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spk01: Good morning, ladies and gentlemen, and welcome to the Berkshire Hills Bancorp second quarter 2024 earnings conference call. At this time, our lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. To ask a question, please press star 1 on your touchtone phone. If at any time during this call you need assistance, please press star 0 for the operator. This call is being recorded on July 18, 2024. I would now like to turn the conference over to Kevin Kahn, Investor Relations Officer. Please go ahead.
spk05: Good morning, and thank you for joining Berkshire Bank's second quarter earnings call. My name is Kevin Kahn, Investor Relations and Corporate Development Officer. Here with me today are Nitin Mahatre, Chief Executive Officer, Sean Gray, Chief Operating Officer, Brett Berbovic, Chief Financial Officer, and Greg Lindenmuth, Chief Risk Officer. Our remarks will include forward-looking statements and refer to non-GAAP financial measures. Actual results could differ materially from those statements. Please see our legal disclosure on page two of the earnings presentation, referencing forward-looking statements and non-GAAP financial measures. A reconciliation of non-GAAP to GAAP measures is included in our news release. If it's time, I'll turn the call over to Nitin. Nitin?
spk00: Thank you, Kevin. Good morning, everyone, and thank you all for joining us today. I'll begin my comments on slide three, where you can see the highlights for the second quarter. Overall, I'm pleased to report that we had a strong quarter with solid improvement in operating earnings quarter over quarter. Operating EPS of $0.55 was up 12% linked quarter. Operating net income of $23.2 million was up 11% linked quarter. ROTC was 9.65%, up 92 basis points linked quarter, and operating ROA was 79 basis points, up 8 basis points linked quarter. We are encouraged by the trends in key performance matrix especially credit and expenses. Credit costs continue to trend down, with net charge-offs at seven basis points of loans, the sixth consecutive quarter of declining net charge-offs. Loan loss allowance closed at 1.22% of loans, modestly above the upper end of our guidance range. We've updated the slides on overall CREE, office, and multifamily portfolios. The information on those slides highlights that our portfolio remains granular, geographically diverse, and resultantly less risky. The performance of those loan books remains strong. Our expense optimization focus continues to gain traction. Operating expenses of $71.3 million were down 2% in link quarter, reflecting lower compensation, occupancy, and equipment expense. Our balance sheet remains strong. Capital ratios remain robust with common equity tier one ratio of 11.6% and a tangible common equity ratio of 8.2%. We repurchased about 600,000 shares in the second quarter for $13 million. Asset quality remains strong with a modest decline in non-performing loans with net charge-offs at a low point of seven basis points and ACL to loans at a high point of 1.22%. Liquidity remained solid, and loans to deposit ratio was at 96% and 92%, respectively, excluding and including New York health for sale balances. Average deposits were down 2% link quarter and up 2.2% year-over-year. Deposit costs were up by six basis points in the quarter, while reflecting a reduction in the rate of increase in deposit costs and beta. Average loan balances were up 2% link quarter and up 5% year over year, reflecting solid loan growth versus a relatively soft first quarter. We continue to make steady progress in optimizing our branch network. We'd announced the sale of 10 branches in New York in March, which tightens our footprint and enhances the efficiency and profitability of our network. We remain fully committed to and invested in our remaining presence in New York. The transaction remains on track to close in the third quarter. I'd note that we also consolidated three additional branches in the second quarter, bringing our total branch count to 93 today and projecting to 83 by the end of third quarter. We believe that we are now at about the right size for our branch network. We launched Berkshire One, an expanded suite of digital deposit product proposition for our customers. We intend to make banking with Berkshire when, where, and how you want it, easier than ever. We continue to invest to digitize the client experience, which is reflected in our net promoter scores that reached a record high of 60, and mobile app ratings, which averaged over 4.5 stars for iOS and Android devices, with the latter reaching 4.8 stars for the first time. I want to thank all of my Berkshire Bank colleagues for their continued hard work and commitment to the bank. Through this challenging environment for the banking sector, their commitment to our strategy and dedication to our customers is what continues to bring us together and truly set us apart. We had previously announced Brett Burbowick's promotion to the CFO position after David Rosado's departure in the second quarter. Brett has been with the bank for over 12 years and has deep institutional knowledge. Brett's prior role was as Chief Accounting Officer for us And prior to Berkshire Bank, Brett worked at KPMG for about nine years. I'd like to formally welcome Brett as our new CFO and thank him for stepping up to guide us through our journey ahead. I'll now turn it over to Brett to cover our financials in more detail and share our updated outlook for 2024. Brett.
spk06: Thank you, Nitin. I'm excited to step into the new role and energized to work with my team to help us achieve our vision to be a high performing, relationship driven, community focused bank. With that, I'll turn to the slides. Slide four shows an overview of the second quarter. As mentioned, operating earnings were 23.2 million, or 55 cents per share, up 6 cents linked quarter. Net interest income of 88.5 million, increased 400,000 linked quarter. Operating non-interest income was 20.1 million, up 16% linked quarter. Total operating revenue was up 3% linked quarter. Operating expenses were 71.3 million, down 2% linked quarter, and down 4% year over year, delivering operating leverage of 5% linked quarter. Net charge-offs were 1.7 million, or seven basis points of average loans, and were down 11 basis points linked quarter. Provision expense was 6.5 million, up half a million linked quarter, bringing our coverage ratio to 122 basis points of loans. Slide five shows our average loan balances. Average loans were up 155 million linked quarter, or 2%, primarily driven by growth in Cree and CNI. The modest decline in consumer balances year over year reflects the continued runoff of the Upstart portfolio. We've updated a page in the appendix which shows the data on Upstart and Firestone. The books combined are down to 124 million, or 1.3% of total loans, and are performing as expected. Slide six shows average deposit balances. Average deposits decreased 199 million or 2% linked quarter, primarily driven by lower payroll deposits. Year over year deposits were up 211 million or 2%. I'd note that payroll deposits can move higher or lower depending on the day of the week that the quarter ends. Payroll deposits have generally risen over time but we expect lower payroll deposits in the third and fourth quarter, given that those quarters end on a Monday and Tuesday respectively, which are typically lower balance days for the business. Non-interest bearing deposits as a percentage of total deposits remained at 24% consistent with last quarter. Deposit costs were 235 basis points, up six basis points linked quarter. The pace of the increase in deposit costs has dropped meaningfully over the last three quarters. Our cumulative total deposit beta is 42% through 525 basis points of Fed tightening. Turning to slide seven, we show net interest income. Net interest income was up modestly linked quarter and down 5% year over year. Net interest margin was up five basis points linked quarter to 320 versus 315 in the first quarter and 311 in 4Q23. While we expect continued funding cost pressure, the worst of the NIM compression is behind us, and we're seeing NIM tailwinds emerging, such as fixed rate assets maturing and repricing higher. Also, our received fixed swaps will roll off in the medium term and provide another tailwind to NIM. Slide 8 shows operating noninterest income up 2.8 million, or 16% linked quarter. The growth was primarily driven by gains on SBA loan sales given higher volumes. The growth in other fee revenues year over year was primarily driven by the reversal of tax credit amortization under new tax credit investment accounting. The modest drop in loan-related fees linked quarter was caused by a high level of swap fees recognized in the first quarter, and wealth management fees were also down linked quarter due to seasonal tax prep fees recognized in the first quarter. Slide 9 shows expenses. Operating expenses were down 2% linked quarter to $71.3 million and down 4% year over year. Part of the sequential drop is due to seasonally higher payroll taxes in the first quarter, but we also had a nice drop in occupancy and equipment due to our expense initiatives. Technology expense was up linked quarter on investments and digitizing the bank's offerings. Gap expenses of 70.9 million include an expense reversal relating to buildings sold during the quarter, which added two cents to gap earnings. Slide 10 is a summary of asset quality metrics. Non-performing loans were flat at linked quarter and down 25% year over year. Net charge offs were 1.7 million and were down 2.4 million linked quarter and down 4.1 million year over year. I'd note that our 10-year average net charge-offs to loans is 26 basis points. We've included a chart in the appendix with Berkshire's net charge-off rates versus the industry since 2000. Slide 11 shows that our CREE book is well diversified in terms of geography and collateral. The credit quality of the CREE portfolio remains solid with non-accrual loans at 13 basis points of period end loans. Slide 12 details our office portfolio. As noted last quarter, the weighted average loan to value ratios are about 60%, and a majority of the portfolio is in suburban and Class A space. I want to highlight an office study published by the Kansas City Federal Reserve in April. The Fed data, which we've included in an appendix slide, shows that the probability of default rises meaningfully as a square footage of the property finance increases. That is tall towers and central business districts. As you know, we have very limited exposure to Boston's financial district and 80% of our office properties financed are under 150,000 square feet, suggesting our portfolio has lower default probabilities. Slide 13 shows details of our multifamily portfolio. The multifamily portfolio is $665 million or 7.2% of loans. The book is well diversified across our footprint and we currently do not have any non-performing loans or net charge-offs, and criticized assets are 1.2%. While current credit quality metrics are strong, we recognize that economic uncertainties exist, and we're monitoring both new originations and existing portfolios carefully. Slide 14 shows our available liquidity versus uninsured deposits. Coverage of uninsured deposits was 128% at the end of second quarter. As Nitin mentioned, we have strong capital levels. Our top capital management priority is to support organic loan growth. In Q2, we did repurchase $13.4 million of stock at an average cost of $21.88. Year to date, we've repurchased $17.4 million of stock at an average cost of $21.94. All of our repo this year has been completed below tangible book value per share. Our tangible book value per share increased 7% year over year. And if you adjust to add back the AOCI bond mark on our adjusted tangible book value per share would be 2585. Slide 15 shows our outlook for the rest of 2024. We plan to give annual guidance in detail in January and each year and provide updated guidance on each mid-year earnings call. In the third quarter, we expect to book a $19 million non-operating gain on the branch sale. We do expect loan growth to be closer to the low end of the range provided in January and our NIM to be stable around 320. We expect deposits to be lower than January guidance, largely driven by the New York branch sale and payroll balances normalized for period end. We expect net interest income to be down modestly between 352 million and 354 million. Despite a strong second quarter, we expect non-interest income to be between $75 million and $77 million. Offsetting the modest revenue weakness, we anticipate both provision expense and operating expenses to be below January guidance. We expect the provision to be between $25 and $27 million, and we expect expenses to be between $287 and $290 million. Taxes for the year will be closer to the high end of the range of 20 to 22%. And with that, I'll turn it back to Nen for further comments. Nen?
spk00: Thank you, Brett. Second quarter marks the end of our three-year best plan. I'm proud of what our team has accomplished and how far we've come. We've streamlined the bank's footprint, channels, and businesses, including the sale of Berkshire Insurance Group, the sale of Mid-Atlantic, and New York branches. We reactivated our organic growth muscle by restarting our loan growth engine starting 2021 and by implementing new deposit generation initiatives subsequently, including the addition of new bankers to supplement our strong existing team of bankers. We've digitized many of our services to enhance client experience and position the bank better for the future. In a difficult macroeconomic environment, we achieved the low end of our RODSI target with 10.1% RODSI for full year 2023. We had a few misses too. We missed our ROA target by a small amount and we decided to run off our upstart book mid-year 2022 to de-risk our balance sheet. We also outsourced facilities management and reversed course to insource that function about 18 months ago. We still have work to do. Our focus near-term is to accelerate our deposit growth engine, tightly manage expenses and credit, and expanding our digital banking offerings. The operating environment for the banking industry continues to be challenging, given historic increases in interest rates to quell inflation. As noted last quarter, the yield curve is in its longest period of inversion in recorded history. We've included a slide in the appendix which provides historic context for the current unusual period. It highlights that the yield curve has been positively sloped for 83% of the time since 1976. The slide also sizes the potential net interest margin and net interest income increase for the industry during the periods of yield curve steepening. While no one can call interest rates, you can see from the historic data that the revenue left for the industry could easily be $100 billion or more when the yield curve normalizes. We look forward to a more novel banking environment heading into 2025 and 26. With that, I'll turn it over to operator for questions. Operator?
spk01: Thank you. Ladies and gentlemen, as a reminder, should you have any questions, please press star 1 on your touchtone phone. First question comes from Lori Hunsicker from Seaport Research Partners. Please go ahead.
spk03: Yeah. Hi, good morning. And Brett, I just want to say congratulations and welcome in your new role. Can you just take us through, in terms of non-interest income, can you just help us think a little bit about what SBA loan sales will look like? You know, wealth management fees obviously down a little bit. Just with that will look like? And then that other, other line that was 3.3 million, was there anything non-recurring in that? If you could just comment on those three in any order.
spk06: I'll start with the other line, Lori. That's driven by our tax credit amortization, the change in the accounting that we did in Q1. So if you recall, we used to have tax credit amortization as a contra fee income or contra non-interest income. So now under the new accounting, that goes away and goes all below the line. So that's why we're seeing an uplift there. Plus in the first quarter, we also had a one-time adjustment for the change in accounting. So now we believe, you know, the tax credit amortization portion of that line is right-sized for SBA.
spk03: Sorry, Brett, what was the one-time adjustment there?
spk06: That was a drop of about $700,000 in Q1. So it was negative non-interest income.
spk09: That obviously didn't reoccur in Q2.
spk03: Gotcha. Gotcha. Okay. So the $3.3 million roughly is a good run rate. The 1.87, the one PEM item adjustment was a $700,000 in one Q. Correct. Gotcha. Okay. Gotcha. Thanks. And then the – sorry, I didn't mean to cut you off. The SBA – Oh, no.
spk06: No problem. The SBA side, you know, we really like the business. They had a good quarter. It was slightly above our, you know, kind of eight-quarter average, but they have strong momentum going forward. So, we look forward to, you know, seeing the results in the next quarter.
spk03: Great. And then the wealth management –
spk05: Laurie, over the last eight quarters, it's averaged closer to $2.7 million a quarter. So they had a really good quarter. But as Brett said, they got a really, really strong momentum. So we're optimistic about that business.
spk03: That's great. That's helpful. And then just the wealth management line, I mean, it's moved around. Just any general comments with the drop between March and June? It's a small drop, but how should we be thinking about that?
spk06: First quarter, I'm sorry, Nan.
spk00: Yeah, I was just going to say the drop is really corresponding to the tax prep fees in the first quarter that's seasonal. So I think that just normalizes for it. But outside of that, I think the business is moving along quite well. The assets under management or administration were up about 6% to 7% year over year. So we believe the momentum is there. We just have to see how that plays out in the fees and revenues.
spk03: Gotcha. Okay, that's helpful. And then on the expense side, the $384,000 of sort of merger, restructuring, charge reversal, you had mentioned that was related to a building sale or do you have any other color on that?
spk06: So we had previously moved three buildings to held for sale probably about a year ago. Those sales just closed this quarter and we realized a small gain.
spk03: Okay. And were those the Connecticut branches that you closed or was that something different?
spk06: No, these were other office buildings that had been previously moved out for sale. Gotcha. Gotcha.
spk03: Okay. And then just in terms of merger and restructuring charges going forward at the moment, that's looking completely clean. There's nothing on the horizon. Is that right?
spk06: That's about right. We should see a little bit in Q3 as we close on the New York branch sales.
spk09: but shouldn't be overly significant. Okay.
spk03: Perfect. And then the CFO transition, were there any one-time costs associated with that in this quarter, or will there be next quarter? How should we think about that?
spk00: No, Laurie. There weren't any. Okay.
spk03: Okay. Great. And then tax rate, and I appreciate the refreshed guidance here. But your tax rate of 23% this quarter seems to be over that high end of the guide. How should we think about that? Just an anomaly that will come down?
spk06: Yes. We have another tax credit coming in later in the second half of this year that will help drive the tax rate down to kind of the high end of our guidance between 20% and 22%. Okay.
spk03: Okay. Great. And then just two more for me. Martin, can you just comment a little bit? I mean, you obviously made some comments, but it does seem like it still might be under a little bit of pressure just because of the funding side. Can you help us think about what that looks like from the relative to the 320 level, just as we look towards next quarter?
spk06: Yeah, we feel strongly that you will be able to maintain the 320 level. Like I mentioned, we have some tailwinds coming, our fixed, our received fixed assets repricing over the next 12 months. We also have our fixed hedges rolling off over the near moderate term. So we believe those tailwinds will help maintain the 320 guidance.
spk03: Okay. Okay. Great. And then just last question here on office. Really, really appreciate all your details here. The 8%, and I'm looking at slide 12 here, the 8% that's maturing in 2024, is that 8% maturing for the rest of 2024? Was that full year 2024? I guess round numbers, that's about 40 million. Can you help us think about what that's looking like for the next two quarters and any color you can give us on vacancies in that bucket or Class ABC, just any other details you can provide on that.
spk09: Yeah, Greg, you want to take that?
spk04: Sure. Hi, Lori. How are you?
spk03: Hey, Greg. Thanks so much.
spk04: No problem at all. Well, we started the year off 23% of the portfolio was maturing, so we're down to 8% for the remaining part of the year. So, so far, so good. We've had some real success stories in our maturities with payoffs from sales all getting out at par. If you look at that class A, B, it's almost evenly split the remaining amount this year. It's 21 million in A and roughly 18, 19 million in class B. And then the buckets for the maturities are relatively balanced as well. It's about 60% of that remaining is in 3Q, 40% in 4Q.
spk03: Okay, and then any comment on vacancies on those properties? Any color there?
spk04: Yeah, it's very consistent with the average of the portfolio, so most are 90% occupied, our lowest being probably around 80% occupied, one-to-one cash flow. It is one of our criticized assets that we're keeping an eye on that's coming up in the third quarter.
spk03: Okay, perfect. Very helpful. That's great. That's all for me. Thank you.
spk00: Thank you, Laurie. Thanks, Greg.
spk01: Thank you. Next question comes from Mark Fitzgibbon at Piper Sandler. Please go ahead.
spk08: Hey, guys. Good morning. Good morning. Three years ago, when you set out your targets, those three-year targets for best, many of us thought they were low because they were below where your peers were. And you guys ultimately came up short. of those targets. And so I guess I'm wondering, does that change the strategic thinking of senior management and the board? And what are your new strategic goals and what kind of timeline are you looking at?
spk00: Yeah, Mark, thanks for the question. As we set out the plan, the intent was we were literally operating at the bottom of our peer group with the broad C and ROA and all of the financial matrix. Our intent was to get to the median of the peer group over a midterm outlook and then get to build a journey towards getting to the top quartile. I think we're roughly about 65th percentile. So we've climbed up about 35 percentile points in the relative ranking on ROTC and ROA. And obviously we didn't anticipate the whole inverted yield curve and March madness, as we call it last year. So I think with that said, we're proud as to how far we've come from where we were. And at this point of time, I think the journey is going to be, how do we continue to improve our momentum? As we talked about in my remarks, the focus is on growing deposits, managing expenses and credit. And I think you've seen it consistently over the last four years, that expense delta year over year in the last four years has significantly outpaced the Delta for the peers, which means our expenses were growing at a lower pace than the market and the peers. So I think we believe that's going to continue to be the case. We believe our initiatives that we implemented for loans have turned out well, and now the deposit initiatives are kicking in and credit is continued to be monitored tight. And our head of commercial, which is where almost 65, 66% of our book is, is incredibly focused on quality of relationships, quality of sponsors, and leading with deposits and managing credit tightly. So I think we will have a lot of those tailwinds as we get into the next three years. And I think Brett mentioned in his remarks, when we give the annual guidance in January, we would also think about do we give midterm outlook somewhere in the middle of next year when there is better clarity on the macro environment.
spk08: Okay, so you're not recalibrating quite yet. We're going to have to wait until the year end for that.
spk09: Yes.
spk08: Okay. Changing gears a little bit, it looked like you grew commercial real estate about $113 million this quarter. Can you share with us what kind of the breakdown of the types of CRE you were booking and maybe what the average rates were?
spk00: The average rate for the book is about, it is closer to 8%, Mark. I think it was about 7.85 something for the overall commercial book. So closer to 8. And again, most of these existing clients, existing and well-known sponsors, and some part of it is also the draws on the construction loans that are in the portfolio.
spk08: Okay. And then I was curious, has the Biden proposal to cap rent increases nationwide on multifamily up to 5% a year kind of changed how you think about multifamily long-term?
spk00: Not fundamentally. I think we've been prudent about it all along, and especially in the last few years that I've been here, we've been consistently focused on more of the quality of the sponsor, the borrower risk rate as well as the facilities. So I think really the focus remains to be staying prudent. And in fact, even now, as you know, the market demand has somewhat subsided, but the lenders have backed away as well. So we do have potentially more swings at the plate, but we're being very prudent and judicious and leading with relationship and quality of deposits and sponsors.
spk08: Great. And then lastly, the NIM guidance that you gave, does that assume any rate cuts this year?
spk09: It assumes one this year in the fourth quarter. Thank you. Thanks, Mark.
spk02: Thank you. Next question comes from Christopher O'Connell from KBW. Please go ahead.
spk09: Hey, good morning. Good morning.
spk07: On that last question, can you just remind us how much of the loan portfolio is short-term or reprices with the short end of the curve?
spk00: The rough breakout, Chris, is about 42%, I believe, of the portfolio is fixed and 58 is floating. And roughly of the floating, about two-thirds of that has floors as well, if that is your question.
spk09: Okay, yeah, that's helpful.
spk07: And so, you know, in the event that we do, you know, get more cuts than what's in your guide, you know, how much do you think each, you know, additional rate cut, you know, what that impact has on NIM, you know, initially?
spk06: We remain relatively neutral right now, so it won't have much of an impact.
spk07: Yeah. And do you think that eventually, you know, you would begin to benefit, you know, from the cuts over time as we get, you know, further along into 2025? And, you know, any sense of if that is the case, you know, how long that might take to kind of materialize?
spk06: Yeah, I think eventually we will obviously start to see some of the benefit there, especially as, you know, the deposit costs, you know, slow. You know, I would say probably, you know, the next 12 months or so.
spk05: Chris, we've got $1.4 billion of CDs that are maturing over the next 12 months. And they're rolling over at sort of flat rates to where they were issued. So there's much less pressure on the CD book from a cost perspective. And as they start to roll, they'll eventually start to roll to lower rates.
spk00: And Chris, I don't know if you think you, I think it, Hey, Chris, just to add to that, I think, as Brett said, the balance sheet is neutral, so we're relatively agnostic to the rate environment at the moment. But in this cycle so far, our deposit betas have been at 42 cumulative, and that's kind of where the peer averages are. But on loans, our beta has been about 47, whereas the peer average is about 35. We believe it allows us to have better spreads if we continue down this path.
spk07: Okay, great. And what is the current CD or kind of highest, you know, offering rate on deposits?
spk09: Currently, the highest is about four and a half right now from a promotional perspective. Okay, great.
spk07: And then on the expense guidance, is that inclusive of the 3.3 more or less of the non-operating that's been occurred so far this year or no?
spk09: No, that does not include non-operating. The guide is for operating expenses. Okay. Thank you.
spk07: All right, great. And then, you know, on the rest of, you know, the portfolio, you know, outside of office, you know, it seems like the runoff portfolios have been holding up pretty well. I mean, is there anything else, any areas of concern, any pockets of CRE that you guys are feeling, you know, a little bit more cautious on here?
spk00: No, Chris, I think as we said, you know, this quarter was really at seven basis points. That's really low. I think we'll have to go back many, many quarters to go find such a good quarter. But we recognize that this has episodic elements. So we remain cautiously optimistic. The trend's been good for the six quarters. Charge-offs have gone down. But we recognize that it's not going to be seven basis points, right? in the outer quarters. And to that extent, our teams, both on the frontline and the risk management teams, continue to manage portfolios, monitor them very closely. And yeah, everything that the street worries about, Cree office, multifamily, there is heightened attention paid to those portfolios.
spk07: Got it. Any, like anything in particular as you guys look in terms of like loan growth going forward that you guys are trying to stick away from? Or that you do feel a little bit better about putting money to work at?
spk00: No, I think we continue to look at our, you know, commercial portfolio is about 66% of the book. We, the way we continuing down the path, we hope that becomes, you know, 70% or higher over time. And to that extent, get as much of commercial originations in the portfolio as possible. And within that, trying to get as much of CNI and business banking type of loans to improve the asset mix within that as well. So that remains to be our priority.
spk09: Great. Well, appreciate the time. Thanks for the call.
spk00: Thanks, Chris. Have a good one.
spk01: Thank you. Next question is a follow-up from Lori Hunsicker from Seaport Research Partners. Please go ahead.
spk03: Yeah, hi, thanks. Good morning, Brett. Just a quick follow-up here. The gain on sale of the New York branch is the $19 million. How much of that is actually going to drop to the bottom line, and what's the after-tax on that looking like? Thanks.
spk06: So, it should, I mean, it's obviously we'll reinvest, but the majority of it should drop to the bottom line. I think from an after-tax impact, it should be about $15, $16 million.
spk02: Okay. Okay. Great. Thanks so much.
spk09: No problem, Lauren.
spk02: Thank you. We have no further questions.
spk01: I will turn the call back over to Nitin Mahatre for closing remarks.
spk00: Thank you all for joining us today on our call and for your continued interest in Berkshire. Have a great day and be well. Joanna, you can close the call now.
spk01: Ladies and gentlemen, this concludes your conference for today. We thank you for participating and we ask that you please disconnect your lines.
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