6 million specific reserve.

[Matt Schultheis:]

Okay. Aside from the one in New York, do you see any problems with anything else out of market?

[Robert Rout:]

We have a couple of lot development projects in Florida that probably are just going to take some time to work through, obviously with that market down there. We feel we have some pretty good guarantors in place that have some pretty solid projects in Western Pennsylvania and we were just having discussions with them last week and they put a lot of their equity into it already and they're probably going to put the face with putting some more in and they have the wherewithal to do it.

[Matt Schultheis:]

Okay. Are they cross collateralized with their Western PA properties?

[Robert Rout:]

Were in the process of some of that, Matt.

[Matt Schultheis:]

Okay. What is your total exposure to out of market?

[Robert Rout:]

Tony Kallsen is with us, he is our Chief Credit Officer.

[Tony Kallsen:]

We have about $318 million in out of state or what we consider out of state transactions. That represents about 18% of our commercial real estate portfolio.

[Matt Schultheis:]

Okay.

[Todd Brice:]

I would point out as well, Matt, that only around 7% of that is in one to four family lot developments. So most of – the profile of what we do when we're looking at out of state transactions first it's with customers that we have a track record with, and second, the majority of the exposure is in either apartments or good development.

[Robert Rout:]

Or owner occupied too. We have some fair amount of owner occupied as well.

[Todd Brice:]

And then it's split up between a number of different states too, Matt. There is probably I think collectively –

[Matt Schultheis:]

Are you there?

[Robert Rout:]

We are trying to – I am just trying to –

[Matt Schultheis:]

There wasn't even static.

[Tony Kallsen:]

Probably about 20 some states we're in. That is pretty disbursed.

[Matt Schultheis:]

Okay. I notice your press release did not discuss 90 days or I may have missed it, 90 days past due or 30 to 89, can you comment on either of those or both of those?

[Robert Rout:]

They would have been attached to the spreadsheet that we provided, Matt, with the press release.

[Matt Schultheis:]

Okay.

[Robert Rout:]

But I can give you those numbers here very quickly. At the end of the third quarter, our non-performing loans to total loans was 0.92%. And our non-performing loans or non-performing assets to total assets –

[Matt Schultheis:]

I can see non-performing assets, but how about 90 days past due?

[Tony Kallsen:]

It is still accruing.

[Matt Schultheis:]

That's right. I forgot you guys did that. How about 30 to 89?

[Robert Rout:]

Don't have that handy here, Matt.

[Todd Brice:]

We have seen some deterioration, we typically don't publish that. We have seen some deterioration from prior months. There are some things slowing down a little bit.

[Robert Rout:]

Most of the increases in both those numbers are a result of the three non-performing loans –

[Matt Schultheis:]

Sure.

[Robert Rout:]

– we talked about.

[Matt Schultheis:]

Any idea how long it might take to clean those three up? I mean, I know you guys are fast, but –

[Tony Kallsen:]

The problem is – this is Tony Kallsen. The problem is that the strategies are based on selling real estate in this market. So whether we sell it or whether they sell it, it is the same basic strategy.

[Matt Schultheis:]

Sure.

[Tony Kallsen:]

We have already gone through the process of trying to identify other assets, and getting lien positions on those other assets. So and really, it's going to take some time to work through those because we are talking about selling real estate.

[Matt Schultheis:]

Okay. That's it for me. Thank you very much.

[Robert Rout:]

Thanks, Matt.

[Operator:]

The next question is from David Darst with FTN Midwest. Please go ahead with your question.

[David Darst:]

Good afternoon.

[Todd Brice:]

Hi, David.

[Robert Rout:]

Hi, David.

[David Darst:]

Bob, given the recent rate cuts, could you give us kind of an update on your balance sheet position, and whether your asset sensitive or liability sensitive?

[Tony Kallsen:]

Yes, we continue to remain liability sensitive, and certainly, we will benefit slightly, we are fairly well balanced. There will be a slight benefit with the rate cuts. But as you know, if they go down too much more, then you start hitting floors on core deposits. The other mitigating issue as Todd mentioned in his introductory comments, with this loan growth, we will need to be a little more aggressive going forward in attracting deposits than what we've had. That sort of unique liquidity position that we had over the past couple quarters with the acquisition of Irwin is slowly winding down, again, as we are seeing all these good loan opportunities.

[Todd Brice:]

With that being said though I mean, we are able – on the asset side, we are able to generate probably spreads of 1.0 point to 1.5 points higher, than where we were at this point last year.

[Tony Kallsen:]

Yes, the pricing on commercial loans, and retail loans for that matter, have gone our way here over the last quarter or two, and it is not getting in the way.

[David Darst:]

Are you comfortable growing the loan book at this pace for a couple of quarters, or do you feel like you are going to slow it down?

[Tony Kallsen:]

We're being selective. But I can tell you, there is an awful lot of business out there to be had.

[Robert Rout:]

I will say, last quarter there was a little bit of a temporary spike that we will probably see a little bit of it this quarter as well. But we had about $70 million of product in the lower floater bonds, that were backed by letters of credit that we issued, and with the commercial paper market drying up, they weren't able to remarket those, so we got those put back to us, and I think last quarter it amounted to about $25 million, there was probably a similar amount in early October that we funded as well.

[David Darst:]

Meaning an additional, or was that a roll?

[Robert Rout:]

Additional.

[David Darst:]

Okay. And then how about as far as the disruption of markets, have you been able to pick up any new lenders, and where do you go with your commercial lenders in the Irwin market?

[Todd Brice:]

I mean we are kind of just letting them continue to do their job. We try to stay out of their way down in the Irwin markets, and they have a pretty good following down there, and we are able to bring some increased capacity to them, and really just support them a little bit, and get them acclimated a little bit on how we do business. There were a lot of similarities. As far as any new lenders, I don't think we picked any up. I'm sorry, we did, we brought one in one of our northern markets. And again, if you find the right person, we would consider bringing them on, but don't have a help wanted sign hanging out on the door that we are looking for people. We look for the quality people.

[David Darst:]

Okay. Thanks.

[Todd Brice:]

Thanks, David.

[Operator:]

The next question is from Collyn Gilbert with Stifel Nicolaus. Please go ahead with the question.

[Collyn Gilbert:]

Thanks, good morning, guys, or afternoon, evening, whatever it might be. Sorry. Just a question following up to some of Matt's comments on the out of market. Do you have the delinquency and charge-off trends or metrics of the out-of-market portfolio?

[Tony Kallsen:]

We don't – this is Tony Kallsen. We don't track those separately. I can tell you from a charge-off perspective, I am not sure we have taken a charge on anything out of state at this point.

[Robert Rout:]

There has been a couple years, yes. And the only problem one that we have currently is the condominium units up in Long Island. Everything else is running current.

[Collyn Gilbert:]

Okay. And then in terms of your exposure on the commercial real estate side to retail related projects, what is the exposure there, and what types of retail do you guys have relationships with, what types of retail buyers?

[Robert Rout:]

One of the things I will refer you to, Collyn, is our slide show. We did present a slide that segregates us by type of loans for commercial real estate. And if you just give me a second here, I will refer to it. Our largest component – total commercial real estate portfolio is about $1.8 billion. 16% of that would be retail and strip malls, $250 million is residential rental properties, apartments, et cetera. $244 million or 14% would be office buildings. And then from there on, you just get on below in single digits, hotels, manufacturing, residential development. Real estate residential development is about $106 million, or 6% of that portfolio.

[Collyn Gilbert:]

Okay.

[Robert Rout:]

We have some business colleges. We have some juvenile prisons. The biggest component is the retail and strip mall and residential apartments.

[Collyn Gilbert:]

Okay. And are you concerned at all, or maybe what segments of the CRE portfolio, outside of resi development, are you kind of looking at most closely now?

[Todd Brice:]

I would say you are right on point, Collyn. I would say the retail is one that is just kind of an unknown on how the tenants are going to be impacted going forward in this economic downturn. The other thing that's going to concern me is going forward, when we kind of – the one thing I will say, we have stuck to more the traditional underwriting over the years, where we required guarantees and down payment, equity, 20%, 25% equity. And we amortized them out over 15 or 20 years. We weren't doing any of that 10-year interest only strips, a lot of these guys were placing on that stuff. When those start to reprice, or balloon, there is going to be a big void in the marketplace. It's just tough for them to go out and find financing on those larger projects right now. There maybe some – people are either going to have to put more equity into them, or there may be kind of a glut on the market. So I mean that's definitely an area that we are paying attention to right now.

[Robert Rout:]

I think we are comfortable with our underwriting, but there is no doubt that the commercial real estate segment of the country is going to undergo some softness, as leases renew and tenants leave. But we think we're in a good position for that as compared to others.

[Todd Brice:]

To-date, we haven't seen any discernible decline in that particular product yet.

[Collyn Gilbert:]

Okay. That's helpful. Thank you.

[Robert Rout:]

You're welcome, Collyn.

[Operator:]

The next question is from Rick Weiss with Janney Montgomery Scott. Please go ahead with your question.

[Rick Weiss:]

Hey, guys.

[Robert Rout:]

Hi, Rick.

[Rick Weiss:]

I was wondering when you are talking about picking up commercial loan opportunities, would that be commercial business, or commercial real estate? And what is your typical loan size that you are going to see in C&I?

[Todd Brice:]

On the C&I is probably in that couple, $3 million range. And you kind of put a limit to any one project in the $10 million range, at $10 million, and then we have in-house limit of like 22, and then we do have some accounts above that, but they are cut up into four or five or six different projects, maybe $6 million to $7 million chunks.

[Rick Weiss:]

Okay. And Irwin did not exceed that?

[Todd Brice:]

No.

[Rick Weiss:]

And trying to make sense out of the loan loss allowance. The provision has been jumping around, to say the least, the last couple of quarters.

[Tony Kallsen:]

Right.

[Rick Weiss:]

And I was wondering kind of what's, I think the merger probably influenced a lot of that, but kind of like, I know you don't give guidance, but just want to ask anyway. What sort of run rate would you think is fair?

[Robert Rout:]

As you know, we are all subject to the SEC's guidelines on how that loan loss reserve is calculated, and most that's done on retrospective type data. And so you pretty much have to look at the portfolio as it is in a particular quarter, and that becomes the basis for your loan loss going forward. That's the accounting perspective. Now from the banking perspective, as we're all in the business, we like to take a prospective look, and sometimes the accounting rules clashes with that type of perspective. So as far as run rate goes, Rick, what we have been telling our folks is if you look back over history, the losses in our portfolio have ranged between 25 basis points and 35 basis points. Sometimes it's as low as 0.01, sometimes it's been as high in the high 30s or 40s. But that's what we usually tell folks, take a longer-term perspective. 25 basis points to 35 basis points of losses, that's pretty much the benchmark for our provision expense, plus some additional for whatever growth we are putting on the books. Now with that said, we certainly are entering into different times. We just don't know what the next couple of quarters are going to bring.

[Rick Weiss:]

Okay. Alright. So I don't think it's going to be jumping from like a negative, was a $118,000 second to $6 million, and back to negative. That was just kind of weird. Was that because of the merger?

[Robert Rout:]

No, I think some of it was. But some of it's also is our credit quality at the second quarter was in pretty good shape, and that became the basis for our loan loss reserve. Come the third quarter, you're seeing three troubled commercial loans go non-performing. We put aside $5.4 million of specific reserves, just for those three loans.

[Rick Weiss:]

Okay.

[Robert Rout:]

And actually, without those, our loan loss provision would have been around a $1 million this quarter.

[Tony Kallsen:]

Rick, it's Tony Kallsen. We have some unusual events take place in Q2. One was an improvement in credit metrics, and that feeds into that model. But the other was the release of a lot of specific reserves, on some problem accounts that we resolved in June, so we had a release of a lot of that in Q2.

[Robert Rout:]

Yes, good point.

[Todd Brice:]

That's a good point. I mean with the apartments, the guy still making payments and working on getting these things rehab, and getting them released up, and the guy in New York has a plan in place to market some of these in a little bit different way. So we are still actively managing these accounts, and hopefully, we will have a positive resolution at the end of the day. But we deal with just where market conditions are today. This is the prudent approach to take.

[Tony Kallsen:]

As we see that loan portfolio today, we believe that loan loss reserve is adequate to handle future losses.

[Rick Weiss:]

Okay. No, I am not really trying to bust your chops. I am trying to figure out like what to do for my own model.

[Todd Brice:]

No, it's a legitimate question.

[Robert Rout:]

I was actually thinking, Rick, if you could figure out how to do a LLL, we would hire you.

[Rick Weiss:]

I wish it was the old days, where you could just say, I am targeting a loan loss reserve of 1.3, or whatever it is, and go from there. Also, I guess with the Irwin merger, did you guys change the name, like to S&T on signage and things like that?

[Todd Brice:]

Yes, fully integrated.

[Rick Weiss:]

Okay. Got it. Thank you very much.

[Todd Brice:]

Okay, Rick.

[Robert Rout:]

Okay, Rick.

[Operator:]

(Operator instructions). Next question is from Andy Stapp with B. Riley & Co. Please go ahead with your question.

[Andy Stapp:]

Hi, guys.

[Todd Brice:]

Hi, Andy.

[Andy Stapp:]

I came a little late on the call and missed some of the detail on these three credits, which I can look at the transcript to get that. But just trying to get a feel, I mean, you had you are commercial lenders, so you sometime have just lumpiness, when a couple credits go into non-accrual status. Just trying to get a feel how much was related to the economy, and how much was related to just the lumpiness?

[Robert Rout:]

The question on everybody's mind is when you see problem credits in the banks is it one-off or customer specific or is it something happening with the general economy.

[Andy Stapp:]

Especially, it look like your NPAs were way down outside of these three credits plus like you mentioned the provision would have been fairly nominal outside of these.

[Robert Rout:]

I think the answer, I mean, we said it is company specific that these problem loans, or is there something more related to systemic issues going on in the economy, and I think the answer is yes, it's both of those.

[Andy Stapp:]

Okay. That's what I figured.

[Robert Rout:]

One of those is the apartment deal, the fellow made some out of state real estate investments.

[Andy Stapp:]

Okay.

[Tony Kallsen:]

We did not finance, but it affected his level cash flows, and then the other one, which is the condominium units in Long Island, yes, the guy that we have been doing business with for 15 years, his project is definitely affected by what's happening in the economy. Especially with job losses in the New York region, and bonuses aren't going to be very high where people are going to be looking for new housing. [inaudible].

[Robert Rout:]

I think it's both.

[Todd Brice:]

Andy, if I could just make one important distinction too. The $15 million apartment loan is not in the non-performing category right now. It is still performing. It's just impaired which is why –

[Robert Rout:]

It's non-performing –

[Andy Stapp:]

Okay. I thought you placed all three on non-accrual status.

[Tony Kallsen:]

Todd talked about specific reserves that were placed on specific projects. Let me make this clear. The way our model works is we look at specific analysis, or we look at reserve analysis on accounts that are impaired for non-performing. So they could be accrual accounts, and this large apartment project that we are talking about is about $15.4 million in outstanding, that we do have a specific reserve on. That is accrual at this point.

[Andy Stapp:]

Okay. I must have misread the press release.

[Tony Kallsen:]

Andy, your question on the economic. I mean I would attribute a large part of what happened with the apartment project on management, and I would attribute a large part of what happened with the condo project [inaudible] as economic.

[Andy Stapp:]

Okay.

[Todd Brice:]

Andy, you are right, that there is a misstatement in the press release, those three loans weren't all placed on non-performing status. One is just impaired.

[Andy Stapp:]

Okay. So two of them were, but the apartment complex was not?

[Todd Brice:]

That's correct.

[Andy Stapp:]

Okay. And you mentioned you are going to have to go at some point more aggressively after deposits. Just wondering if you could tell me, tell us what some of the deposit rates going out there are especially with some of these, your more distressed competitors who need funding. And some color to your best ability, as to how aggressively I mean, would you have to match that funding you think to get the funds you need, or given that you don't have the issues they have, you think, how much do you think you could discount, relative to these competitors?

[Todd Brice:]

We are running a special right now, 3.70 for six months, and we are getting some pretty good action on it right now, and others are a little bit higher. Maybe a half point to even 75 basis points higher. I think you are right, Andy. I mean the first question out of the customers mouth is not today what's your rate, what's your financial stability, we are able to paint a pretty good picture for people looking to make a change.

[Andy Stapp:]

Okay. And is my understanding correct, you don't participate in national shared credits?

[Todd Brice:]

No. I mean Andy, we probably have two or three, but I will tell you that the credits that we've shared in are within our region, and with people that we have other relationships with.

[Andy Stapp:]

Okay.

[Todd Brice:]

And there are a couple of real estate projects that we got involved with in the Pittsburg marketplace that we're involved four or five banks. As a practice, we don't go on the shared national type credits.

[Andy Stapp:]

Okay. That's it from me. Thanks.

[Robert Rout:]

Thank you, Andy.

[Todd Brice:]

Okay.

[Operator:]

There are no further questions in queue. I would like to turn the call back over to management for closing remarks.

[Todd Brice:]

Well, thank you for participating in today's conference call, everybody, and Bob and Tony and I appreciate the opportunity to discuss this quarter's results, and we look forward to hearing from all of you at our next conference call. Thank you.

[Operator:]

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.