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Astoria Financial Corporation (AF)

Q1 2010 Earnings Call Transcript

April 22, 2010 10:00 am ET

Executives

George Engelke – Chairman and CEO

Monte Redman – President and COO

Frank Fusco – EVP, Treasurer and CFO

Analysts

Matthew Clark – KBW

Bruce Harting – Barclays Capital

David Hochstim – Buckingham Research

Bob Ramsey – FBR Capital Markets

Christopher Nolan – Maxim Group

Matthew Kelley – Sterne Agee & Leach

Collyn Gilbert – Stifel Nicolaus

Tom Alonso – Macquarie

Operator

Good day and welcome to Astoria Financial Corporation’s first quarter 2010 earnings conference call. At this time, all participants have been placed in a listen-only mode and the floor will be open for questions following the presentation. (Operator Instructions) Today’s call is being recorded.

Today’s conference call includes several forward-looking statements, which are intended to be covered under the Safe Harbor provision for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. A decision of risk factors associated with these use of forward-looking statements is outlined on page six of our first quarter 2010 earnings release, which is available on our website or may be obtained from the Company upon request.

It is now my pleasure to turn the conference over to Mr. George L. Engelke, Jr., Chairman and Chief Executive Officer of Astoria. Please go ahead sir.

George Engelke

Thank you very much and good morning, and welcome to a review of Astoria Financial Corporation’s 2010 first quarter results. Joining me this morning are Monte Redman, President and Chief Operating Officer; Frank Fusco, CFO; and Peter Cunningham, our Investor Relations Officer. Following my brief remarks we will entertain any questions you may have.

Last night evening, we reported that for the 2010 first quarter, net income totaled $12.9 million or $0.14 per share. Included in the first quarter is a $45 million provision for loan losses, 5 million less than the 50 million provisions in each of the last four quarters.

In addition, we reported that the first quarter net interest income and net interest margin, both increased year-over-year, and on a linked quarter basis. The margin increased 24 basis points from the previous quarter, and 23 basis points from last year’s first quarter to 2.39%. And on a trailing quarter basis net interest income was up 9%, despite a smaller balance sheet.

With respect to credit quality, although non-performing loans have increased slightly from the previous quarter to $419 million, as we anticipated. We are encouraged by the improving trends in early-stage delinquencies.

Loans one and two months past due declined $21 million, or 7% from the previous quarter, and $53 million or 17% from the 2009 first quarter. While non-performing loan levels may remain elevated for some time as we work through the foreclosure process, it’s important to note that the loan potential remaining has been greatly reduced. We have already marked down and charged off as necessary over 70% of current residential non-performing loans to their adjusted fair value less selling costs.

For more comprehensive details on credit quality please refer to pages three, four and 13 of our press release.

During the first quarter, the balance sheet contracted at $191 million, as loan prepayments and amortization outpaced loan production. With respect to deposits, we continue to let high cost CD deposits run off. Total CD deposits decreased $208 million while low cost, passbook money market and checking accounts increased $81 million or 8% annualized.

With respect to the outlook for 2010 while it appears that a moderate economic recovery is underway, the housing market remains soft and high unemployment persists, which may somewhat restrain the pace of the recovery.

The long-term outlook for credit is improving, which should translate into continued declining credit costs and improved financial performance. In terms of loan growth, as the mortgage rate for 30 year fixed-rate conforming loans increases, we anticipate that loan prepayments will decline, which should result in portfolio growth in the second half of this year.

With that as an overview, I’d like to open the phone lines for your questions. Nicole, if you would take care of that please.

Question-and-Answer Session

Operator

Thank you. The floor is now open for questions. (Operator Instructions) Please hold for your first question. Thank you. Our first question is coming from Matthew Clark of KBW.

George Engelke

Are you there Matt?

Operator

Mr. Clarke your line is open to speak.

Matthew Clark – KBW

Hello?

George Engelke

Hi Matt, good morning.

Matthew Clark – KBW

Good morning. Just first, can you talk about your expectation for growth and what that assumes for volume, with higher rates and mortgage rates ticking up, and it sounds like you think obviously prepays will slow. But just want to get a better sense for what kind of confidence you have that you are going to be able to regain some of the volume that’s been maybe going away from you with the government now involved and now uninvolved to some degree?

George Engelke

All right Matt. In terms of loan growth per se our pipeline as of the end of the first quarter is about $250 million less than what’s at the end of the year. So, we are looking at a loan portfolio reducing, as well as a balance sheet in the second quarter. I will say this about a 16% of our applications coming in are for purchase. So the applications we’ve been seeing over the last year have been mostly refinanced. So, I am not sure what the government programs are doing in terms of helping the overall purchase market. What we’re hoping is that the overall mortgage rate increases – a 30-year fixed rate increases, with the government out of the purchase more with backed security area, and that our refinance has actually slowdown and decrease, which were in the second half of the year, which will allow for portfolio growth. We are not going to push our rate on our loans or credit quality just to get loan growth. So if that does not happen, we will continue to shrink the balance sheet as necessary, just putting on good-quality loans at good rates.

Matthew Clark – KBW

Can you update us on what you are offering on the 5/1 ARM? I think it was 408 sometime last quarter or towards the end of last quarter. I’m just curious if you guys have bumped that up or not.

Monte Redman

No, we have not. The current 5/1 no point loan – jumbo loan which has an LTV of 75% is 4% right now.

Matthew Clark – KBW

Okay. Okay. And on the CD front, have you guys begun to think about going long, maybe three to five-year range that you see some of your, I think, peers going out there, offering 3% on three to five-year money. Is that something you guys are starting to do or have any intention of doing?

Monte Redman

We’ve been extending liabilities, all of last year we continue to do so now. The average CDs in terms of maturity was about 18 months in the first quarter, and that’s more of a bell relationship we have, our three, six and nine months and one year rates are anywhere between 50 and 75 basis points. But our current – our two-year rate is 1.25, our three year rate is 2.25 and our five-year rate is 3%. So, we have been doing this for a while. We’ve been able to extend CD liabilities as we are able to reduce our CD costs. And I think that’s one of the things that we are able to reduce our interest rate sensitivity gap, which was in excess of negative 20% at the end of 2008 to just slightly below 7% at the end of 2009 and is actually now slightly below 6% at the end of March. So, we’ve been doing that all along. While we’ve been working on credit quality, we were – we didn’t lose the ball in terms of watching out for interest rate risk as well.

Frank Fusco

Matt, this is Frank Fusco. We’ve also taken opportunities to extend our borrowings as well out into that three and four-year range for interest rate risk purposes in this low rate environment.

Matthew Clark – KBW

Okay. But I guess on the loan front offering 4%, 5/1 ARMs and locking in for, I guess, under five-year duration obviously, but still just is that – is there any cause for concern in locking it at that kind of rate.

Monte Redman

One of the things that’s happening while we are doing new loans at 5%, a significant amount of our 5/1 that are reset five-year period are now turning into one-year ARMs. And those one-year ARMs are low interest rate, but it also helps us match interest rate risk. So, we think, we look at both sides on the assets and liabilities. On the assets it is the amount of new loans with five years – five-year terms as well as the amount of repricing loans that go into one-year ARM. We are cognizant of both sides and that’s how we help – no, we’re taking a look at the whole picture when we manage interest rate risk.

Matthew Clark – KBW

Okay. Great, guys. Thanks.

Monte Redman

Okay.

Operator

The next question is from Bruce Harting of Barclays Capital.

George Engelke

Good morning, Bruce.

Bruce Harting – Barclays Capital

Hi, good morning. What are you seeing in terms of loan modification behavior in your portfolio and your NPA portfolio? And are these working? And is the period of time – is part of the NPA number we should keep in mind that it’s just the same loans, but they are taking longer to go into foreclosure, and due to these programs maybe you can comment on that?

George Engelke

Yeah, that’s a good point, Bruce. I’ll comment first on the second part in terms of the length and time that alone is in the foreclosure process. And one of the reasons why we anticipate the non-performing loans may increase a little bit, and may continue to do so, just working through the foreclosure process in various states. 36% of our non-performing loans have been delinquent for more than a year. In fact, we have five states mostly in the Northeast that over 40% of our non-performing loans in those states are basically delinquent. It just takes a long time to actually get possession of those properties. The good news is that because of the way we’ve been conservative, proactively reviewing those non-performing loans at six months and annually thereafter we will charge off if necessary the potential loss at that time.

Over 70% of those were residential non-performing loans have gone through that process. The bad news it just takes longer to turn the non-earning asset into an earning asset. In terms of the modification program, the biggest thing that we have seen, because we’re a jumbo lender is job and unemployment. And when somebody loses their job it’s very hard to modify a loan when 31% of zero is still zero. So the biggest thing that we’ve been able to do – we have 12 different programs that we work with and try to work with our delinquent borrowers. But probably the most successful thing we’ve been able to do is short sales and able to help them in terms of their credit picture and work through that.

Bruce Harting – Barclays Capital

Monte, as you mentioned I think under 20% of your originations are purchased, is that right?

Monte Redman

That’s correct.

Bruce Harting – Barclays Capital

And then why do you – is that because you’re not looking for – you’re just not in the market with the rate right now, or is that just the flow that is coming to you? Just why do you think there isn’t a bigger purchase component to the overall market right now both for you and nationally?

Frank Fusco

There are several reasons. One we’re a jumbo lender and the amount of jumbo loans out there in the country now is less than 10%. With the government raising the conforming limit up to 729,000 in a lot of areas, a lot of people are able to take a 30 year fixed that they are selling to Freddy or Fannie or getting it through FHA. So, they are able to go with 30-year fixed at 5% rather than doing a 5/1 at probably at 4% if you will. I think in terms of our approach, we’re still, I would say very conservative in this market. We think we’ve turned the market has turned the corner, but we believe it’s going to be a little bumpy and we haven’t loosened our underwriting in this market.

Bruce Harting – Barclays Capital

Okay. Thank you.

Frank Fusco

If you take a look at our average loan and the average LTV effectively what you’re talking about were $720,000 loan that was four or five years ago maybe a $2 million home collateralizing that loan, it’s now maybe worth today’s value at about 1.3 million and we’re lending 700,000 on that. So that’s our average transaction.

Bruce Harting – Barclays Capital

Thank you.

George Engelke

Okay.

Operator

Your next question is from David Hochstim of Buckingham Research.

David Hochstim – Buckingham Research

Hey, good morning. I wonder if you can give a little more color on the outlook for the margin, so went nicely this quarter. If you start to grow loans again is it likely that you can continue to drive down the funding cost. And if you are extending the duration, it seems, so that would put some upward pressure. But I just wondered if you can give us a sense of what to think about for the margin this year?

George Engelke

Well, I think we put in the press release we have about 1.5 billion of our CDs, non-liquid CDs about – at about a 2.06% rate . In March given our current rate, which included the rate I said earlier, the average rate was low as 1.26. So, we are looking at some benefit on the CDs rolling over. I will say this though in terms of – reasonably saying only modest margin expansion. We had a lot of CDs rolling over in December and if you remember we said the average cost of CDs for the fourth quarter and the average rate of CDs at the end of the quarter, there was a difference of about 20 basis points.

David Hochstim – Buckingham Research

Right.

George Engelke

In the first quarter we had a lot of CDs rolling over in January. That difference between the average cost of deposits for the first quarter and the average rates of deposit at the end of the quarter was only 5 basis points. So a big part of the increase in margin for the first quarter as compared to the fourth was the fact that as of the end of the year that rate was already showing that big benefit. That benefit is significantly reduced in the first – as of the end of the first quarter. So, we will have some benefit into the second quarter, but we’re looking for less of an increase than we just got in the first quarter.

David Hochstim – Buckingham Research

Okay, thanks. And then on the improvement in delinquencies, is there any sort of comments you can make about where those are occurring? Is it concentrated by geography or type of borrower or type of loan?

George Engelke

Well, I think the benefit is throughout the country the increase in non-performing loans interesting about 70% of the increase of that was Alt-A. Now most of that increase relates to 2005 and 2006 originations. The good news only 17% of our portfolio is Alt-A, and in fact with Alt-A which original LTV of greater than 70% that’s only 7% overall portfolio. So in terms of future problems it seems to me less of supply coming forward in terms of future problems.

David Hochstim – Buckingham Research

Okay. Thanks.

Operator

The next question is from Bob Ramsey of FBR Capital Markets.

Bob Ramsey – FBR Capital Markets

Hey, good morning, guys.

George Engelke

Good morning.

Bob Ramsey – FBR Capital Markets

It seems like there was less of a headwind this quarter from the Arm repricing. Could you talk a little bit about has there been any shift in borrower behavior once they hit that repricing date and maybe let us know what percent of the ARMs today are in that one-year product that rolled into the one-year?

George Engelke

Well, the answer to the first question is, no. We’re still getting in excess of 75% of the ARMs reaching their repricing period going into one-year ARMs. I think what we said as of the end of the year, the first half of the year had about 1.4 billion of ARMs repricing. The second half of the year had close to 2 billion. So, we see more of the ARMs hitting that repricing period in the second half of the year.

Bob Ramsey – FBR Capital Markets

Okay. And 1% of – go ahead.

Monte Redman

But the activity has not changed. A lot of people are still going into that – turning into a one-year ARM. We are contacting those people several times during their year period to let them know that they can refinance at any time into new 5/1. So to keep them with us, but right now that’s helping. Although the rate is a little lower it’s helping our interest rate risk position.

Bob Ramsey – FBR Capital Markets

Okay. And what percent of your ARMs in the portfolio are one year today versus five or other turns?

George Engelke

Probably about 35 to 40% of the residential portfolio are one-year ARMs

Bob Ramsey – FBR Capital Markets

Okay. And then if I shift gears a little bit you noted in the release that about 52 million of the multifamily non-performing loans are TDRs that are performing according to their modified terms, if they continue to do so – sorry go ahead.

Monte Redman

I want to correct you a little bit.

Bob Ramsey – FBR Capital Markets

Please.

Monte Redman

52.5 million of our multifamily loans are non-performing. Of that 52.5 million, 23.7 are – were modified TDRs and are performing according to their terms.

Bob Ramsey – FBR Capital Markets

Okay. Thank you. And with that 23.7 million if they continue to perform as a modified, when do they come back into the performing loan bucket?

Frank Fusco

If they have been performing according to their modified terms for six months we will then – we still watch them modestly but we will no longer include them as part of non-performing loans.

Bob Ramsey – FBR Capital Markets

Okay. And are they – with the 23.7 million, have they been there close to six months or they are newer this quarter sort of where are they in terms of age?

Monte Redman

I will tell you what, they are less than six months and greater than a month.

Bob Ramsey – FBR Capital Markets

Okay. Maybe the last question with an end of quantitative easing at the end of March, have you guys seen much change in sort of mortgage rates, mortgage demand et cetera of the mortgage market?

George Engelke

I think in terms of the rates haven’t increased that much and we have not seen a change. We are anticipating that the 30-year conforming rate will rise and that will help us in the growth in the second half. But we have not seen that significant at this point in time.

Bob Ramsey – FBR Capital Markets

Okay. Thank you guys.

George Engelke

Okay.

Operator

Your next question is from Christopher Nolan of Maxim Group.

Christopher Nolan – Maxim Group

Hi, good morning.

George Engelke

Good morning.

Christopher Nolan – Maxim Group

A quick question, can you give us an update in terms of the reserving policy, the credit quality seems to be stabilizing here. But the reserve ratio partially – I mean, excuse me – reserved loan-loss reserve balances continue to grow. I’m just trying to see what you guys are thinking in terms of where the reserves can go?

Monte Redman

I think we review our losses at all different levels of our portfolio by state, by year of origination by type of loan by original loan value et cetera. In addition we also look at local and national trends as part of our process in calculating the allowance for loan losses. As we stated in the press release, we believe the long-term credit outlook is improving, which should translate into declining credit cost. But that may be a bumpy road going forward in there. As I said earlier to an earlier question, the non-performing loans may grow just because it just takes a long time to go through that foreclosure process. The key part is that 70% of those residential loans have already been reviewed and charged off any difference between their current value, less selling cost if necessary. And the other part that we take a look at is the one and two month bucket in delinquencies. So, we take a look at all those things in terms of our allowance for loan losses. The one thing I would say in terms of coverage ratio is bad in if you reduced our non-performing loans by the amount of loans that have already been reviewed 246 million, our coverage ratio would actually be greater than 120% of those remaining non-performing loans.

Christopher Nolan – Maxim Group

So I’m sort of reading between the lines here. It seems like you guys are becoming much more comfortable with your overall reserve position, and even though the balance sheet might decrease a little bit in the second quarter, we could see overall additions to the reserves were to moderate a little bit.

George Engelke

Well, I think we believe that in terms of our portfolio we’ve seen that peak. We believe the long-term outlook is positive and that will lead into – go into a declining credit cost going forward, but it just may be a bumpy road as we go through this.

Christopher Nolan – Maxim Group

Okay. Great. Thanks for taking the questions.

George Engelke

Okay.

Operator

Your next question is from Matthew Kelley of Sterne Agee & Leach.

Matthew Kelley – Sterne Agee & Leach

Yeah, hi guys.

George Engelke

Hi.

Matthew Kelley – Sterne Agee & Leach

Just going through the dynamics of the margin, a little bit more. It looks like you get about $4 billion of CDs that are going to mature and then the current rates that would be down about 50 or 60 basis points. But you have got pretty close to a similar amount of ARMs it will hit the one-year and become the one-year ARMs and reset. Isn’t that impact a lot larger like 200 basis points on a similar dollar amount? I mean, you could put those together; won’t the margin be down in the second half of the year?

George Engelke

I think we are leading to a very modest increase in the second quarter and then remain stabilized for the rest of the year there. In terms of our matching an interest rate position, we agree that there are a lot of loans that may turn in there. But I think with very modest increase in the second quarter than plateauing, our 2.39% margin that is right now is probably the highest we’ve have been in the last 10 years. So in terms of our operation and making sure that we are not taking on risky loans, we believe this is a very good margin may be slightly higher than second quarter, but plateau after that.

Matthew Kelley – Sterne Agee & Leach

Right.

Monte Redman

Not every mortgage loan is going to reprice down 200 basis points. That’s the max they could. And then so there was a blended series and it also depends on when during the year they are repriced.

Matthew Kelley – Sterne Agee & Leach

But most of the current period fixed coupons are in the five?

Monte Redman

Yes, the very low fives, yes.

Matthew Kelley – Sterne Agee & Leach

Right. So, I mean if 75% of the portfolio does reprice at that same repriced ratio stays in place that’s like 2.6 billion that will potentially reprice 200 basis points lower in a static environment. I mean the one-year CMP is only 40 bps.

Monte Redman

Yes, that’s correct.

Matthew Kelley – Sterne Agee & Leach

So what are the other options that would allow the margin to stay flat?

Monte Redman

Well, partly offset is that our multifamily loans that are subject to repricing in many cases are repricing up slightly, as well as how much of the balance we continue to keep short on the funding side.

Matthew Kelley – Sterne Agee & Leach

Okay.

George Engelke

And then the exact timing of every dollar of mortgages don’t repriced today, it could be repriced later in the year if rates are slightly higher.

Monte Redman

If more of those loans are repricing by the end of this year, interest rates are exactly where we are today and more of those loans are repricing down, we will take a look in terms of our CD pricing in terms of making sure the maximum is appropriate.

Matthew Kelley – Sterne Agee & Leach

Right, got you. And do you notice any impact from the Freddie/Fannie buyout programs?

Monte Redman

Minimal our securities portfolio in small relative to hold balance sheet and then we saw a slight increase in prepaid, but nothing significant.

Matthew Kelley – Sterne Agee & Leach

Okay. Actually one last question. When you look at the history of your charge-off you know process, and you take a 180 day write-down, and then you have to wait for the property to go through the foreclosure process to get it back and sell it. How much – what are you seeing for additional charge-off at the point-of-sale? I guess the question is have your initial write-downs been accurate to the point that it does not require additional write-downs once you get the property back and sell it?

George Engelke

It depends on the length of time, but ultimately our loss severity is somewhere about 30%. And quite frankly if you review it at six months and you’re holding it for a year and a half or longer you may get a little additional write-downs, but overall the loss severity and new values have been pretty good.

Matthew Kelley – Sterne Agee & Leach

Okay.

George Engelke

I think just adding one piece to that when we had the REO and we have marked down these loans down to the value that we think they have, when we get to the point of selling the property we are showing net profits almost every single month in that area, not that it’s a real profit, obviously, but the meaning is that we are charging off appropriately on those pieces of property.

Matthew Kelley – Sterne Agee & Leach

Gotcha. All right. Good to hear.

George Engelke

Thanks.

Operator

The next question is from Collyn Gilbert of Stifel Nicolaus.

Collyn Gilbert – Stifel Nicolaus

Thanks, good morning, gentlemen. Just a question, I want to try to understand a borrower behavior a little better here on the one-year resets. Why are the borrowers choosing to go into one-year ARMs? Versus locking in longer-term you know at similar rate?

George Engelke

I think you have to understand that we are talking about in most cases jumbo borrowers who understand the yield curve and understand the fact that they believe that as interest rates rise they will be able to refinance in that period of time. And in the meantime they think that they will take advantage of the decrease in interest rate.

Collyn Gilbert – Stifel Nicolaus

Okay. So due see then – so I guess the risk is depends, which is I think what we are talking about maybe what sort of not alluding to too is that – if it is a savvy borrower and if it’s really more of a financial place for them than the second we see signs of rates going higher than you’ll probably see a lot of that product moves off the balance sheet then.

George Engelke

No, I don’t think we will move off the balance sheet. I think will move from a one-year ARM to a new five-year product. I think as I said earlier one of the things we are doing is contacting these people, letting them know that they do not have to go to another broker, they can refinance with us at anytime. We have a one-year prepayment penalty in place for residential loans, so by the time they are now repricing into one-year ARMs that penalty is gone. They could repriced – they can refinance at anytime. So they can – we let them know that they can come to us and we will put them in a new five-year at the rate at that point in time. Conversely on our balance sheet, as we are putting in new five-year ARMs at that point, we can extend our liabilities to continue to match that. So it works out for everybody.

Collyn Gilbert – Stifel Nicolaus

Okay. Okay, all right, thanks.

George Engelke

Okay.

Operator

The next question is a follow-up question from the line of Bruce Harting Barclays Capital.

Bruce Harting – Barclays Capital

The goodwill loss, are there any sort of epilogues or conclusion remarks you want to make on that in terms of how that came out ? And then is there anything in the legislation that impacts the thrift industry or OTS that we should be aware of that might not have been apparent?

George Engelke

I would say watch this legislation that’s floating around right now. There is a whole lot of things in there that absolutely make no sense whatsoever. And that will be something we’ll all have to work through depending on what people that are not bankers decide bankers should be doing.

Frank Fusco

Yeah. I think in terms of our business quite frankly there is nothing that’s really going to affect us whether is the – our business is very basic. We have two sides here. We have retail banking and our portfolio lending. So there may be changes to our regulatory environment. There may be other changes in certain operations, but that should not have an impact on our banking.

Bruce Harting – Barclays Capital

Okay. So in terms of one or two of the other large OTS regulated companies announcing conversion to bank holding companies is there anything you can comment on that or you need to do that or not?

George Engelke

No, there is no need to do that. There is legislation that is changing every day and we anticipate there will be regulatory changes and at that time we will make any decisions we need to do in terms of what we have to do. But right now we are very comfortable. As I said our operation is really basic. It’s two businesses. It’s retail banking and it’s portfolio lending. We could work under any regulatory environment that comes out of the legislation.

Bruce Harting – Barclays Capital

Okay. Thanks.

George Engelke

Okay.

Operator

Your next question is from Tom Alonso of Macquarie.

George Engelke

Hi, Tom.

Tom Alonso – Macquarie

Hey, good morning, guys. Just real briefly, just so I can – I just want to make sure I can kind of understand the growth dynamics that you guys are talking about in the back half of the year. I don’t – you’re not looking for a big bump up in origination volumes that’s really just going to be more prepaid slowing is that a fair way of looking at?

George Engelke

I think so, and I think we’re not looking at dramatic growth in terms of portfolio – loan portfolio at this point. But agreed we don’t see the purchase market heating up dramatically. It may get – it may do better. We think we’ll do somewhat better, but nothing dramatic. We’re looking at refi loan down.

Tom Alonso – Macquarie

Okay. And is that dependent upon rates going up or you just think that’s sort of a natural attrition if you will of people who were going to refi, already refi?

George Engelke

I think it’s a little bit of both, but clearly with rates rising would be – would increase that potential.

Tom Alonso – Macquarie

Okay, fair enough. Thanks, guys.

George Engelke

Okay.

Operator

Since there are no further questions, I would like to turn the conference back over to Mr. George Engelke for any additional or closing remarks.

George Engelke

Thank you very much for participating this morning. It’s nice to see blue sky once in a while, and we’re seeing a little now and we’re enjoying it. Hopefully we can keep it that way. Thank you.

Operator

Thank you. Ladies and gentlemen, this concludes today’s teleconference. Please disconnect your lines at this time and have a wonderful day.

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