HomeStreet's CEO Discusses Q3 2013 Results - Earnings Call Transcript

| About: HomeStreet, Inc. (HMST)

HomeStreet Inc. (NASDAQ:HMST)

Q3 2013 Earnings Call

October 29, 2013 1:00 PM ET

Executives

Mark Mason – Vice Chairman, President and CEO

Darrell van Amen – EVP, Chief Investment Officer and Treasurer

Analysts

Paul Miller – FBR Capital Markets

Tim Coffey – FIG Partners

Ryan Zacharia – Jacobs Asset Management

Tim O’Brien – Sandler O’Neill & Partners

Operator

Good afternoon, and welcome to the HomeStreet’s Q3 Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today’s presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Mr. Mark Mason, President and CEO of HomeStreet. Mr. Mason, please go ahead.

Mark Mason

Thank you. Hello and thank you all for joining us for our third quarter earnings call. Before we begin, I’d like to remind you that our third quarter earnings release was furnished yesterday with the SEC on Form 8-K and is available on our website at ir.homestreet.com. In addition, a recording will be available at the same address approximately one hour later today.

On this call, we will make some forward-looking statements. Any statement that isn’t a description of historical fact is probably forward-looking and these statements are subject to many risks and uncertainties. Our actual performance may fall short of our expectations or we make take actions different from those we currently anticipate. Factors that may cause actual results to differ from expectations or that may cause us to deviate from our current plans are detailed in our SEC filings, including our Quarterly Report on Form 10-Q for the second quarter and our Annual Report on 10-K for 2012 as well as our various other SEC reports.

Additionally, information on any Non-GAAP financial measures referenced in today’s call, including a reconciliation of those measures to GAAP measures may be found in our SEC filings and in the earnings release available on our website.

Today, I’d like to share a few thoughts about current market conditions, speak about our strategy, and highlight key financial results. Please refer to our earnings release for a more detailed discussion of our financial condition and results of operations.

The mortgage market is far different today than it was a year ago. While this is not surprising or unexpected, the magnitude and the speed of the change has been significant. According to a recent MBA mortgage finance forecast, 30-year fixed mortgage rates rose from a historic low of 3.35% in May to 4.6% in the third quarter of this year, an increase of 125 basis points over a short three months.

Given that this change occurred at the end of a series of refinance ways, the most recent historically longer duration, the rising rates served to curtail refinance activity faster and more significantly than previously experienced.

Total loan origination volume for the industry was $471 billion in the third quarter of last year, compared to the expected volume of $369 billion for the third quarter of this year, a decline of roughly 22% year-on-year. Refinance volume is expected to decrease by $153 billion or 45% over that same period.

In the third quarter, our net income was strongly impacted by these changes in the mortgage market. Significant decreases in refinance activity will only partially offset by a slow growing purchase market. In our ongoing growth in personnel and origination capacity, lower aggregate mortgage demand also drove lower profit margins as lenders competed for remaining volume in a smaller market.

Our company is now going through the long anticipated transition from a company, whose earnings were dominated by mortgage banking, to one with more diversified sources of income. We’ve been working to accelerate the growth of our commercial and consumer banking businesses, while we continue to build mortgage market share in existing and new markets.

Now a little about our third quarter results. Net income was $1.7 million or $0.11 per diluted share. Net interest income of $20.4 million, grew by $3 million over the second quarter due to higher balances and yields on loans over investments, as well as higher yields on single family loans held for sale. Our net interest margin increased by 31 basis points to 3.41%, up from 3.10% for the prior quarter.

Non-interest income was $38 million, down $19 million from the second quarter due to lower mortgage origination sale revenue, offset in part by an increase of nearly $2 million in mortgage servicing income. Non-interest expense was $58 million, an increase of 2.5% over the prior quarter, primarily due to higher compensation-related expense resulting from the growth in personnel as we expand on mortgage banking and commercial and consumer banking businesses.

On October, 24, our Board of Directors approved the common stock dividend of $0.11 per share payable on November 25, to shareholders of record as of November 4, 2013. And in the third quarter we announced two separate merger agreements to acquire Washington based Fortune Bank and the Yakima National Bank.

Both transactions have received shareholder and regulatory approval and are expected to close early in November. We are very excited about these acquisitions, as they bring us great teams of seasoned lenders and customer service personnel. Additionally, with the acquisition of the Yakima National Bank, we will expand our market to Central and Eastern Washington.

We also entered into an agreement to acquire two retail deposit branches from American West Bank. We have received all necessary regulatory approvals and we expect this transaction to close in early December.

I’d like to go into a little more detail now on our commercial and consumer banking business. Commercial and consumer banking had its second consecutive quarter profitability with net income of $3.9 million for the quarter, increase of $2.5 million over the second quarter. Net income for the first nine months of this year was $2.3 million, compared to a net loss of $10 million for the same period last year.

Loans held for investment were approximately $1.5 billion at September 30, increasing $94 million or almost 7% over June 30 of this year. Total new loan commitments in the quarter were $242 million, compared to $211 million in the prior quarter. We had significant originations and commitments in each lending area with the strongest growth in commercial real estate and residential construction.

Overall C&I growth has been the slowest with lending competition extraordinary high, and business loan demand that remains below pre-recession levels. Deposit balances of $2.1 billion, increased 7% from June 30, with gains in both transaction and savings accounts as well as in certificates of deposit, which we began to grow this quarter to extend the duration of our liabilities.

Our net interest margin improved due to a 42 basis point decline in interest-bearing cost of deposits over the same period last year, due primarily to the maturity of higher cost time deposits. This was offset by a six basis point decline yield on interest-bearing assets due primarily to lower yields on single family adjustable rate mortgages.

So we open our forth dedicated commercial lending center in the third quarter located in Everett, Washington, and added three commercial lending originators to our team.

Credit quality improved significantly over the quarter with non-performing assets decreasing to 1.37% of total assets, the lowest level since the beginning since the beginning of 2008. And classified assets decreased to only 1.9% of total assets, down from 2.7% in June 30.

We also saw reductions in non-accruals, delinquencies and TDRs. OREO was essentially unchanged from the prior quarter. It has decreased by approximately 50% since the beginning of the year. Our allowance for credit loss has declined to 1.61% of total loans at September 30 compared to 1.92% of total loans at the end of the second quarter, reflecting the improved credit quality of our loan portfolio and the significant level of single family mortgages portfolio today, which will have historically substantially lower credit risk.

Our allowance coverage now compares favorably to peers with similar loan portfolio composition. This decline in coverage was achieved through a recovery of $1.5 million of loan loss provision in the quarter. And in the third quarter, the Bank’s Tier 1 leverage ratio was 10.90% and total risk-based capital ratio was 18.52%.

Now let’s talk about our mortgage banking business. For sometime now, we have been executing our strategy to build a substantial multi-state retail origination franchise. And to take advantage of continuing dislocation and consolidation in the industry by opportunistically recruiting teams with top producers in major Western markets.

Today, I am happy to announce the opening of new mortgage lending centers in Newport Beach, Carlsbad, Del Mar and Central San Diego, California. At the beginning of 2012, we had nine stand-alone mortgage lending centers in three states. Today, we have 40 lending centers in five states including now a total of 10 in California.

Our strategy is to mitigate the impact of declining profit margins and lower industry loan volume through continuing to hire high quality and high volume mortgage producers in our existing and new markets. It might see counterintuitive to increase our mortgage banking personnel at a time when the large national banks are swimming down their operations in response to a smaller market.

However, larger banks and national platforms are reducing personnel in response to lower loan demand in markets in which they already operate. In our case, most of our hiring is in markets that are new to us. At the same time, we reduced operations staff in our established markets in Puget Sound and we may continue to make further reductions going forward.

We’re also focused on increasing our profit margins, through improving origination fees where possible, and reducing controllable production costs while increasing our production efficiency. Over the last two years, our production costs have risen in response to ever increasing investor underwriting, data quality and compliance requirements. We are responding to these increases by developing more efficient origination software and streamlining workflows where possible.

In the third quarter, the mortgage banking business had a net loss of $2.2 million, a decrease in net income of $13 million from the second quarter. This was primarily attributable to a $20 million decrease in net gain on loan originations and sale activities. The reduction in revenue was due largely to lower interest rate lock commitment volume, which declined by 45% to $786 million in the third quarter as a result of sharply declining refinancing activity, that was only partially offset by a slow growing purchase market. 80% of third quarter interest rate lock commitments were purchase transactions, compared to 59% in the second quarter.

Closed loan volume designated for sale was $1.2 billion in the quarter, down only 9% from the second quarter, but substantially higher than the volume of new interest rate lock commitments. This imbalance in the quarter negatively affected earnings, since majority of our mortgage revenue is recognized at the time of interest rate lock, while a majority of origination costs including commissions are recognized or incurred upon closing the loan.

If rate lock commitments during the third quarter would have been the same $1.2 billion level, as closed loans, it would have resulted in approximately $11 million higher gain on loan origination sale revenue. Conversely, if closed loan volume had been the same as the $786 million in interest rate lock commitments, pre-tax income would have been approximately $4 million higher, as a result of the lower variable costs such as commissions and incentives.

We do not expect this imbalance to be significant in the fourth quarter. For the quarter, net gain on single family mortgage loan origination sale activities was $31 million, decrease of 39% from the second quarter. The composite margin was 375 basis points, down only slightly from 380 basis points in the second quarter. Single family mortgage servicing income was $3.7 million, almost doubled that of the second quarter.

Mortgage servicing fees were up as our portfolio’s Single Family Loans Service for Others grew by 8.5% over the quarter. And HomeStreet maintained its ranking as the number two originator by volume of purchase mortgages in the Pacific Northwest, based upon the combined results with our affiliate business, Windermere Mortgage Services.

Non-interest expense increased $1.3 million from the second quarter, primarily from the net addition of 35 mortgage originators and fulfillment personnel, located primarily in California. At the end of the quarter, we eliminated 34 positions from established fulfillments centers in Puget Sound.

Going forward, as soon as stable interest rate environment, we anticipate the primary drivers of quarterly changes in mortgage loan volume to be continuing growth in loan production personnel and our expansion in the new markets, as well as seasonal factors.

Going forward, what should you expect from HomeStreet? Given the significant transition our company is now experiencing, I thought we should share with you today some metrics to assist you in understanding and analyzing our future prospects. First, please note that we anticipate non-recurring transaction costs related to the acquisitions of Fortune Bank, the Yakima National Bank and the two American West Bank branches of approximately $4.8 million and $700,000 in the fourth quarter of this year and the first quarter of next year respectively.

Our near-term goal for our commercial and consumer banking business is to achieve 6% to 8% quarter-over-quarter growth in earning the assets through next year, while managing growth in non-interest expense to 1% to 2% per quarter over the same period.

We believe that investments in personnel and new branches that we’ve made in recent quarters and our recent acquisitions, will allow us to achieve these goals. Additionally, we continue to look for quality acquisitions to further accelerate this growth. We plan to continue opportunistically growing our mortgage banking business throughout the Western United States by taking advantage of the consolidation and dislocation continuing in the industry today.

Our growth plans include increasing mortgage production personnel by 5% to 7% per quarter through the next year and beyond. We believe we are positioned to do this because of our strong retail franchise that is focused on being the best place for high performing self-sourcing loan originators to be successful.

We’ve proven our value prospect to the market, and today we have a pipeline of people waiting to join us. In this regard, pacing and logistics are critical. We are committed to growing in a controlled fashion and minimizing to the extent possible, the impact on earnings and customer service associated with this growth. We believe the recent changes in the industry brought on by rising rates have only increased our opportunities.

We thank you for joining us on the call and your attention today. I’d be happy to take your questions at this time. Operator?

Question-and-Answer Session

Operator

Thank you. We will now begin the question-and-answer session. (Operator Instructions) At this time, we will pause momentarily to assemble our roster. The first question is from Paul Miller with FBR. Please go ahead.

Paul Miller – FBR Capital Markets

Hi, thanks a lot. Thanks. Hi Mark, can you talk a little bit about your commercial loan growth. You’ve bought a lot of commercial teams on board. You’ve got some pretty solid commercial growth there. Can you talk a little bit about what do you – where do you see that going and how competitive is that market still?

Mark Mason

I assume you’re primarily talking about the C&I business.

Paul Miller – FBR Capital Markets

Yes.

Mark Mason

That market is incredibly competitive in part, because there is no real new loan growth, so all of the business surrounds, each of us trying to take each other’s customers. Ultimately, that becomes a competition of rates and terms. Most of the banks to-date, give generally good service to their customers. As a community bank, we try to highlight local service and local decision making, but of course we have a lot of local competitors as well.

Fortunately, with the addition of the teams from Fortune Bank and the Yakima National Bank, we add well established teams with well-established customer bases to our group. And that in addition to the people we’ve added over the last year, we think we’re going to do better than most. Having said that, it is a business that is unfortunately too competitive on the types of things that hurt our business; the terms, the credit quality of loans and rates which compress our margin.

As excited we are about this, we think that it’s going to be a slower growth business than we might hope. More exciting today in terms of near-term prospects on origination, our commercial real estate residential construction. As you saw in the quarter, the biggest numbers at least changed in origination numbers were in those business lines. We have a very fine residential construction group that has been a core business of this company for a long period of time. Obviously it was part of the challenge during the recession, but today the terms on those loans, the credit quality and the strength of the developers that survived through the market, much superior to pre-recession standards.

And our ability to bank larger, more liquid and better capitalized developers is even better than it has been. So we’re looking forward to strong growth there. We’re growing to grow that business beyond its traditional footprint in Washington, and Oregon [ph]. And so we’re quite excited about those prospects.

Our commercial real estate business, again one of the older businesses here, institutional quality and I’m very, very excited about the quality of the loans that we’ve done in that group, quality of the sponsors and the projects. We are one of the few middle market banks in our area who has the technical expertise to do significant commercial construction, as well as bridge and repositioning loans, that has been a strong part of our originations. And those loans, a portion of which will become Fannie Mae loans or the front-out [ph] loans in our portfolio.

So those are the highlights for us. Unfortunately, the C&I business as it is for others in our markets is going to be a struggle to create significant loan demand.

Paul Miller – FBR Capital Markets

So, I mean at 6% growth – you had 6% growth this quarter. I mean that’s something that we need in our models to gear down a little bit or to remain – do you think you can maintain at least – a little bit above market growth out there, because the lending teams you’re bringing on?

Mark Mason

We think we’re going to exceed the peer growth as a consequence of all the investments we’ve made. We’re just now starting to get traction in some of these businesses. And this quarter’s growth of course excludes the impact of our acquisitions. So as I mentioned in my comments, we’re looking to grow earning the assets. I quoted a 6% to 8% range. Obviously, we feel we can exceed that if we’re giving that kind of guidance. And well my guidance is through the end of next year, I would expect that to continue for some reasonable period beyond that.

Paul Miller – FBR Capital Markets

And then you mentioned earlier in the call that, how much rates rose in the third quarter. Where currently a raise in the Washington area and have you seen materially impact in refis and how is that – and what about the purchases. Is it still lack of supply holding that back?

Mark Mason

Since rates peaked in the second quarter, they rallied somewhat. The Federal Reserve’s decision not to start taper the partial government shutdown, you all are students of the interest rate economy today. Rates have moderated. We’ve seen the 10-year rate move back down to just over 2.5%. Accordingly, mortgage rates have dropped as well, and they are today in the 4.875% to 4.375% range for a 1.30 year convention mortgage.

So they’ve come down a little bit, that has helped the refinance market. More recently, our application volume has – on refinances, has risen somewhat such that refinances make up about 25% to 30% of our current application volume, up from about 20% in the prior quarter.

Paul Miller – FBR Capital Markets

Okay. Thanks a lot.

Operator

Our next question is from Tim Coffey with FIG Partners. Go ahead please.

Tim Coffey – FIG Partners

Good morning, gentlemen.

Mark Mason

Good morning, Tim.

Tim Coffey – FIG Partners

So can you give us an idea of how much your deposit growth in the quarter came from your recent hires in the commercial banking side of business?

Mark Mason

I don’t have a specific number. I would say that we’ve gone comprehensive benefit from all the things we’ve been doing. Remember, we’ve opened a number of new retail deposit branches in new markets, they are contributors. Our new commercial customers have been fairly significant contributors. I think that our product strategy and our most recent marketing, has helped us. Those of you not around market may not know that in the second quarter, we became the bank sponsor of the Seattle Seahawks and Sounders, that has gotten us a great deal of local [indiscernible], and has helped our name recognition and customer acquisition on the consumer side. And so I think all of those things have contributed to the growth in deposits.

Tim Coffey – FIG Partners

Okay. And I am assuming that most of that – if you’re looking from a geographical standpoint, a lot out will come out from a future stand market?

Mark Mason

Yes, that’s correct. That’s correct. Though I will share with you Hawaii continues to be a strong deposit gathering market. We have some specific savings products in Hawaii. We have one saving account that is specific in limited Hawaiian markets that we have – Darrell, what do we raised there so far?

Darrell van Amen

In the last quarter, we raised about $35 million in that one…

Mark Mason

That one market in that one product.

Darrell van Amen

In that one saving account, that’s the [indiscernible] account.

Tim Coffey – FIG Partners

Okay. To go forward and just talking the strategy that can be, I don’t know yourself you saw in interest bearing deposits and terms type deposits?

Mark Mason

Well, we hope that our business lending and all the work we’ve done in building a state of the art cash management and treasury services team is going to bring us greater levels of outright business deposits without lending, all right? I mean there are banking customers who don’t borrow today. And some very fine companies that have a positive cash flow and don’t need us to lend to them.

And we have spent a fair amount of money and we’ve hired a lot of great people to address that more technical market from a service standpoint. One of the bright spots for the folks from Yakima National Bank and Fortune Bank that they saw in joining us was the very sophisticated treasury and cash management services that we were able to provide and the support.

Tim Coffey – FIG Partners

Okay, thanks. So would it be your expectations in terms of the deposit growth that – growth still into this quarter, [indiscernible] we have this quarter would be a bonus, not an expectation?

Mark Mason

We expect to grow deposits similarly going forward. Some portion of that we believe we’re going to have to raise through time deposits, just conservatively when we plan. It is the not the worst situation right now, lengthening our liabilities a little. It helps our weight-risk profile.

Obviously, we would primarily like to do that through retail customers, core customers that also bring that operating accounts and fuller relationships at the margin we can do it in the wholesale market a little bit cheaper. And we’ll probably end up utilizing all of that.

Tim Coffey – FIG Partners

Okay. And then the imbalances that you talked about between the net locked loans and the closed loans in the quarter, you said that – you didn’t expect that we see a significant in the fourth quarter. Just going forward, do you mean that you see that trend reversing or moderated?

Mark Mason

Well, I won’t tell until this time next quarter. I guess the central part of my comment is whether it’s positive or negative; I don’t think it’s going to have a material impact on the results. It could actually go the other way next quarter. And if you think about the number of people we’re hiring, and them ramping up their respective pipelines, we will overcome declining industry volume, simply by acquisition of personnel.

And so that should ultimately lead to on average higher lock volume than closing volume. Now that assumes everything else is static which of course it never really is.

Tim Coffey – FIG Partners

All right. Okay. And just your outlook on M&A. Where do you see your local market, obviously there has been a whole lot of activity in the last couple of months, can you give any thoughts on that?

Mark Mason

Well it’s all frustrating in that the most recent transactions have largely been negotiated on a one-to-one basis, between sellers and preferred buyers. And while we’ve had a similar transaction, it’s all frustrating if you’re an outsider. And if you might have had a more competitive valuation on the building transaction and not really be allowed to participate until after transaction is been executed and now you have to overcome of those who you would break up here [ph].

So I think there are good transactions from the buyer and seller standpoint. I am not critical of what they are doing. From our standpoint, we would like to be considered. And we’ve tried to make that clear to everyone involved in that marketplace. And hopefully going forward, we’ll have more opportunity. I think it’s a great time. I think that at least in Pacific Northwest, folks who have access to capital and growing businesses are active acquirers, and many of these smaller institutions who’ve had to struggle without really access to capital are showing to consider partnering with other institutions for all the right reasons.

And so it’s good to see that more transactions occurring, I’d like to see it more liquid market.

Tim Coffey – FIG Partners

All right, thank you. That is all my questions.

Mark Mason

Thanks very much, Tim.

Operator

(Operator Instructions) Our next question is from Ryan Zacharia with JAM. Go ahead please.

Ryan Zacharia – Jacobs Asset Management

Thanks for taking my questions. So if I understand your growth targets including the announced acquisitions, it implies that earning assets may end 2014 of like $3.5 billion, does that sound right?

Mark Mason

That’s entirely possible.

Ryan Zacharia – Jacobs Asset Management

Okay. And what do you…

Mark Mason

Because I see an extrapolation of those numbers, yes.

Ryan Zacharia – Jacobs Asset Management

Yes. And what do you think is a good efficiency ratio for the core banking segment for 2014 within the context of those targets if you achieve those goals?

Mark Mason

Understanding that it’s a number that’s going to be improving over the year, right?

Ryan Zacharia – Jacobs Asset Management

Yes.

Mark Mason

It’s not very attractive today. And as your earnings assets grow, of course then earning [ph] improves substantially. I am not going to be that impressed with it for the year. I mean it could be in the 75% to 80% range, but I would expect by the fourth quarter, that number – of 2014, that number is substantially better, and something that would be at the lower end of that range.

Ryan Zacharia – Jacobs Asset Management

Okay. And then just from the second quarter presentation, you’ve put forth kind of a slide that you had in there for a number of times now, mortgage volumes, not expectations but overlaid versus kind of MBA assumptions and that had kind of $5.5 billion of funds in retail for sale mortgage production volume. I just want to know how you think about that number kind of 90 days later.

Mark Mason

I don’t feel substantially different today. That scenario when I forecast, as I remind my attorneys, it is based upon on extrapolation of planned hiring and a production level per producer. And I still feel like that is an achievable number based upon our plans on the current market metrics of loans per loan officer, assuming that continuing hiring scenario. I would hope that’s a little conservative.

And remember that’s direct originations too, right? That excludes the production we buy from our affiliate Windermere Mortgage Services.

Ryan Zacharia – Jacobs Asset Management

Right. And that’s what I was going to ask just, what was the number this quarter?

Mark Mason

Good question. Where is the Windermere number? Hold me a minute. So closed loans Windermere was $167 million, plus they added $25 million of our portfolio production as well.

Ryan Zacharia – Jacobs Asset Management

Are you seeing a bit pickup in ARM production and are you putting portfolio in more of that stuff. Do you think that that’s kind of burgeoning opportunity?

Mark Mason

Yes. And yes, in fact the growth primarily on the non-conforming or jumbo side, in ARM production is a little larger. And as a consequence, we are beginning to pool more loans and become somewhat more competitive on our rates. And we’ll likely sell more production on accrual basis to non-agency investors and that’s a program we’re just starting and we think that’s a significant opportunity today.

Ryan Zacharia – Jacobs Asset Management

Okay, great. Thanks a lot guys.

Mark Mason

Thanks. I appreciate it.

Operator

The next question is from Tim O’Brien with Sandler O’Neill & Partners. Go ahead please.

Tim O’Brien – Sandler O’Neill & Partners

Good morning, Mark.

Mark Mason

Good morning, Tim. How are you?

Tim O’Brien – Sandler O’Neill & Partners

Fine. Thanks. Just one quick question, you might have touched on this. How many folks did you add with the rollout of those new Southern California centers?

Mark Mason

Good question. Because it’s sort of work in process, right, we hired an initial group including the branch managers, and then we have a target over time that we would like to grow each of the branches to. So the initial hiring in Northern California was about 30 to 35 folks, same in Southern California roughly. Overtime, each of those areas should grow to – should be in excess, well in excess of double that number just in those branches. And those will not be the only branches we opened in California.

Tim O’Brien – Sandler O’Neill & Partners

It makes sense. And where the hires in Sou Cal [ph] tied to the MetLife business back in the day?

Mark Mason

The Northern California group was. There are a few people in the Southern California group, but mostly they are originators from other lenders. I will share with you that each of the groups, Northern and Southern California currently work for one lender. The Northern California group came from one lender. The Southern California group came from another different lender.

Tim O’Brien – Sandler O’Neill & Partners

And as far as progress in Northern California that you talked about kind of hiring, did you make many additional hires this quarter, up North?

Mark Mason

A few. Again, right, so each of the plans we have an initial set of folks. And then we have follow-on hiring that’s planned. I don’t know the exact number. The pace of that is really over the next couple of quarters to complete filling those offices in each case.

Tim O’Brien – Sandler O’Neill & Partners

Yes. All right, thanks for answering my questions.

Mark Mason

Also soon we’re going to be opening where you are, in San Francisco.

Tim O’Brien – Sandler O’Neill & Partners

Great. Good luck.

Mark Mason

Thank you.

Operator

(Operator Instructions) Showing no further questions in the queue, this concludes our question-and-answer session. I would like to turn the conference back over to Mr. Mark Mason for any closing remarks.

Mark Mason

Thank you again for joining us on our call today. We appreciate your patience, and as always, your great questions. Look forward to talking to you next quarter. Thank you, operator.

Operator

Thank you. And the conference is now concluded. Thank you for attending today’s presentation. And please disconnect your lines.

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