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Community Bank System, Inc. (NYSE:CBU)

Q1 2013 Earnings Call

April 24, 2013 11:00 AM ET

Executives

Mark Tryniski – President and CEO

Scott Kingsley – EVP and CFO

Analysts

Aaron Brain – Private Investor

David Darst – Guggenheim Securities

John Moran – Macquarie

Terry Markey – Private Investor

Operator

Welcome to the Community Bank System First Quarter 2013 Analyst Conference call.

Please note that this presentation contains forward-looking statements within the provisions of the Private Securities Litigation Reform Act of 1995 that are based on current expectations, estimates and projections about the industry, markets and economic environment in which the company operates. Such statements involve risks and uncertainties that could cause actual results to differ materially from the results discussed in these statements. These risks are detailed in the company’s Annual Report and Form 10-K filed with the Securities and Exchange Commission.

Today’s call presenters are Mark Tryniski, President and Chief Executive Officer; and Scott Kingsley, Executive Vice President and Chief Financial Officer. Gentlemen, you may begin.

Mark Tryniski

Thank you, Rebecca. Good morning and thanks all for joining our first quarter conference call. We have started 2013 as expected. The first quarter is generally uneventful for us and this one was no different with the exception of the balance sheet strategy that we expected and we’ll comment on further.

Earnings were satisfactory. In fact $0.50 per share of EPS is a first quarter record for us. The margin is softer than last year’s first quarter but non-interest revenues are up 11% driven by strength in banking, wealth management and benefits administration. We are also achieving incremental benefit from the HSBC, First Niagara branch transaction closed last summer.

Loans were flat for the quarter which is a seasonally expected outcome for us and asset quality was very strong. Our pipelines are where they needed to be heading into the second quarter which is seasonally very important for us. We’ve commented in the past that our balance sheet strategy we have developed and we’re monitoring for the appropriate opportunity to execute. This strategy involves a simultaneous sale of investment securities and prepayment of home loan, bank advances that we partially executed in the first quarter and early part of the second quarter.

The principal objectives of the strategy were replace the advances with the corresponding acquired last year’s branch acquisition thereby improving the quality of our balance sheet, and to create regulatory capital for use in creating future earnings and shareholder value. We were able to accomplish this through the sale of securities and the aggregate resulted in no net gain or loss in the current period, a modest benefit to future margin, a modest reduction in the duration of the securities portfolio, no impact on rates activity [ph] and significantly the creation of approximately $35 million of tier one capital.

Scott will discuss the transaction in further detail but we are very pleased with the outcome and believe it is both a qualitative and economic benefit for shareholders. With respect to remainder of the year, we will continue to work hard to offset the expected impact of margin pressures. We have the typical tools at our disposal to accomplish that including loan growth, non-interest revenue growth, expense management and capital management. In fact loan growth to-date this quarter is over $20 million and we are hopeful this strength will continue and create earnings momentum through the remainder of the year. Scott?

Scott Kingsley

Thank you, Mark, and good morning everyone. As Mark mentioned, our operating performance for the first quarter of 2013 remained favorable. Our first quarter reported earnings of $0.50 per share were a new all-time high for the first fiscal quarter. As a remainder, we completed the acquisition conversion of 16 former HSBC branches and three First Niagara branches in the third quarter of last year. So the fourth quarter of 2012 was the first quarter where the various operating attributes of the transactions were fully reflected. Also as a remainder, we did raise a necessary incremental capital to support those branch acquisitions in January of last year.

I’ll first discuss some balance sheet items. Average earnings assets of $6.57 billion for the first quarter were up $680 million from last year’s first quarter and down 1.5% from the fourth quarter 2012 averages reflective of the balance sheet restructuring activities which Mark described.

Compared to the fourth quarter of 2012, average loans were up $27 million while ending loans were essentially flat at seasonally expected. Average investments including cash equivalents were lower by $129 million and ending balances down nearly $200 million. Seasonally robust growth in municipal deposits also contributed to a higher level of cash equivalence at the end of the first quarter.

Outstandings in our business lending portfolio were down slightly from the fourth quarter as contractual and other unscheduled principal reductions continue to upset new loan generation. Asset quality results in this portfolio continue to be stable and favorable to peers with net charge-offs of under 30 basis points over the last nine quarters.

Our total consumer real estate portfolios of $1.83 billion comprised of $1.48 billion of consumer mortgages and $353 million of home equity instruments were up modestly from December from the continuation of solid organic generation. We continue to retain in portfolio most of our mortgage production in the first quarter and we’re able to productively add to our outstandings at blended yields of 4.04%.

Asset quality results continue to be very favorable in these portfolios with total net charge-offs over the last nine quarters of $2.8 million or just eight basis points of loss. Our consumer indirect portfolio of $640 million was down $8 million or 1% from the end of the fourth quarter, consistent with the seasonal expectations and regional demand characteristics. (inaudible) valuations were the largest majority of our lending is concentrated continue to be stable and favorable.

Net charge-offs for the last nine quarters were $3.1 million or 23 basis points which we consider exceptional. With our continued bias towards A and B paper grades and a very competitive market conditions in this asset class, yields have trended lower over the last several quarters.

We have continued to report very favorable net charge-off results with first quarter 2013 results no exception. Non-performing loans comprised of both legacy and acquired loans ended the first quarter at $27.3 million or 0.71% of total loans. Of that total, $11.4 million or 42% are business lending related and $15.6 million or 57% were consumer real estate products.

Our reserves for loan losses represent 1.21% of our legacy loans and 1.11% of total outstandings and based on the trailing four quarters results, represent 5.5 years of annual net charge-offs. As of quarter end, fair value based loan marks related to the $421 million of outstanding balances acquired since 2011 approximated $15.1 million or 3.6% of the remaining acquired balances which are not reflected in the allowance for loan losses.

As of March 31, our investment portfolio stood at just under $2.7 billion and was comprised of $428 million of U.S. agency and agency-backed mortgage obligations or 15% of the total, $714 million of municipal bonds or 27%, $1.25 billion of US Treasury Securities or 47% and over $200 million of cash equivalence or 8% of the total. The remaining 2% was in corporate and other debt securities including our holdings of pool trust preferred instruments which continued to fully perform.

As was mentioned in our earnings release, we sold an additional $250 million of treasury securities in April and used a portion of the proceeds to extinguish an additional $135 million of FHLB borrowings. After the restructuring activities, the weighted average life to maturity of the portfolio is approximately 5.6 years with an effective duration of 4.1 years, levels meaningfully lower than those reported at the end of 2012.

Our capital levels in 2013 continue to be strong. The tier one leverage ratio improved to 8.78% at quarter end, a meaningful 38 basis point increase over year-end 2012 and tangible equity to net tangible assets was 7.58%. Let me try and provide some additional granularity of the impact of the balance sheet restructuring and its effect on capital.

First, all those securities we sold were in our AFS portfolio, so the capital from those gains was already in gap equity via OCI – AOCI because that is one element of the balance sheet that’s continually carried at fair value. The loss we incurred on the early debt extinguishment was equivalent to the gains realized from the security sales, so no net impact on the P&L. However by itself the debt charges did result in a reduction in tangible book value per share, but from the ratio standpoint, the tangible equity to tangible asset ratio was restored to pre-transaction levels because of the smaller balance sheet.

On the regulatory capital front, focusing on tier one leverage, unrealized gains on AFS securities are not included in regulatory capital since the restructuring was again income statement neutral and the regulatory capital stayed constant, and the balance sheet strength by $500 million, we inherently improved our regulatory capital capacity. But all that said, we have not been asked to retain a higher level of regulatory capital than previously communicated. In fact we believe the restructuring creates incremental capital capacity for us to support any and all future expansion opportunities.

Shifting to the income statement, our reported net interest margin for the first quarter was 3.86%, down 10 basis points from the first quarter of last year and including the effect of the completed branch acquisitions. First quarter net interest margin was positively impacted by the balance sheet restructuring activities previously described. Proactive management of deposit funding costs, continue to have positive effect on margin results but has not been able to fully offset declining asset yields.

Despite the lower margin results for the quarter, net interest income was up 8.4% from the first quarter of last year, reflective of our larger earning asset base. On a linked quarter basis, net interest income was lower by $1.5 million or 2.6% reflective of two less calendar days and effect of the fourth quarter included our semi-annual Federal Reserve Bank dividend.

First quarter non-interest income was up 11.3% from last year’s first quarter. The company’s employee benefit administration and consulting businesses posted a 9% increased revenues from new customer additions, favorable market conditions and growth from the company’s Metro New York actuarial and consulting business acquired at the end of 2011.

Our wealth management group generated an 18% revenue improvement from last year and included solid organic growth in trust and asset advisory services as well as favorable market conditions. Compared to last year’s first quarter, the company generated $1.2 million increase in deposit service fees or 11.8% as the addition of new and acquired deposit relationships and solid growth in debit card related revenue more than offset the trend of lower utilization of overdraft protection programs.

Net mortgage banking revenues of just a $171,000 in the quarter were almost entirely from servicing fees reflective of the decision to continue to hold most of our current mortgage originations in portfolio. Quarterly operating expenses of $54.6 million increased $5.1 million or 10.4% over the first quarter of 2012, reflective of the recurring operating expenses of the branch acquisitions completed in last year’s third quarter.

First quarter operating expenses were $680,000 higher than the fourth quarter of 2012 excluding acquisition expenses and litigation settlement charges incurred in the last quarter. A 2.8% increase in quarterly personnel costs with a combination of seasonally higher payroll tax related expenses and 2013 merit increases, partially offset by two less payroll days. Occupancy expenses were up 6% linked quarter again as seasonally expected.

Other operating expenses were 2.9% lower than the fourth quarter of 2012 which did include certain legal or professional costs related to the fourth quarter litigation settlement. Our effective tax rate in the first quarter of 2013 was 29.2% versus 28.5% last year reflective of lower [ph] level of non-taxable income in the current period.

I’ll now turn it back over to Rebecca to open the line for some questions.

Question-and-Answer Session

Operator

(Operator Instructions) And our first question is from Aaron Brain [ph], your line is live.

Aaron Brain – Private Investor

Good morning gentlemen, how are you doing?

Mark Tryniski

Good, good morning.

Aaron Brain – Private Investor

I just had a couple of follow-up questions on the balance sheet restructuring. Could you possibly share with us the weighted average yield on both the securities that you sold as well as the borrowings that you paid off?

Scott Kingsley

Sure. In the transaction that we accomplished during the first quarter, so the first 390 something million dollars of investments and 360 something million dollars of debt securities. The debt cost was roughly 4%, the blended asset yield was a little over 3% and the securities that we sold in April, the effective yield on the treasury securities was about 2.3% and again the debt securities had a cost of about 4%.

Aaron Brain – Private Investor

Okay. And when in the quarter did you complete out the first tranche?

Scott Kingsley

About two-thirds of the way through the quarter.

Aaron Brain – Private Investor

Okay. And the duration of the securities, do they more or less match the duration of the borrowings?

Mark Tryniski

No, absolutely not, they were longer. The investment securities in totality had a longer duration than the debt securities.

Aaron Brain – Private Investor

Okay.

Mark Tryniski

Which is why there is more investment securities to effectively consummate [ph] the transaction.

Aaron Brain – Private Investor

Okay. And as you noted the primary benefit here would seem to be the $35 million of regulatory capital that was unlocked by the transaction, could you remind us what is your appetite for acquisitions, what would be your thought process around the types of assets that would be of most interest to you?

Mark Tryniski

Yes, I think Aaron as I commented on the two principal objectives of those strategy were to effectively replace the federal home loan bank advances with the correspondingly acquired in the HSBC, First Niagara branch transaction, secondarily to be able to accomplish that with no impact on current or future earnings and also the ability to create $35 million worth of regulatory capital that can be utilized for additional earnings and growth opportunities in the future was really the purpose.

In terms of the utilization of capital, we will not be impatient. I think we have a lot of – there is certain many opportunities that may arise, so we will be opportunistic in deploying that capital in a way that’s added to the shareholder value which maybe acquisitions as you asked specifically about, I think we’ve had for a number of years a reasonable appetite for what we try to identify as high value acquisition opportunities whether there is branch transaction, whole bank transactions or financial services transactions and certainly the ability to deploy that capital in a acquisition without the ability to have to look shareholders by raising additional capital is something that we would certainly consider as acquisition opportunities arise.

Aaron Brain – Private Investor

And is there – you noted that in the quarter your tier one leverage ratio went up to I think was it 7.87% or.

Scott Kingsley

That’s 8.78%.

Aaron Brain – Private Investor

8.78%. Thank very much. Obviously that’s well above regulatory minimums. How do you think about, is that the upper bound of where you want to be, or could you see a drift even higher from here?

Mark Tryniski

Well I think because of the lower risk generally nature of our balance sheet and our risk appetite, I would agree that that 8.78% we have more than sufficient capital to reflect risk on our balance sheet, certainly more than what the regulatory capital standards require and we’ll look to opportunities to deploy that effectively as I said into the future.

I think prospectively in terms of whether that number gets bigger or smaller I would see in the near-term it would grow just by virtue of the fact that we – the earnings will accrete that number into the future until we do have a high value opportunity to deploy that capital for productive purposes into accretive earnings and shareholder value. So I would say certainly in the potential near-term an increase of the tier one leverage ratio until the point arises that we have the opportunity to deploy it productively.

Aaron Brain – Private Investor

All right, well I appreciate that very much. Thank you.

Mark Tryniski

Thanks for the questions.

Operator

And our next question is from Terry Markey [ph], your line is live. And we have no further questions in queue. (Operator Instructions)

Mark Tryniski

Perhaps we’re getting difficultly [ph] in hearing you, we missed that last comments.

Operator

We have a question from David Darst. Your line is live.

David Darst – Guggenheim Securities

Good morning.

Mark Tryniski

Good morning, David.

Scott Kingsley

Good morning, David.

David Darst – Guggenheim Securities

Scott, you were thinking about, you said net interest income being slightly negative, as the margins concerned are you looking for a flat to maybe up a couple of basis points margin for the full year this year relative to ‘12?

Scott Kingsley

It’s really good question, David. I think what we – what happens when you shrink the balance sheet meaningfully like we’ve done in the quarter, you get sort of natural pickup in net interest margin evenly we are not creating incremental net interest income and certainly if you saw what happened in the first quarter, we probably went backwards three or four basis points on core margins but the restructuring activities then picked that back up six or seven to end up at 3.86% versus 3.83% in the fourth quarter.

We could probably see a repeat of that uptick in the second quarter and I think it’s just incumbent upon us to again try to actively manage the margins, so we’re limiting that natural core erosion to a small amount as possible for the balance of the year. But again we’re likely to get some kind of optical lift in the pure margin in the second quarter above that 3.86% just from the mix change.

David Darst – Guggenheim Securities

Okay. And there is no – you haven’t have a negative impact from the drag from holding the liquidity to do this, right?

Scott Kingsley

Really not, David. I think and again today we are – because of where we are from the market condition standpoint, we’re okay holding a higher level of liquidity than maybe in the past, we’ve demonstrated and you can appreciate David overnight earnings capacity on your liquidity today is very, very close to your net deposit cost. So it’s on a net interest income standpoint it’s probably neutral or a wash but clearly you’re holding on a capital to support that liquidity but we think in the current interest rate environment that’s not necessarily a negative.

David Darst – Guggenheim Securities

Okay. And then your comments on your loan pipeline, you had pretty growth in the latter half of last year, I guess, seasonally it’s down. Should we think about a mid-single digit kind of loan growth rate for this year or maybe its little bit lower than that?

Mark Tryniski

I think David last year as we commented previously, the full year 2012 organic loan growth was 7% which is actually a very strong outcome for us in our markets, and the majority of that was residential mortgage lending and auto lending. And if you look at the trailing four quarters, our organic loan growth is also about 7% obviously with no growth in the first quarter, but seasonally our goal usually in the first quarter is breakeven which we effectively do I think we were down a few million dollars in the loans like 1.5% or 1% or something.

But we really need to execute in the second and third quarters because the fourth quarter starts to slowdown, the first quarter is usually quite slow and again neutral in the first quarter in terms of loan growth is expected outcome for us internally. So we need to continue to perform in the second quarter, as I said we got up to very fresh start in first three weeks in the second quarter, we’re up $20 million in all the three pipelines, that’s mortgage lending, its auto lending and its business lending, so all three businesses are up.

And frankly we expect that to continue in the third quarters just based on what our current execution and what we’ve been able to accomplish in the last 12 months as well as just the expected seasonality of those businesses. So we expect another strong performance in the second and third quarters of this year as well.

David Darst – Guggenheim Securities

All right, and this competition changed or I guess some of your peers have set to [ph] more aggressive?

Mark Tryniski

I would say it’s very aggressive on the rate side. It’s certainly for our business lending opportunities, it’s gotten very aggressive. We haven’t seen a great deal of the relaxation on the terms and structure side of those business lending opportunities meaning modestly but more episodically I would say the consistently, but certainly on the pricing side, pricing is very thin and to you the point where there are not opportunities, there are not opportunities for any real returns on the capital that you’re deploying at those transactions. So I would say it’s very aggressive mostly on the rate side.

David Darst – Guggenheim Securities

Got it, okay. And Scott just one more question, could you really comment on the expense base and is there anything else from the acquisition last year that you can continue to take out of the cost please?

Scott Kingsley

Yes, good question Dave. I think in terms of in addition to some of the comments I provided on the run rate, I think that in general on a totality basis first quarter expenses are probably pretty reasonable to use from a run rate standpoint. We’ll get higher payroll costs in the second and third quarter and the fourth quarter because you have more payroll days. We’ll get some relaxation from the payroll tax related items that tend to really be cumbersome in the first quarter.

I suspect when we guess turn the heat off and start piling snow that will be little less expensive to cut the grass and turn on the air conditioner. So we do have some seasonality there but I think if you blend all those things together, just given where we are from a side characteristic that’s a reasonable run rate.

Question on some continued opportunities relative to post branch acquisitions. We have a number of initiatives underway to do some expansion to a couple of our existing branches for the ultimate objective and we’ve announced this to consolidate two or three more during 2013. We won’t see a ton of expense savings in fiscal 2013 from those activities, but they will be highly productive in terms of our service capacity, convenience to the customer and just quite frankly just a better outcome in terms of real estate characteristics.

So productive items maybe get a little bit of benefit in the second half of the year, David, but nothing that significant. I think we’ve said before out loud, because of the nature of our non-metropolitan footprint, we constantly are looking at our branch characteristics in terms of service capacity. So we are not in the middle of launching some maps review of every place we are. It’s kind of an ongoing activity for us. So when we start to see differences in terms of transaction accounts and customer traffic, we think we can react to those opportunities on a concurrent basis.

Mark Tryniski

One point to add to that too, David, if I could, is just strategically in terms of those branches, there are two things we’re really focused on with respect to those branches acquired, one is loan growth. The larger banks had a very different model of lending than we have. We think ours works effectively in our markets kind of having the local credit authority resident in the branches and that’s something that we’re working very hard for and the second strategic objective around those branch is really growing fee income, another area where the larger banks is not in some measure because of regulation but did not have the capacity to create the kind of fee income as a percent of the deposit base that we have the capacity to do.

So we’re really right now focused on those two objectives of lending and growing fee income as it relates to the HSBC branches acquired last year.

David Darst – Guggenheim Securities

Okay, great. Thank you.

Mark Tryniski

Thanks, David.

Scott Kingsley

Thanks, David.

Operator

And our next question is from John Moran. Your line is live.

John Moran – Macquarie

Guys, how’s it going?

Mark Tryniski

Good morning, John.

Scott Kingsley

Good morning, John.

John Moran – Macquarie

I just want to – just circling back on the balance sheet restructure, and Scott I know it was in the prepared remarks I think I just missed it. The duration was down a bunch I think you said sub 4 now?

Scott Kingsley

Just about 4.1, John. So if you take into the account the April activity, only accomplished couple of weeks ago, the effective duration is 4.1 years on roughly $2.4 billion of investments and cash equivalents.

John Moran – Macquarie

Okay. And that was down from – it was kind of closer to 5.

Scott Kingsley

It was. So in one quarter with these activities we effectively shortened the duration by almost a year.

John Moran – Macquarie

Got you. Then I think you kind of covered seasonal items on OpEx pretty well with the last question which was one of my follow-ups but then maybe we can just address the same thing on fee side of the things, benefit and consulting actuarial runs a little bit better in the first quarter if I’m remembering correctly and is there anything else that we need to kind of be thinking about in terms of seasonality there?

Scott Kingsley

Yes, good memory John, the actuarial business quite frankly is very strong in the first quarter as they end up servicing their customers who need things for financial reporting outcomes, valuations and (inaudible) define benefit obligations and post-retirements obligations that its around year-end. Because of that business has now got broad services in it so little less profound than it was a couple of years ago, but I would say that we would still think that first quarter revenue generation is the high point of the year in that business and it tapers off a bit maybe consistent with what you saw last year.

On the wealth management side, got off to a great start, certainly participating in nice robust market conditions that tends to have less seasonality attached to it. So we would certainly be happy to take the kind of growth we saw in the first quarter for the balance of the year. On the banking fee side, that’s a little bit more profound. I think a lot of people appreciate. The lack of customer activity and the utilization of some of our depository products in the first quarter has historically kept us down 5% to 10% versus the fourth quarter that precede it.

I think a lot of people would don’t spend a lot of time thinking that there are two less calendar days in the first quarter than the fourth quarter. So all by itself that’s a 2.2% decline in activity characteristics. So I would say that what we continue to see and I think a lot of our peers see this as a higher level of utilization of debit card related income is offsetting what tends to be lower characteristics for utilization on the overdraft side. And then consistent with Mark’s comments John, when loan growth starts to pick up in the second and third quarter, we tend to get fee opportunities surrounding the loan side of the equation as well.

John Moran – Macquarie

Okay. That’s helpful color. This is last one from me, it’s just on the auto side of things, any thoughts with I guess some potential guidance coming out of regulatory bodies there and how that may impact the business. And then I think just in general a lot of the comments that we hear on auto anecdotally would suggest that it’s gotten a heck of a lot more competitive, so anything that you could help us out with there?

Mark Tryniski

Sure, auto industry has got more competitive I think that’s a market that tends to be much more volatile in terms of those who compete in that market and those who don’t and many banks to get in and get out overtime and over different cycles, we’ve never done that. We’ve done a really good job of – and our leadership team in that business has done a very good job of growing it fairly consistently over the years.

If you look at that business back trended over 10 years it’s just continual general nearly double digit growth for an extended period of time through different auto cycles as well. So I think we would agree with you that lately it’s become a bit more competitive. You see some of the captives reengaging. You see some other banks who maybe is – who got on their business on the last down cycle. We’re now getting back and so I agree it’s a bit more competitive and the rates are under pressure like they are in every asset class.

One thing I will say is that the majority of our paper is used auto paper and there is certainly less competition and modestly less competition and less rate pressure in the used auto business, but we like that business much better than new, for a variety of different reasons. We think frankly the return on capital characteristics of that business are superior than financing new. So the problematically less increases in competition and rate pressure there on the used auto business, but I would agree that it exist.

The other I think question you asked was around the regulatory changes in that business. Those are discussions just starting to be had with the Consumer Finance Protection Bureau and other regulators. And there is lot of discussion around flat fees in terms of the compensation structure to the dealer, so we’re staying close to what the emerging discussions and regulators will be in and we will adjust accordingly.

I think it’s up in the air at this point based on what the final regulations or if there are regulations what they look like, in terms of whether that accrues to the bank’s advantage or disadvantage I think it could go either way. We’ll just have to see what the nature of those regulations are, it’s impact on the dealers and the impacts on the banks, but we’ll stay close to it and we will manage accordingly as the rules emerge.

John Moran – Macquarie

Got you. Thanks very much for answering my questions.

Scott Kingsley

Thanks, John.

Mark Tryniski

Thanks, John.

Operator

And we have a question from Terry Markey [ph] your line is live.

Terry Markey – Private Investor

Hi guys sorry about that earlier, I want to try it again here. Can you just repeat what the yield on the securities sold was in the first quarter and then what you sold in April?

Scott Kingsley

Right, Terry the rough numbers would be that the yield on the blended securities that were sold in the first quarter that roughly $390 million or $400 million were in the low fees [ph] because when you think about it, just do the math that we matched up basically perfectly on the gain or loss side with the $360 million of debt securities that came up. So the asset yields were a little bit lower than the 4% cost of the debt instruments.

In April, little bit more of a gap. So $250 million of treasury securities was roughly at 2.3% yield and we extinguished a $135 million of debt securities again at that rough 4% handle.

Terry Markey – Private Investor

Great, thank you again.

Scott Kingsley

Welcome, Terry.

Mark Tryniski

Thanks, Terry.

Operator

(Operator Instructions) At this time we have no further questions in queue.

Mark Tryniski

Very good, thank you, Rebecca and thanks to everyone for joining us here this morning.

Operator

And that concludes today’s conference. Thank you for your participation. You may now disconnect.

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