First Bank

Thank you for standing by. My name is Ian, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Bank Earnings Conference Call, Third Quarter 2024. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. I will now turn the call over to Patrick Ryan, President and CEO. You may begin your conference.

Thank you. I'd like to welcome everyone today to First Bank's Third Quarter 2024 Earnings Call. I am joined by Andrew Hipschman, our Chief Financial Officer, Darlene Gillespie, our Chief Retail Banking Officer, and Peter Cahill, our Chief Lending Officer. Before we begin, however, Andrew will read the Safe Harbor Statement.

Thanks, Pat. The following discussion may contain forward-looking statements concerning the financial condition, results of operations, and business of First Bank. We caution that such statements are subject to a number of uncertainties and actual results could differ materially, and therefore you should not place undue reliance on any forward-looking statements we make. We may not update any forward-looking statements we make today for future events or developments. Information about risks and uncertainties are described under Item 1A, Risk Factors, in our annual report on Form 10K for the year ended December 31st, 2023, filed with the FDIC. Pat, back to you.

Thanks, Andrew. I'll kick it off with some high-level summary comments, and then the team will get into a little more details. Overall, I was happy to see return of solid loan and deposit growth during the quarter. After a couple of flattish quarters in the first half of the year, based on a little bit of a slowdown in activity and some elevated paydowns, it was nice to see some robust loan and deposit growth in the quarter, so we felt very good about that. Overall, loans grew about 90 million. Unfortunately, a large portion of that came towards the back half of September, leading to a relatively small increase in the average balance is outstanding. So from a quarterly results perspective, not ideal, since we didn't get a chance to earn much interest income on those loans, and obviously had to book a full provision, but at the end of the day, we think that that will serve us well heading into the fourth quarter and next year. We also saw deposits grow 82 million, which was a very nice quarter, and 19 of that was coming in the non-interest bearing category, which was great to see. We did have some margin compression during the quarter. Andrew will get into some of the reasons about why that happened. Obviously, there was still pressure on the deposit funding side. We did take some significant actions in September when the Fed made their move, and we expect we'll be able to help keep the margin stable as we move forward. We continue to find incremental opportunities to fine tune our balance sheet. We sold about 12 million in low-yielding investment securities that had about a .41% weighted average rate. We did that during the quarter when the bond market rallied, and we canceled 25 million in lower-yielding BOLI assets and purchased 20 million in new policies with a net pickup of about .5% on those additional BOLI policies, which will certainly help as we move forward. We estimate a normalized net income during the quarter of about 9.7 million. We calculate that by smoothing out some of the unusual items during the quarter, whether that be one-time, non-recurring revenue expense items or certain line items that may have been unusually high or low compared to what we normally see, and we try to take a look at that, quote-unquote, normalized number, just to get a sense for the run rate going forward. That 9.7 million estimate was basically in line, maybe a little bit lower than where we were in the first and the second quarters doing the same analysis. So, continuation of continued good performance on kind of a core normalized basis, and we think we're well-positioned for good results moving forward. Importantly, the income from the strong growth in Q3, together with the balance sheet enhancements, should help position us for a good Q4 and for a strong start to next year. 56 million of the loan growth, or about 62%, came from our C&I and owner-occupied segments, which are two areas of emphasis for us, so that was nice to see, and the credit quality remained strong across the entire portfolio with all of our segments, including commercial real estate performing well. Last but not least, tangible book value grew significantly, 38 cents during the quarter, or about 3% quarter over quarter. In summary, I think we're doing the right thing to create value in this environment. We're generating quality earnings and growing book value. We're optimizing our portfolios and driving growth in deposits and C&I lending. Future earnings profile looks strong, and we expect a stable margin and growth, and maturation of some of our new specialized lending businesses will help drive and improve profitability as we move forward. So now I'd like to turn it over to Andrew to get into a little more detail on the financial results for the quarter. Andrew.

Thanks, Pat. For the three months ended September 30th, 2024, we recorded net income of 8.2 million, or 32 cents per diluted share, and a 88 basis point return on average assets. Recall that we closed the Malvern acquisition in July of last year, so that is a big driver of the year over year comparisons for the period. We had an outstanding quarter for growth, and our quarterly metrics were slightly obscured by some noisy items. The real highlight of the quarter was the growth of our loan and deposit portfolios. Loans were up nearly 12% annualized, and deposits up 11% annualized from the second quarter. Loan growth was broad-based, but the growth occurred late in the quarter, with the effect of raising average loan balances only 12.2 million, while -to-point they were up 89.5 million. With such a high level of late quarter growth, our credit loss expense outpaced the loan interest earned on the new loans originated during the quarter. The 1.6 million credit loss expense for the quarter was primarily related to provision build related to this growth, as asset quality remained strong. On the other hand, net interest income actually declined by 446,000 due to some margin compression, which was due to higher interest income being outpaced by increased deposit costs and higher average borrowings. On the deposit side, balances were up total 82.4 million, with growth occurring across all categories. Our net interest margin declined to .49% in the third quarter compared to .62% in the prior quarter. Interest-bearing deposit costs continue to increase, rising six basis points from Q2, as we saw some expected upward CD repricing and the competitive environment was still difficult. We also saw average loan yields decline by eight basis points compared to the link prior quarter, due to a combination of approximately 200,000 in lower acquisition accounting accretion, approximately 60,000 in lower prepayment penalties on loans, and slightly lower average loan rates, primarily due to the current market rate environment. Our margin was also impacted by the higher level of on-balance sheet liquidity maintained during the quarter. Looking ahead, interest income will be negatively impacted by those late September Fed rate cut. However, we still have loans that were originated in a lower rate environment that will be repricing higher. We also successfully moved rates lower on a significant portion of our deposit base after the recent Fed cut. We continue to manage a well-balanced asset and liability position, which we expect will lead to a relatively stable margin with opportunities for improvement, regardless of how quickly the Fed reduces rates. As I mentioned, our asset quality continues to be strong. NPAs, the total assets, declined from 56 basis points to 47, and our allowance for credit losses to total loans remain steady at 1.21%. Including general acquisition accounting credit marks that are not included in the allowance, our ratio increases to 1.47%. As we continue our ongoing work to prioritize our balance sheet or optimize our balance sheet, we executed sales of certain lower-yielding investment securities. During the third quarter, we sold approximately 11.7 million in additional investment securities, resulting in a $555,000 net loss on the sale of investments. Another balance sheet optimization strategy that impacted income was the bully restructuring transaction we completed during the quarter. We recorded a one-time enhancement fee of approximately 1.1 million related to the restructuring, and on the flip side of this benefit was additional tax expense totaling approximately 1.2 million. Non-interest expenses were 18.6 million for the third quarter compared to 18 million in Q2 2024. The increase primarily reflects an increase of $533,000 in Oreo expense, which was primarily related to the write-down of an Oreo asset during the quarter. We continue to prioritize expense management and expect the core expense base to be relatively stable over the next several quarters. As I mentioned earlier, our tax rate was affected by a one-time basis by the bully restructuring. Without that impact, our effective tax rate would have been approximately 24% for the quarter. We anticipate that our effective tax rate going forward will be in the range of 24 to 25%. Stripping away some of these noisy factors, you see a very positive story for this quarter. We reported an efficiency ratio of around 58%, once again remaining below 60% for the 21st consecutive quarter. We also expanded our tangible book value per share, as Pat mentioned. We are very pleased with our business growth and the continued balance sheet repositioning we executed during the quarter, despite the short-term impact it had on earnings. We believe we are positioned to perform very well for the remainder of 2024 and beyond. At this time, I'll turn it over to Darlene Gillespie, our Chief Retail Banking Officer, for her remarks. Darlene, go ahead.

Sure, thanks. Thank you, Andrew, and good morning, everyone. As Pat and Andrew have mentioned, deposit growth was robust during the third quarter of this year. We attribute this to our team's outstanding ability to build and maintain deep customer relationships, as well as our very proactive efforts to manage deposit pricing in anticipation of the Fed's rate reduction in September. As mentioned, our total deposits were up approximately 82.4 million, or over 11% annualized, from the second quarter of 2024. And the expansion was across the board. -interest-bearing demand and interest-bearing demand showed tremendous growth in a very dynamic rate environment, up 19.3 million and 23.3 million, respectively, during the quarter. Money market and savings grew 36.3 million, and time deposits grew 3.6 million from the second quarter of 2024. The majority of this growth was in our commercial portfolio. Predominantly, all of the bank's -to-date deposit growth occurred during the third quarter as a result of onboarding some larger commercial relationships, which aligns with the quarter's loan growth. We have been working to strike the balance of achieving profitable pricing while also maintaining desirable customer relationships. And our third quarter outcome suggests our bankers are doing this skillfully and effectively. This comes even as we continue to let costlier and non-relationship funding leave the bank. The key words for us here is relationship, and that's our marching order. We continue to prioritize full banking relationships, and this approach has proven successful. While we started to move some rates lower earlier in the year in anticipation of the Fed rate cut, with the cut actually taking place in late September, it gave us the opportunity to move rates down in a more aggressive manner. We have not experienced any significant attrition to date, and we actually saw an increase in our deposit balances. Given the interest in high-yielding products throughout the year and our large growth and volume during the quarter, we're happy to see our overall total deposit costs only increase by four basis points from the second quarter. We continue to effectively manage our funding costs to support lowering this metric and maintaining a stable net interest margin. As I've mentioned in recent quarters, our branch strategy is aimed at supporting engagement in our current markets and opportunistic expansion in adjacent markets. We currently have 26 branches, and in Q4, we're completing a relocation from our Glen Mills, Pennsylvania location to Media of Pennsylvania. And we're excited about our new branch opening in Trenton, New Jersey. We will also be consolidating our two Flemington, New Jersey locations into one. Net, there is no change in the number of locations, but we are excited about the deposit and overall opportunities that will present itself by expanding into these markets. Lastly, I wanna mention we recently launched our online account opening platform as part of our digital banking initiative to support our deposit growth efforts. We continue to see an increased preference for digital banking, and we're excited about the momentum we have built in offering easy and convenient solutions for our customers. Overall, we are very pleased with the performance of our deposit portfolio this quarter and confident that our continued focus on customer service, competitive product offerings, and innovation will support sustained deposit growth into the next quarter and beyond. At this time, I'll turn it over to Peter Cahill, our Chief Lending Officer, for his remarks. Peter?

Thanks, Darlene. The lending area in Q3 had a quarter where our work over the past few quarters was a lot more evident. As you know, we've been focused on developing business where relationships are shared with our customers. That's where deposits and other ancillary business lies. Transaction business is something we're just not looking to do. As we've mentioned before, we are seeing more relationship business in commercial and industrial than elsewhere. Our regional teams are doing well, and the &I-related specialized business areas are also doing very well. Private equity banking, after a slower start than planned this year, has picked up steam significantly, and our asset-based lending area is on track to meet its goals for the year. All of this is not to say that we are no longer in the market for investor real estate relationships. We've always done a good bit of investor real estate lending and will continue to do so. Historically, slightly more than half of our lending business has been in that area. Investor real estate loans, as you know, tend to be more transactional as properties are bought and sold. Our focus on investor real estate has been with investors and developers who want to maintain a relationship with us over the long term. The earnings release details lending activities -to-date. Loan growth was essentially flat through the first six months, absent the sale of approximately 24 million in non-strategic investor real estate loans in Q2. In the third quarter, we converted our very strong loan pipeline into outstanding loans that resulted in growth for the quarter of almost $90 million. The schedules in the earnings release break down the loan portfolio into their various segments and show the changes from quarter to quarter. We saw growth in all key areas led by C&I, slash CREO and owner occupied, and including investor real estate, as well as residential and consumer. A positive factor in all this growth, as was pointed out by I think both Pat and Andrew, was that growth in C&I loans outpaced growth in investor real estate by a factor of two to one. Overall for Q3, we closed and funded new loans of 122 million and experienced loan payoffs of $43 million. Other factors impacting overall loan growth are borrowings and pay downs underlines of credit, as well as the amortization of term debt. Worth mentioning, I think, is that Q3 represented our largest quarter in terms of new loans funded, and our smallest quarter in terms of loan payoffs in over two years. I don't really have a specific reason for this happening other than the build of a strong and growing loan pipeline heading into Q3, coupled with experiencing, out of the ordinary levels of payoffs in recent quarters. The bottom line is a quarter to quarter results can be bumpy, but they should even out in the long run. C&I loans made up 70% of new loans funded over the first nine months of the year. This well exceeds what we've done in previous years, and is evidence, I think, that we're executing on our plan to go where the relationship business is. We always track the reasons that loans get paid off, and the number one reason through the first nine months of the year was that the asset underlying the loan was sold, kind of an out of control occurrence source. Very close second was where loans are refinanced out of the bank. And the good news is with some of these payoffs, that the majority, over 70%, have been invested real estate loans. The turnover in this segment helps us manage the makeup of the overall portfolio. In fact, there's a slide in the earnings supplement that reflects our level of invested real estate loans to capital. One can see an increase after the acquisition of Nowburn last September, but then decreasing since. Comment now on our loan pipeline. Our pipeline at the end of the third quarter stood at $276 million of probable fundings, down 19% from the June 30th level of $342 million. This was expected after the loan closings we had in Q3, most of which were at the very end of the quarter, as Andrew and Pat mentioned. Overall, I continue to be pleased with these results. We have an active calling effort, and we're seeing good diversification between the groups. If one breaks down the components of the pipeline at quarter end, D&I loans are 49% of the pipeline, investor real estate 48%, and consumer making up the balance of two or 3%. Looking at how this might impact the rest of the year, our level of projected loan funding for Q4 is solid, and in line with historic quarterly loan growth projections. While a lot of banks in the market are experiencing weak loan demand, we're seeing good activity in most areas. Regarding asset quality, I don't have anything to add to what's in the earnings release or what's already been mentioned. The portfolio continues to look good to me. Charge-offs from minimal, non-performing loans continue to decline, and delinquent loans continue to be very small. To wrap things up, there weren't any significant changes this quarter with our regional teams or specialty banking areas. They all continue to perform fairly well. This concludes my remarks about lending, and I'll turn things back now to Pat Ryan for some final comment.

Thank you, Peter, and thank you, Andrew and Darlene. At this point, we will open it up for the Q&A portion of the call.

At this time, I would like to remind everybody that in order to ask a question, please press star followed by the number one on your telephone keypad. Once again, that is star followed by the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Our first question comes from the line of Justin Crowley with Piper Sandler. Your line is open.

Hey, good morning, everyone. Wondering if you could talk through a little more of the commentary on a stable margin from here, and I guess to start with the lower loan yields in the quarter, just where new loan production is coming on that, and how that compares to what's rolling off.

Yeah, Justin, great question. Obviously, we're keeping a close eye on it. On the terms side, as I'm sure you know, a lot of that gets priced off of the middle of the curve, and so when things dipped for a while, we did see loans on the terms side moving closer to the mid, low sixes, which was down a fair bit from where we were a few months ago when we were getting yields in the sevens. That being said, our floating rate stuff, whether it's construction or prime-based lines of credit, still earning prime, prime plus half, prime plus one, and even with the Fed move, the yields on those are still in the eights or nines sometimes. So sometimes it's a little bit of the mix that can help drive the impact within any given quarter, but the big thing for overall margin stabilization is our commitment to continue to move deposit costs lower to make sure that we're at least matching if not doing better than what we're seeing on the asset side. We did take some steps during the quarter in terms of funding. Obviously you saw based on what happened with loan yields, we didn't quite keep pace, but we're keeping a close eye on it, and we're gonna continue to drive liability costs down based on what we need to do to preserve the margin. So hard to say specifically how it'll play out, but it's obviously a key goal of ours, and we're happy to say that what we're seeing in the market and what we're hearing from customers, and we have lowered rates is not necessarily excitement, but we're not getting a ton of pushback, and it doesn't appear to be anybody in the market who's really trying to continue to push growth with higher yield and deposit products. So I think we will have the opportunity to see things stabilize as we move forward.

Okay, and then on just levers to pull on the funding side. What is sort of, and I'm not sure if you're able to quantify it, but as far as data is on the way down, what's embedded in there, and is there any element of conservatism as far as that goes, and might there be opportunity to do better there to perhaps see or outperform a stable margin and see margin expansion as rates continue to come down?

Yeah, I mean, listen, there's certainly a scenario where that plays out, right? I don't think we're forecasting it, not because it can happen, but there's obviously a scenario where competitive pressures on the deposit side make it harder to keep it stable. So I think we figured the safest guidance was the middle of the road guidance. But yeah, and obviously the other piece of this is what's happening with the yield curve. There's been a lot of talk about the spread between two and tens, and the curve's not inverted anymore. Well, yeah, I guess at the two and the 10 level, but what about the zero to five, which is probably more meaningful for banks that do commercial lending like us. And so if we start to see some extension and some steepening within the lower part of the curve, that could obviously lead to some margin expansion, but I think it's a little early to predict that at this point. So we're gonna work towards stable and obviously take advantage of opportunities to make it move higher if we see them.

Okay, got it, that's helpful. And then just shifting gears a little, with the loan growth so backloaded, not sure if you think there was any correlation to the Fed having moved in borrowers making decisions based off that, however expected it was, but what are your expectations on how loan growth could trend over more so like the medium and longer term for the bank?

Yeah, I'll let Peter give you a little bit of data just in terms of the historical trends. I think it's worth mentioning that we honestly spend our time looking at the world in quarterly 90 day increments, but in our business, it's a little crazy to think about things in that short of time horizon. So the short answer to the first part of your question is loans close at the end because that's where they happen to close, right? So we tend to see very consistent performance over time in terms of loan production, but whether they close in the beginning of the quarter, the end of the quarter, the beginning of the year, the end of the year, there's just a lot of variability across the hundreds of conversations that we're having with our different borrowers and different projects that it's very rare that some outside factor would be the key driver. It just tends to be more the timing of the specific project or the renewal of the line or what have you. But Peter, why don't you jump in and maybe share with Justin some of the kind of the historical numbers you've looked at, not quarter to quarter per se, but how it kind of averages out over time.

Yeah, Justin, what Pat said is correct. I mean, deals end up in the pipeline for quarters on end. In fact, we just went through the end of September and kind of did a very modest scrub of the pipeline and said, hey, look, if you go through deals that have been in the pipeline for 360 days or more, there was only a handful of them, but it was amazing to me that most of them were still live deals. In fact, one was closing within two weeks. So they can get delayed as to the various stages they go through. But when you look back at the two, we're at 276 million of what we call probable funding and you've been on our calls, that's where we kind of waited as to likelihood and where it is in the approval process. So 276 million compared to an average for this year for the nine months was over $315 million. So we're down, we're down because we had our biggest quarter and our biggest month in September in loan funding. So if you took that $315 million average for the nine months and compared it to last year, last year we were at $214 million. So we're $100 million average pipeline this year greater than where we were last year. So our folks are finding business out there. It's just a question sometimes of getting across the finish line.

Okay, great, appreciate. Yeah, no, totally, I appreciate the detail there. And then Pat, I guess just one on the buyback. I think in the past you've spoken about perhaps wanting to get to a point where you're operating with, call it excess capital if you will, before thinking about getting real active there. Just directionally we saw capital ratios move lower with some of the growth. So just, I guess looking for an update there and if the new authorization is more of a just let's put it in place so we have it.

Yeah, I mean, I'd say it's both, right? I mean, obviously we think there's value in having a program in place regardless of the environment or the situation. But as far as how do we think about when we're gonna jump in, obviously, key factor is where are we trading, right? And the closer we get to book value, the more interesting the stock buyback looks to us. Obviously some of it has to do with what we're seeing in our own pipeline and our growth prospects and overall capital levels. But I think we're at a point with current capital where we can be opportunistic. So I don't think we are in a let's wait till we get to some much higher level than we are. I think the levels that we're at are adequate and therefore we can be in the market looking if we think the time is right. But at the same time, it's not a aggressive strategy of ours to buy back every share we can that's in the plan. I think it's more an opportunistic vehicle, if you will.

Okay, helpful. I will leave it there. I appreciate you guys taking the question.

Yeah, thank you, Justin.

Our next question comes from the line up Manuel Neves with DA Davidson. Your line has opened.

Hey, good morning. What is the kind of the right level of purchase accounting accretion going forward or it should be running down? Was this quarter that different than expectations? Just can you kind of help with that?

Yeah, I think Andrew can give you some visibility there. I mean, it's a set schedule that does slowly work its way down over time. So Andrew, you wanna jump in?

Yeah, I think we talked about this. The level will drop and it does depend sometimes on prepayments of loans and things like that. Loan accretion is the primary driver of this. There is some other things going on in there, but it's mainly loan mark accretion. So it'll drop slightly over the next few years and most of it gets earned in the first three years and then it drops off fairly significantly after that. So there'll continue to be small declines over the next two years and then it drops off kind of after that. But it should, again, it'll continue to drop slowly over approximately the next 24 months.

And do you have an exact number for what the new loan yield was? I know a lot of it came on at the end of the quarter. I guess it was trying to compare it to the loan yield that you booked for the whole quarter.

Hello?

Yeah, ma'am, sorry, this is Andrew. Peter, I know you keep track of the weighted average yields. I don't have that data in front of me, but do you have some, just kind of at least an estimate of what the loan yields were for the quarter?

Yeah, well, if you look at the new loans funded, closed and funded, not advances under existing lines, things like that, but new loans funded for the quarter, the weighted average was around 765, and that was down about a quarter, maybe 30 basis points from the same similar number, the quarter before. So I'd say the loans, some of that gets pushed by larger loans that might be at a tighter spread, whatever, but quarter to quarter went down, it went from about 8% to around 765, 770.

Okay.

Does that help?

Yeah, it does help. So that's where the commentary that the NIN would have been a little better if those loans were fully in there the whole quarter. Why doesn't there kind of a bias for up NIN given that they are, you know, some of the

smaller loans that we do, we have business banking teams that are out doing, you know, a couple of hundred thousand dollar lines of credit term loans to smaller businesses, is they're gonna be at, you know, prime plus one, where, you know, a larger owner occupied real estate loan, 10, 15 million dollar loan is gonna be at, you know, 250 basis points or, you know, 250, 275 over treasury, five year treasuries, as you know, are right around four. So, you know, there's a different mix in there, different sizes, different mixes, and, you know, it impacts that quarter to quarter number, you know, the market is gonna be a little bit, a little bit, okay.

Yeah, and I also think, Manuel, there's, you know, as Justin talked about, there is a scenario where the margin can tick back up a little bit. I think we're a little hesitant to predict it just because, A, we don't know what the Fed's gonna do. We got 25% of our balance sheet that, you know, flows down every time the Fed moves. And, you know, you get into the unknowns around what will the market absorb in terms of deposit reductions. And so, I think there's a scenario where that plays out to our benefit, but I'd be hesitant to predict it until we, you know, get a little more visibility in how quickly we can lower the deposit costs.

On deposit costs, do you have an end of period total deposit costs after the Fed cut? You know, your average was at 305. What were you at? I don't

know if we did that calculation. I know what we did was we took a look at the asset side and we figured out, you know, the dollar amount that was gonna reprice with the Fed move. And then we came up with a reduction across a variety of our deposit portfolios that once fully implemented, you know, would have a similar impact to the lost interest income from the asset side. But I'm not sure we, you know, sort of calculated what does that mean in terms of the funding costs for the last two or three weeks of the quarter, but, you know, it obviously is something we're keeping a close eye on.

Okay. And then the op-ex run rate, you did call out the Oreo write down. Should we think of op-ex being stable with the write down or without? So it's like 18 million or 18.6 million?

Yeah, probably in between, but I don't know, Andrew, if you wanna give a little more color there.

Yeah, I think that's about right. Obviously, that's assuming kind of a core and they're very rarely do we not have some kind of one-time unusual item during a quarter. But yeah, I think we're thinking somewhere kind of in between that is the kind of core run rate over the next couple quarters outside of any kind of unusual or one-time items.

Okay. And then is the right way to think of the fee side is I think 1.8 million, stripping out securities, stripping out sort of the Foley. Is that the right run rate going forward and what could kind of take it up, take it down?

The questions on non-interest income?

Yes, the income.

Yeah, I mean, I think if you strip out some of the noise from this quarter, that's a decent expectation for what we expect the numbers to look like going forward.

Thank you, I'll step back into the queue.

All right, thank you, Manuel.

There are no further questions at this time. I will hand the call back over to Patrick Ryan for closing remarks.

Okay, great. Well, again, thanks everybody for taking their time to join the call. We appreciate the interest in First Bank and we'll look forward to regrouping with everybody at the end of next quarter. Hope everybody has a wonderful day.

This concludes today's conference call. You may now disconnect. Have a good day.