S&T Bancorp, Inc. (NASDAQ:STBA)
2013 Annual Shareholder Meeting Conference Call
May 20, 2013, 10:00 am ET
Jim Miller - Chairman
Ernie Draganza - Senior EVP, Chief Risk Officer & Secretary
Todd Brice - President & CEO
Mark Kochvar - Senior EVP & CFO
Good morning. And I would like to welcome everyone to the S&T Bancorp Annual Meeting of Shareholders. The first question is if everyone voted or cares to do so; if you haven't please raise your hand and we will take care of you, okay.
I am Jim Miller and as Chairman of the Corporation I'll serve as Chairman of this annual meeting. I have asked our Corporate Secretary, Ernie Draganza to serve as Secretary for this morning’s meeting. With me also are Todd Brice, our President and Chief Executive Officer; Mark Kochvar, our Chief Financial Officer and Ernie Draganza, our Chief Risk Officer.
And also in attendance today are [Dave Vinceco] and Michelle Chapel of KPMG would you please acknowledge your presence here so if anyone cares to ask you a question later can do that. They are independent accountants of course.
I would also like to introduce our two newest board members; that's Fred Morelli and Frank Palermo; would you gentlemen please stand and be recognized by the shareholders here and welcome Fred and Frank; they joined us in January.
And finally, I would like to recognize and thank one of our retiring directors, who is with us today Alan Papernick; Alan would you please acknowledge your presence here. Thank you very much for your service to the Board and for being here this morning. One of the retiring director, John Brenzia who is not able to be with us this morning.
A copy of the minutes from last year’s meeting is attached to the agenda. If there are no questions, I would like to motion to waive the oral reading of the minutes. Properly move and seconded that the oral reading of the minutes of last year’s annual meeting be waived all in favor give consent by saying aye. (Inaudible) motion carried.
The purpose of this annual meeting is to act upon the following matters: The election of 14 directors to serve a one-year term until the next annual meeting of shareholders and until their respective successors are elected and qualified. The nominees are Todd Brice, John Delaney, Michael Donnelly, William Gatti, Jeffrey Grube, Frank Jones, Joseph Kirk, David Krieger, James Miller, Fred Morelli, Frank Palermo, Charles Spadafora, Christine Toretti and Charles Urtin.
The second item of the business is to ratify the selection of KPMG, LLP as an independent registered public accounting firm for the fiscal year 2013. The third is to approve a non-binding advisory proposal on the compensation of S&T's executive officers and finally to transact such other business as maybe profitability come before the meeting.
I have been informed that a majority of the shares of corporation are represented either in person or by proxy. The Board of Directors previously appointed Tim McKee to be judge of elections and to count the shareholder vote. And Ernie Draganza as a secretary, will you please read the preliminary report of the judge of election?
Good morning. I commence these McKee’s undersigned guys solely appointed for the annual meeting of shareholders of S&T Bancorp call for the 20th day of May 2013, hereby certify that on March 22, 2013 there were outstanding 29,729,548 shares of common stock par value $2.50 for the corporation and 50 million shares authorized. And there were 24,47,674 shares of common stock of the corporation present represented in person or by proxy at the meeting held May 20, 2013. And that we did at said meeting and in due and proper form, hold an election for 14 directors to served the one-year term until the next annual meeting of shareholders and until their respective successors are elected and qualified and that upon that election the following votes were cast for the following candidates.
For the sake of parity and clarity I will read the percentages as opposed to the numbers. Todd Brice, voted for 95.62%, percent withheld 4.38%; John Delaney, percent vote for 77.56%, percent voted withheld 22.44%; Michael Donnelly percent voted for 78.14%, percent voted withheld 21.86%; William Gatti, percent voted for 91.66%, percent vote withheld 8.34%; Jeffrey Grube, percent voted for 96.11%, percent vote withheld 3.89%; Frank Jones, percent voted for 96.05%, percent vote withheld 3.95%; Joseph Kirk, percent voted for 95.70%, percent vote withheld 4.3%; David Krieger, percent voted for 92.63%, percent vote withheld 7.37%; James Miller, percent voted for 94.18%, percent vote withheld 5.82%; Fred Morelli, Jr., percent voted for 96.28%, percent voted withheld 3.72%. Frank Palermo, Jr., percent voted for 96.37%, percent voted withheld 3.63%. Charles Spadafora, percent voted for 77.49%, percent voted withheld 22.51%. Christine Toretti, percent voted for 80.55%, percent voted withheld 19.45%. Charles Urtin, percent voted for 95.95%, percent voted withheld 4.05%.
By virtue of this vote said persons were duly elected directors to serve the one-year term until the next annual meeting of shareholders, until the respective successor is duly elected and qualified. The fourth item that we did at said meeting and in due and proper form ratify the selection of KPMG as an independent registered public accounting firm with the fiscal year 2013. Number of shares for the proposal, 99.30%; number of shares against the proposal, 0.53%; and number of shares abstaining 0.16%. And the final item that we did at said meeting and in due and prepare form considering both upon the non-binding advisory proposal on the compensation of S&T executive officers. Number of shares for the proposal, 93.75%; number of shares against the proposal, 5.27%; and the number of shares abstaining, 0.97%, duly submitted Timothy P. McKee (inaudible).
Thank you, Ernie. More than the required number of votes are being cast to approve each proposal therefore Todd Brice, John Delaney, Mike Donnelly, Bill Gatti, Jeffrey Grube, Frank Jones, Joseph Kirk, David Krieger, James Miller, Fred Morelli, Frank Palermo, Charles Spadafora, Christine Toretti and Charles Urtin are hereby declared elected directors to serve for one year until the annual meeting of 2014. The selection of KPMG as the independent registered public accounting firm has been ratified for 2013 and a non-binding advisory proposal on the compensation of S&T’s executive officers has been approved. Is there any other business to come before the meeting? If not I would like to turn the meeting over to Todd Brice and for a strategic update.
Thanks Jim and good morning everybody. Really its nice having an opportunity to get together with everyone and talking a little bit about what's going on in the bank and where we are going to go next year. Just on behalf of my fellow colleagues on the management team and also our Board of Directors I want to welcome everybody this morning and hope you enjoy what we have to talk about today. Before we do start, we need to bring your attention to the forward-looking risk statement slide on the screen in front of you. This statement provides the cautionary language required by the Securities and Exchange Commission on forward-looking statements that maybe included in this presentation. Since we’ve elected the whole meeting in May this year versus our historical practice of holding it in April which was in conjunction with our earnings release, most of you have had time to adjust our year end numbers and also our first quarter financial results. So I'm not going to get into a lot of detail on financials as Mark Kochvar, our CFO is going to review some of the financial results in his presentation.
Today what I would like to do is just discuss the current operating environment, banking industry and some of the initiatives that we're focusing on really just to address some of the challenges they are impacting S&T as well as the entire industry. I think as anyone who has a savings account or had refinanced more within the past few years know, interest rates have been at historic lows for an extended period of time and the net effect of how the low interest rates environment impacts S&T as well as the industry really is has been a contracting net interest margin.
This chart right here just kind of gives you a sense of how we've been impacted, but if you can back and you can look at from a historical perspective, our margin has been in the 4%. At the end of ’10 you start to see it will contract a little bit and today it's right around 3.5%, and really what this 50 basis points decline really equates to is a $20 million reduction in revenue that we are able to earn on our earnings assets on our balance sheet. So to offset the compression, really you can attack it in three ways. You can get a lot, you can grow loans or your securities on your portfolio. You can also look at growing non-interest income and also you can look at the expense side of your income statement and control some of your cost. So really, we're looking at in all three of these areas and just want to elaborate a little bit on some of the strategies that we're implementing.
As far as growing loans, I would like to bring your attention to this slide. You can see the growing the loans and securities maybe a number one priority that we have at S&T this year. Just go back in ‘08 we were right around just a shade under $3.6 million in total loans and this 2008 was also the year that we had merged with Irwin Bank and then in ‘09, ‘10, and ‘11, you started to get in to recession, you can see that these actually bottomed out at about $3.1 billion and then in 2012, 2013, we have been able to grow both through organic growth and also some M&A activity, but positive loan growth is going to be a focus in all of our lines of business in the coming year, whether it be commercial lending, mortgage, consumer lending, or business banking area. And really to that, and we are really concentrating in two areas. We are focusing on increasing productivity from our existing staff and also adding production people in our various lines of business.
Year-to-date we spend a lot of time and we are going to continue to spend a lot of time developing business skills and sales skills with our sales team. In addition we’ve had some success in recruitment efforts last July. We brought three lenders on board and a new market, the (inaudible) market and they kind of hit the ground, running and generating some nice (inaudible) activity. Also in existing market we’ve added two commercial lenders, we are actively looking to may be recruit on two more to that team. We have been able to add a couple of folks in our business banking division, which are people that focus on relationships less than a $1 million. And then also we have added two more originators to fill gaps in some markets that we have been in. So through some of these efforts, I am pleased to report that we are finally starting to see some increase in loan activity in Q4, and first quarter this year we are up $67 million of $36 million respectively, and the pipelines are up in all lines of business as well. So again it’s good activity out there.
The other area that we can focus in on is our M&A activity, and I think in 2012 we were successful bring on boad Mainline and Gateway Bank. You can see what the Mainline increased our pricing at Cambria County also in Blair County and then the headquarters of Gateway within McMurray which is in Washington County which is very high growth market, so combined they brought about $350 million of assets on to the balance sheet, but I think more importantly and we are seeing a lot of positive business momentum out of those markets. In the first quarter out of the Blair County we booked about $4 million in residential mortgages in those markets which we didn't do through S&T footprint last year so that's been nice success and then also we converted Gateway computer systems down there in February and we see a lot of lift in the consumer areas also on the business banking mortgage lending and wealth so a lot of good things beginning to happen down there and also the commercial lending group is starting to build their pipeline so we expect to see a lot of growth in these markets you know throughout the rest of the year again in 2014 as well.
I think going forward M&A is going to continue to play an important role in our overall growth strategy; when you go back and you look at the track record, I think we've been able through the years to find the right partners, but in the last 22 years we brought on either eight banks or savings allowance that have added about $1.9 billion in assets to the balance sheet. So I think more importantly you know its one thing to go out and find the right partner, but we've been very successful in integrating them into our culture and we've been able to grow revenue streams in all these organizations through an enhanced mix of products and services and we also feel that we are well positioned from a capital perspective and infrastructure standpoint to go out and continue to attract the right partner to the organization and we are going to continue to do it in a conservative manner and that’s rewarded our shareholders in the past.
The second way to really focus in on the margin compression is growing our non-interest income and really again we have a number of strategic initiatives here in place or on-board to implement in order to move these as early as forward and in consumer division we are evaluating all our fee schedules relative to consumers and we feel that, we feel we have the ability to make some modest enhancements in our fee revenue streams while maintaining a very favorable pricing position relative to competitors and markets so we are going to start to roll some of those out in Q3 and we should begin to see some of the impact in the second half of the year.
On the wealth management side, again we are looking at fee schedules and realigning fee schemes and trust financial services in our RRA store capital to enhance sales activities and I also want to get a plug-in for Stewart Capital Mutual Fund; SCMFX as its now over $50 million which was up you know last year at this point in time they were sitting at about $30 million in assets under management so we've had some nice growth and also I think more importantly their performance has been very good. They are a five star rated fund over the last five years and also since inception, so for those of you who are looking to invest in the Mid Cap space please keep us in mind Malcolm’s back here that you can charge in the fund, they have done a nice job.
Finally, on insurance, we've implemented a more robust process to really mine the insurance data from our existing S&T clients and formalize the process really just to increase the visibility, marketing capabilities of our S&T Evergreen division. And while we are just in the roll out stages we are encouraged with results.
And the third area that we are going to focus our attention on is in our expense structure. I think one of the most visible examples is the consolidation of some of our branches in the first quarter; we closed two branches. We also have been running three branches to drive through and we have another branch scheduled to close in the third quarter of this year, but I think the important fact that I want to stress in spite of these closures, they have been done with minimal customer impact as we have other full service locations in close proximity and really a lot of the customers are migrating to our electronic banking products and acceptance of those and so that’s decreasing transaction count in the branches.
In addition, we're about 60% of the way converting our branches to in-brand processing which will eliminate some bad loan functions that we have done in branch closure (inaudible) street below us and we're also implementing several software solutions in Gateway as really just to increase capacity with existing staff. So we're looking at lot of different ways to control costs and you know we do realize these changes have an impact on employees and customers but they are necessary and it's important for us to become more efficient in today’s banking environment.
And if (inaudible) spend some time on asset quality, first two quarters of last year, charges were a little bit higher than we what we would have liked, but the team really got focused in improving asset quality metrics and I think we have a good story to tell over the last few quarters in particular, but if you look at where we were non-performing loans, peaked at around $90 million in 2009 and we have gradually been bringing that and today we’re at about $45 million from down about half of where we were from our peak, but it's going to continue to receive a lot of attention and our hope is to continue to drive those numbers down over the next couple of quarters and we're seeing some good trends and momentum in our revenue expectations. I think we can keep those down to better levels.
So just finally in wrapping up, Jim had mentioned a couple of important members that came on board and retirement of friend (inaudible), but I think we also did have a retirement of Ed Hauck, Chief Operating Officer in March of this year. So to replace that, we brought on-board a new member of the management team, Gary Small who joined our organization in January and he spent the bulk of his career out in the Ohio market, but we shifted David Ruddock back (inaudible) as responsibilities on the operations side, so Gary is our Chief Banking Officer. He is going to be in charge of resale area, in charge of wealth management, so got a nice addition to team and looking forward to implementing some of his suggestions over the next couple of quarters.
So that’s really all I have for today, at this point I will turn over to Mark Kochvar, to talk a little bit about our financial position.
Thanks Todd and good morning and thank you very much for your interest in S&T. Todd touched on a number of the challenges and opportunities that we face, including margin, loan growth and asset quality. Another area of both challenge and opportunity is capital. Capital does represent your ownership in the company and also serves as a source of strength to grow or acquire other companies and it's also a cushion in the event of adverse conditions. The challenge we face is the balance of interest of our shareholders, regulators, prudent risk management and our internal plans to grow organically and potentially require to have sufficient capital but also to provide a reasonable risk adjusted return to the shareholders.
In response to the financial crises regulation for the amount of capital that banks including S&T must hold are expected to change over the next several years. It should be no surprise that more capital will be required. There are a number of ways that regulators look at capital; one of those is the Tier I capital ratio. This slide shows this ratio for S&T over the past several years. It also shows two other lines, the bottom solid line is the current well capitalized level as defined by regulators; currently at 6%. The second line is what we expect the new well capitalized ratio to be, which is 8.5%.
For S&T at our current size that means we will need to have over $80 million more in capital with the proposed requirements. This represents almost four years of retained earnings at current earnings and dividend level. You can see that before the financial crisis back in 2007 and 2008, we operate as did most other banks with relatively less capital. Our merger with Irwin in 2008 caused a decline that year; an action that would probably pay much tougher scrutiny today. The large increase in 2009 is the addition of TARP the capital received from US Treasury. And the large drop in 2011 is the redemption of that same TARP. With a reduced level of earnings during the financial crisis, it was prudent for us to cut the dividend back in 2009. In order to maintain and grow capital first we should repay TARP and now to build a sufficient cushion above the new proposed guideline, and to have enough capital to grow organically or through [fat] acquisitions.
You saw our first quarter results no doubt, and we are making progress and significant improvements in net income and earnings per share. We earned $12.3 million in the first quarter or $0.41 per share; 28% more in the fourth quarter of 2012 and over three times what we earned in the first quarter of last year when we were working through some asset quality issues. The highlights of those - our improved results in the quarter would be to better loan demand which is translated into organic growth in the last two quarters after nearly four years of decline. We are also seeing much of our asset quality with lower non-performing loans as Todd mentioned, and that's due to dramatically lower new non-performing loan formation, lower delinquency and most importantly lower net charge-offs. And while we still have problem loans to work through the numbers that become much more manageable, and we expect to make continued progress in the coming quarters.
Finally in the first quarter of 2013, we entered into a long term strategic partnership with a large processor of merchant transactions. This is the business of processing credit card transactions for retailers and other companies. We did it through the rapid technological changes that have occurred and which we expect to continue in that business. Though it’s becoming increasingly difficult for us to compete, so as part of that transaction we recognized the one-time tax gain of approximately $3.1 million, but we also expect that between the revenue we receive from referrals and the cost savings that we realized, the ongoing impact will be either neutral or actually better. There also a benefit to our customers, who will be serviced by a leading provider and has a [new] scale and resources to commit to that business. Thank you very much and now I would like to turn it back over to Jim.
At this point I would like to ask Todd and Mark to join me up here and we would open the floor for questions. Here's a question, yeah please.
Yeah. The efficiency ratio bothers the hell out of me. It keeps climbing up. When I first (inaudible) group of banks the efficiency ratio was like low running around 50%. I think its around 65% now. I know some of the things involved there or I assume some of the things involved there and I have to mention the compensation expenses which increased 15.5% last year. Would you explain or give us an explanation of what you plan to do on the efficiency ratio?
First, Jim, some of the increasing compensation was a result of bringing the staff from Mainline and Gateway. So [Becky] how many total fleets that we bring online.
Unidentified Company Representative
About 65 to 70.
65 to 70. So about 80 to 90 employees we brought in and plus we got to add some. Even though we cut some staff, we added some in operation. So that net amount was probably close to 100 people. So that was a lot with some of the increase on the expense side, but you are right. I mean we're at 50% efficiency ratio. The industry has migrated up a little bit. You got two components; you got the revenue side, which is getting pinched a little bit and also the increased cost, due to the new regulatory environment that we're in. I mean, we spent a lot of time and effort what I call the control side of the house that we made investments in infrastructure, in compliance, in audit, in loan review, in accounting. So we think we spent a lot of attention on it the last year, so we think we have the infrastructure in place now that we continue to grow the organization without maybe having to add as many resources in those particular areas. But that has been a focus of the industry adding staff in those areas. So to offset it, we've done some things. You know, if you look at our retail network, we're becoming more efficient over there. We've really cut a lot of jobs and hours. So we're in that side of the house, just because of increasing transaction counts, and so we are closing branches. We're making investments in software to enhance capacity of employees. So a lot of different areas. You know this in-branch processing, I talked about it’s probably save about a $0.5 million a year on an annualize basis. Some of those hits won’t start occurring until the second half of the year, but we are looking at a lot of different areas right now, Mark, I don’t know if you.
One thing to note in last year’s numbers with the acquisitions, we recognized a lot of one-time expenses with those mergers and a lot of those are severance related. So there is a total of over $6 million of expenses last year that were one-time in nature. Over half of those were in that severance expense line. So we do expect overall expenses to be lower in 2013 and 2012, I don't think that Todd talk about the revenue part equation; there is a lot of different way to look at expenses. Another way is if you looked at expenses just compared to assets, how big the organization is. When we look at that we stack up very well to peers who are usually in the top one or two of that 20 proxy peer banks. So for us over the past several years, it's been a little bit more of a revenue issue that it has been a true expenses as the margin has not showed and at one chart has come down that hurt that ratio and it just impacted that efficiently ratio for us a lot more than the absolute increase of expenses over past several years.
(Inaudible) compensation, expenses we haven’t had a dividend increase in four years, when you did cut the dividend and when it was necessary to cut the dividend, I think you were very fair, you did not cut percentage what most major banks and regional banks do, and I appreciate that (inaudible) we would like to get back on track, do you see anything to look to the future or you wish to comment on that?
You are absolutely right I mean when the board made a decision to reduce the dividend in 2009 we decided to take a balanced approach and not to said its nothing like a lot of banks that are there, because we looked at our circumstances going forward and try to make adjustments what they might be and that's where we ended up. That's about half of what it was, $0.15 versus $0.30 last quarter. And that's been our approach to try to stay and keep in balance. It’s a quarterly decision by the board but from our point that’s what was the industry is looking at, and what the world is looking at in terms of capital formation it seems like a good time to be modest in the dividend I mean I can go back historically and then when typically all sized banks will pay maybe 25% to 30% to 35% of their earnings and goes into accumulating large pools of capital.
And then we got into an era where the analysts were saying what are you doing with all the capital and so people started what people started doing either increasing the dividend to high payout ratios or going about (inaudible) and then we ran into their problems this latest recession and most people were forced to shut back in closest form on building the capital.
So I think the position of our board today is that we would, we want to be careful and we don't want to do anything we can't sustain and in terms of the payout ratio we’re probably more comfortable back in the 30% to 35% payout ratio range which is about what we paid out this quarter than we are being back at 50% level for the time being. That will change; as things improve, you know the market isn't the best right now, the margin, the opportunities in the loan growth, those things all have to improve before we are going to see more robust earnings. So the Board is keenly aware that we have you know people on our board remember our large shareholders as well and they share your interest so that's about all I can say that's kind of I think…
Well said, I mean the other thing that we really monitor too Jim is you have a lot of companies that maybe got out and done raises, capital raises, so we’ve tried to generate capital internally to get to these higher capital levels with regulators forcing, because if you go out and you (inaudible) or do a raise you are going to dilute your existing shareholder base. So and we tried to you know maybe make it a little bit more cut dividend to as Jim said kind of a balanced level and then generate capital internally to prepare us for future growth and we are starting to see some you know last couple of quarters we've seen growth on the loan side; we did two transactions last year, mergers and I think we are going to continue to, there are going to be opportunities out there that we need to just make sure that we have appropriate capital levels to be able to lot in and do transactions and I think I'm comfortable with where we are today and we have enough capital flow to serve enough capital well through M&A, but if we don't have too much, so yeah some other companies that are going out and doing buyback maybe they did raises you know diluted some shares and now they are out going buyback at higher levels, so I mean like I said we try to balance that out and you know obviously the dividend is important to a lot of people sitting around in this room but capital levels and requirements have changed from a regulatory perspective as well.
I think we rather, in that area, under promised and over delivered if that’s possible. When the bank took the, bought in the capital purchase program, part of the [CPP] program back in 2009, we looked at that, our Board looked at that, our management team looked at that as buying insurance policy, and we didn’t know how deep the recession is going to be and there was some dire predictions about what might occur. So we had the opportunity that any other banks to sell deferred stock to treasury at a fixed price of plus (inaudible). We sold $108 million of that under the advise of many of our advisors and just as an insurance policy and we knew, we thought we could afford to pay the roughly $0.5 million a month in dividend and about $6 million a year, a cost to (inaudible). When we got to the point where we were comfortable repaying it, then we did that and we were able to deliver without a capital raise. So that was unusual, and that was one of our goals to be able to do that because had we had to raise capital to repay the part, we would have diluted the existing shareholders through that process. So I hope that that is, may be some evidence for the shareholder that we really do try to be prudent in the way we approach these things and I think taking the CPP money was prudent to beef up our capital, not knowing how bad things might get, once we really understood how things were going to kind of turn out, we were comfortable repaying it and we will do that without about (inaudible). So I guess that kind of (inaudible) this discussion too, so I just wanted to mention that I don't know (inaudible). Jim any other question? Anybody else have a question?
(Inaudible) I know they will make the market and are strong and I don't like their predictions for earnings for next year.
Well, I mean if you look at the projections out from the Feds, they are still projecting a very flat and very low interest rate environment.
Again Jim let their (inaudible) continued compression on your net interest margin. As I showed you, we were at 4% a couple of years ago, we are down to 3.5. We were done about three basis points this quarter. I think you are going to continue to see some gradual compression on that over the rest of this year and in to ’14. I mean the Feds are not talking about rates and so right now what they are projecting out is 2015, so I mean that’s suffice that the whole that the industry is under right now and
I appreciated your comment and (inaudible).
Mark I think you talked about a $3 million capital gain on the sale or the service. Is that a one time thing in this quarters’ earnings or is it going to continue or is that being replaced by other earnings and stay at the 12 million level until the (inaudible) in line or something.
That $3 million free cash flow is a one-time gain. We were getting earnings from that line of business before between what we are going to get with the new partnership and expense side, that is about the same on a quarterly basis going forward, but the income for the first quarter did include one time pretax gain of about just over $3 million.
There was also some one-time expense in there with the conversion of the Gateway.
About $800,000, so that net was (inaudible).
Well everything else being equal, if you took out those one-time so it’s about a little under $2 million on an after tax basis. So there's a net of about $0.05 to $0.06 per share that was one time related in the first quarter.
Any questions? As there are no other questions we guys were anticipating obviously. So nobody has one (inaudible). Thank you very much. Before we adjourn the meeting I wanted to mention to the group that I had made a decision about a year ago that I would not be a candidate for the Chairman’s position going forward when we reorganize at the meeting immediately following this meeting, and a lot of thought went into that but I think its five year and five years since I retired. Five years of the former CEO in this role is probably long enough and longer than most do it. I don't think it should be a one-size pit-ball type of arrangement, I’ve never believed in that. But I wanted to make you aware of that, and having had this much time to for the Board to consider a replacement we went through an evaluation process and it was very healthy process for I think for the Board of Directors and for our governance processes overall. And while it won't be official until we actually hold the election immediately following this meeting, I think I'm probably comfortable to announce that in our strap hole which was taken with unanimous ballot that was cast for Chuck Urtin, who will succeed me in that role and Christine Toretti will succeed him as the Vice Chairman. And so anyway I wanted to make you all aware of that and if you have any other questions I would entertain a motion to adjourn the meeting. The second? I promptly move the second, all in favor give your consent by saying aye.
(Inaudible) Thank you all for being here.
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