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National Penn Bancshares, Inc. (NASDAQ:NPBC)

Q1 2010 Earnings Call

April 23, 2010 1:00 pm ET

Executives

Scott Fainor – President & CEO

Michael Hughes – CFO

Sandra Bodnyk – Chief Risk Officer

Analysts

Jason O'Donnell - Boenning & Scattergood

Damon DelMonte - Keefe Bruyette & Woods

Avi Barak - Sandler O'Neill

Andrew Stapp - B. Riley & Co.

Collyn Gilbert - Stifel Nicolaus

Mac Hodgson - SunTrust Robinson Humphrey

Christopher Marinac - FIG Partners

Whitney Young – Raymond James

Operator

Good afternoon and welcome to the National Penn Bancshares first quarter 2010 earnings call (Operator Instructions) This call and accompanying presentation slides will be archived on National Penn’s Investor Relation website following the live call.

A transcript of today’s call and the slides will also be furnished on SEC’s Form 8-K. National Penn’s earnings release was furnished earlier today to the SEC on Form 8-K and is also on the Investor Relation website.

The presentation may contain forward-looking information that is intended to be covered by the Safe Harbor provided by the Private Securities Litigation Reform Act of 1995. Please take a moment to review slide number one of the presentation. I will now introduce National Penn’s President and CEO, Scott Fainor.

Scott Fainor

Joining me today are Michael Hughes, our Chief Financial Officer, and Sandra Bodnyk, our Chief Risk Officer. We have changed our format of the call this quarter. I will begin by making a few introductory remarks, with Michael and Sandra giving some more in depth analysis, then I will conclude the presentation.

We are also looking forward to the live question-and-answer session with the investment community which will follow the prepared remarks. As it relates to the first quarter, I believe we have made progress on our short-term initiatives and see some more favorable trends in asset quality.

Regarding asset quality, our nonperforming assets have remained relatively stable over the last several quarters in the $125 million range in fact, declined in the quarter. Although classified assets grew in the quarter the trend line is flattening. Sandra will provide additional color on the quarter.

These trends allowed us to reduce our provision for loan losses to $32.5 million as compared to $47 million in the previous quarter. Despite the decreased provision our allowance for loan losses increased as the provision exceeded net charge-offs.

Significant highlights of the quarter were, core operations provided stable and strong contribution. The net interest margin improved. Our nonbanking businesses continued to perform well. We controlled operating expenses. The balance sheet remains strong and we have enhanced our capital ratios at both the holding company and the banks.

Based upon this performance we returned to profitability which sets the stage for 2010. We remain cautious about the impact of the local economy but the trends are directionally correct as asset quality measures continue to improve.

Let me now turn the presentation over to Michael Hughes, to discuss some specifics of our financial performance.

Michael Hughes

Thank you Scott, this presentation contains the non-GAAP financial measure of core earnings, let me begin by reviewing the reconciliation of reported earnings to core operating earnings.

The good news is that the adjustments are few in number in the quarter. Core earnings per share were $0.03 per share. The first adjustment is a $7.3 million pre-tax or $4.7 million after-tax and is truly an accounting convention.

The company previously made an irrevocable election to mark-to-market on a quarterly basis a portion of National Penn’s trust preferred. Those that trade on a retail basis under the symbol NPBCO.

As you would suspect the preferred is thinly traded as market price improves, National Penn records and expense. During the first quarter the price increased from $21.00 a share to $23.87 per share and on the last day, the stock was up approximately $1.23.

Obviously this is not a core item, it is a noncash item and it does not impact bank regulatory capital ratios. The other item is a $4.1 million pre-tax gain, $2.6 million after-tax related to the curtailment of the defined benefit plan.

It is a curtailment which freezes benefits and not a termination. In addition to this one-time gain pension expense will be reduced on an ongoing basis. We do not anticipate that compensation expense in total would be reduced as we reevaluate the match in our defined contribution plan and look forward to removing the salary freeze later in 2010.

Let’s look at some of our core fundamentals and review slide three, the net interest margin expanded in the first quarter. Based upon our initiative to manage the balance sheet by repricing some higher cost deposits. Despite the contraction in the balance sheet net interest income was flat as the margin expanded.

We do not expect to see the same level of benefit in future periods from CD repricing as we have seen in 2009 and early 2010. Nonperforming assets negatively impacted the margin by 10 basis points in the quarter which is similar to the impact in the last quarter.

As we look at other income on slide four, the core noninterest income for the quarter decreased from $29.3 million to $25.8 million. Items of note were the previously discussed mark on the trust preferred and the pension plan curtailment gain.

There are some timing and seasonality adjustments and wealth management was impacted by approximately $450,000 due to the sale of [Vantage]. Of note were some softness in the private service charges due to seasonality and mortgage originations declined, each reduced refinancing activity.

Referring to slide five operating expenses are well controlled and were under our budget for the quarter. The efficiency ratio on a core basis remained strong as you can see on this slide. Compensation expense declined by $1.4 million to $29.4 million in the quarter due to a reduction in headcount and incentive compensation expense.

Let me spend a little time on capital and asset quality, slide six details capital at the holding company, ratios were strong improved from the prior quarter and in compliance with all regulatory requirements. The benefits of the capital raise in 2009 and the balance sheet management in 2010 significantly enhanced these ratios.

Slide seven is an overview of the capital ratios at National Penn bank. At March 31 the leverage ratio stands at 8.17% and is based on the average assets for the quarter. The slide also shows the calculations assuming no growth or contraction or internal generation of capital in the second quarter. With those assumptions the bank leverage ratio would be 8.32% or a capital cushion of approximately $27 million while maintaining liquidity of $50 million-plus at the holding company level.

Let me conclude by reviewing slide eight which highlights the asset quality trends, as Scott mentioned provision of $32.5 million versus $47 million in the prior quarter. Loan loss reserve increased from $146.3 million to $153.9 million.

Increased loan loss reserve to nonperforming loan coverage from 116% to 128%, nonperforming loans declined despite a mortgage modification program which resulted in troubled debt restructuring of $6.7 million related to residential mortgages.

Since we are relatively early in the release season we look at the comparison of peer group at December 31, we anticipate those favorable comparisons will continue in the quarter. I’ll now turn the presentation over to Sandra Bodnyk, our Chief Risk Officer.

Sandra Bodnyk

Thank you Michael, my comments today will be focused on our loan portfolio and asset quality. Despite positive signs of economic recovery and growth new loan activity continues to demonstrate the reluctance of businesses and consumers to borrow.

New loans originated during the quarter totaled approximately $180 million, however our loan portfolio declined by $109 million to $5.9 billion. As Michael as noted a significant portion of the decrease relates to lower residential mortgage banking refinance activity.

In reviewing asset quality slide nine clearly illustrates the stabilizing trend in nonperforming loans and charge-offs that was experienced over the last several quarters including a 4% reduction in nonperforming loans and a 5% reduction in charge-offs from the previous quarter.

The stabilization is due in large part to the decline in migration rate of classified loans from the levels of mid 2009 as demonstrated on slide 10. Given the continued economic stress classified loans did however increase during the quarter from $501 million to $532 million but the trend line is flattening.

The increase was primarily attributed to three credits totaling approximately $30 million. Two of the credits are in our C&I portfolio related to the construction industry, and one is a residential developer. Analysis of these three credits indicates they should be able to readjust expense levels and have sufficient projected sales to improve their financial position in the latter half of 2010.

As we’ve stated the economy particularly as it relates to housing continues to negatively impact commercial real estate construction loans. In slide 11 details the risk profile of the loan portfolio. C&I charge-offs in the first quarter were $2.3 million and nonperforming C&I loans declined in the quarter by approximately $3 million.

Twenty-two percent to our classified loans are CRE construction loans and 11% of CRE construction loans are nonperforming. I want to emphasize that the nonperforming balance of these loans reflects a 42% reduction to the contractual balance achieved through charge-offs when they were placed on nonperforming status.

Commercial and real estate charge-offs in the first quarter totaled $18.8 million and were related to problem loan resolutions and appraisals obtained during the period. We obtain appraisal updates for nonperforming loans on a six month basis.

Included in nonperforming loans are $6.7 million of residential mortgage loans restructured in an effort to make them affordable to those homeowners who have experienced financial difficulties and were in danger of losing their homes.

Or consumer portfolio continues to perform well and this is a small number in relation to the $830 million of mortgage outstanding. Slide 12 depicts our charge-off and NPA composition by region. Geographically charge-offs and non accruals remain concentrated in our core southeastern Pennsylvania region which experienced a higher escalation in prices and higher average prices of real estate and this is consistent with previous trends.

I’ll now turn the presentation back to Scott Fainor.

Scott Fainor

Thank you Sandra, let me conclude with a few comments, although we have strategically managed the size of our balance sheet we have maintained and in fact improved our profitability through expense control, reduced loan loss provision, and an improvement in the net interest margin.

This was accomplished primarily through lower deposit pricing at some of the larger wholesale and municipal customers as opposed to a broad retail pricing strategy. The balance sheet remains strong. We exceed all regulatory capital ratios. We continue to increase the allowance for loan losses and nonperforming loans declined in the quarter.

Operating expenses were well controlled and nonbanking business continues to perform well. We will remain focused on reducing classified assets. We have executed on our short-term strategies and will continue our effort as it relates to improving asset quality throughout 2010.

Let me address some of the intermediate to long-term initiatives, the regulatory environment, we have met and I believe exceeded the requirements of our regulators. As previously stated many of these initiatives were in process prior to January, 2010.

To give you some examples we have recruited senior personnel in credit administration and loan review. We have expanded the work out group from five to 20, with many being transferred from the line. We have further enhanced loan review processes at the most senior levels of the company and we have refined our loan loss reserve procedures.

TARP repayment, as we have stated previously we will be patient as it relates to the repayment of TARP and want to see economic conditions continue to improve. We will approach this in a shareholder-friendly manner and we’re developing potential strategies which may include repayment over time.

Capital management, the effective allocation and utilization of capital is critical in this environment. We executed on opportunities to more effectively manage capital in the first quarter and this will be a continued focus throughout the year. The internal generation of capital will be a driver of longer-term profitability.

Let me speak about longer-term profitability, although current economic conditions have resulted in diminished loan demand, we are focused on taking advantage of market disruption to secure high quality lending relationships. We are also focused on the cost/sell opportunities in the wealth and insurance areas and have a continued focus on expense control.

Over the longer-term as economic conditions improve, the effective management of capital primarily at the bank level will be an important component to driving earnings through asset and deposit growth.

This ends our prepared remarks, and I’d like to turn it back over to the operator. We can now take analyst questions at this time.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of Jason O'Donnell - Boenning & Scattergood

Jason O'Donnell - Boenning & Scattergood

It looks like total delinquency has trended slightly higher this quarter can you just give us a break out on the early stage delinquencies at the end of the quarter versus the prior quarter.

Sandra Bodnyk

I’m going to have to take a look at the early stage, what I would suggest to you however is that in looking at our delinquencies over the last five quarters, they have trended in a range of eight basis points throughout those five quarters.

The majority of the 30 day type delinquencies, quarter over quarter very early stage, very little in the 60 to 90 and very little change in that.

Jason O'Donnell - Boenning & Scattergood

In thinking about the margin and how that might perform in a rising rate scenario, how much of the loan book currently has floors in place and roughly where are those rates at.

Scott Fainor

We started putting floors into all of our revolving credit facilities and short-term facilities about 18 months ago. And as those facilities have come up for their annual reviews, floors have been put in that range between 4% to 5% on average.

We’ve been through that process so the majority of those credits have floors in place now.

Michael Hughes

But I’d also say that we are asset sensitive so we anticipate we’d see margin expansion in an increasing rate environment.

Operator

Your next question comes from the line of Damon DelMonte - Keefe Bruyette & Woods

Damon DelMonte - Keefe Bruyette & Woods

Could you give us a little bit more of an update on the MOU, you mentioned that you have been addressing requirements from the regulators but is there a way that we can kind of frame out how long it would be until you could have that removed.

Scott Fainor

As we said in the January report for year end and the fourth quarter when we announced and disclosed the MOU, we stated that many of the components of that were in process. We put in place a self-imposed improvement plan on ourselves. We have been executing on that strategy. We have a good relationship with our regulators, the primary regulator is the OCC and the holding company regulator is the Federal Reserve.

We’re working with them on all parts of and the components of the MOU or what they consider to be MRA’s and I think what we pointed out in today’s discussion is, progress has been made and many of the items are completed and now what we do, is keep working with our primary regulator to show evidence of that over time.

Damon DelMonte - Keefe Bruyette & Woods

And then with respect to Reg E which will be implemented in the back half of this year, have you been able to identify and quantify what revenues could be at risk.

Scott Fainor

We still on Reg E, there’s two critical dates, July 1st and August 15th. When we take a look at those two dates, the August 15th date is the one more around the opt in and we’re going to see the reduction in our overdraft fee income.

However, if you take a look at the overdraft income which comes under our category of service charge income on deposits, you’ll see that that was down for the quarter, quarter linked to the end of the year. Our customers are telling us on the retail side that they’re holding more balances, they are managing their accounts better, and so there’s already been a reduction in that fee income and we believe that as we size up who’s going to opt in or not in the third quarter that we’ll probably be able to give you more color on that in the second quarter financial analysis.

Damon DelMonte - Keefe Bruyette & Woods

Just lastly kind of a bigger picture from a competitive landscape have you, do you have any anecdotal evidence or discussion regarding First Niagara’s acquisition of [Harleysville].

Scott Fainor

We hold First Niagara in high regard as we do all of our competitors but I think what you’ve seen from what we accomplished in the first quarter our banking teams are poised, they are continuing to try to take advantage of disruption, not only with that merger but with other mergers that have taken place over time.

And we continue to look at at building our transaction accounts and low cost core deposit products and we’re going to continue to be a force in the markets we serve around being competitive and trying to get our fair share of market disruption into our company.

Operator

Your next question comes from the line of Avi Barak - Sandler O'Neill

Avi Barak - Sandler O'Neill

Two quick questions for you regarding your comment about provisioning in excess of net charge-offs at what point or just your personal best guess do you expect that that trend could reverse allowing for some release of reserves.

Scott Fainor

I think its too early to tell and we’re focused in on the economy in the markets that we serve and I’ve done a lot of customer calls over the course of the last let’s say six to eight weeks, more than 30 calls, and one of the things we’re hearing clearly from our commercial customers is they do not have confidence yet in Eastern Pennsylvania around the economy coming back.

So they think it’s the second half of 2010 versus the first half so without that confidence we don’t see a lot of requests for new borrowing, we don’t see a request for a lot of people trying to go and hire more people, and I think we’re going to be a little bit more cautious around the economy as it relates to our customers and to the markets that we serve.

With that being said, I think you heard clearly in our presentation we’re cautiously optimistic that we can continue to navigate through this and show signs of strength and I think we pointed that out in many categories today with these quarterly results.

Michael Hughes

If you look at the trend in net charge-offs in nonperformers, we’re seeing that flattening. I think a key indicator would be classified assets and the reduction in absolute dollars.

Avi Barak - Sandler O'Neill

Second question, unrelated topic, we all recall at the end of last year, Nat Penn sold and wrote down and sold the remaining exposure of the pool trust preferred securities in the investment portfolio, just wondering if those securities have actually been sold at this point and could you give us an idea of the range of where those securities were sold.

Michael Hughes

Those securities were sold in the fourth quarter and as you recall it was critical for us to get the tax benefit and the NOL carry back to execute that transaction in 2009 and they were sold at values that approximated the fair market value that we had marked them to at September 30.

Avi Barak - Sandler O'Neill

Just wanted to commend you on the revised press release and the new conference call format as opposed to webcast, so thanks for that.

Scott Fainor

And thank you for the comments Avi.

Operator

Your next question comes from the line of Andrew Stapp - B. Riley & Co.

Andrew Stapp - B. Riley & Co.

With the lack of customer confidence in the local economy do you foresee loan balances continuing to decline throughout the year.

Scott Fainor

I think the confidence right now is driving some of the demand down but we do think that the second half of the year that there will be some turn in that demand because remember there’s some pent up demand out there. If companies aren’t making investments in plant and equipment, and they’re not hiring, they’re trying to get it all out of the expense side, they can only do that for so long.

So the loan demand right now is down at low levels, but at the same time we think that there will be a pick up in the second half of the year, so loan volume will be soft to slightly down and we think we can look at some more positive growth in the second half of the year.

Andrew Stapp - B. Riley & Co.

Do you know approximately when the salary freeze might end.

Scott Fainor

The salary freeze went into effect on August 1st of 2009 and has been in full effect since then.

Andrew Stapp - B. Riley & Co.

But you talked about ending that freeze.

Scott Fainor

I think we’ve been, we tried to be clear with all of our employees and the market, that until the company comes back to a more sustained profitability and that’s more than just one quarter, we would keep that salary freeze in place.

We understand it’s a competitive environment out there, we understand it’s a very difficult decision and we’re analyzing it very closely and if we can keep ourselves on track with future profitability we will lift the salary freeze at that time.

Operator

Your next question comes from the line of Collyn Gilbert - Stifel Nicolaus

Collyn Gilbert - Stifel Nicolaus

Could you just give some possible color on where you think a reasonable run rate would be on expenses.

Michael Hughes

We had said previously that we felt comfortable at a $60 million range on a quarterly basis and we still feel comfortable with that.

Collyn Gilbert - Stifel Nicolaus

And then just in terms of with the commentary here on loan demand being weak and your borrowers just not having it safe yet, what’s your current line usage in your C&I book and then how does that compare to what maybe it was say two years ago.

Sandra Bodnyk

I’m just looking back to two years, current line usage is running in the 42% range, looking back over two years our line usage was running at 47.7.

Scott Fainor

One of the things if I can just reiterate about the customers’ reaction to confidence in the market, I think its natural. I think our markets lagged into the recession, they’re lagging out. I think this is all natural and I think what we have to do is continue to stay in close contact with our customers to the most senior levels in the company and that way our teams can then be very supportive when that turn takes place.

And that’s exactly what we’re doing.

Collyn Gilbert - Stifel Nicolaus

And if you covered this in your opening comments, I apologize but do you think there is room to further lower the deposit rates.

Michael Hughes

We have said that the benefit that we’ve seen in the margin in 2009 and early 2010 we don’t anticipate seeing that type of benefit in the future. So from a margin perspective it’s a function of the economy, loan demand, but we don’t think as we would suspect industry wide that it will continue to be driven by lowering deposit costs.

Scott Fainor

The only additional thing I want to add to Michael’s comment on that is our company has been focused more than ever as you’ve heard in previous quarters around low cost core and transaction accounts whether they be personal on the consumer side, or small business, and I think as we all know there is a long sales cycle in getting traction on building your core transaction account base.

And we have one year under our belts and we’re continuing to focus in 2010 so changing our mix will help us in regards to that growth of lower cost profitable core transaction accounts.

Operator

Your next question comes from the line of Mac Hodgson - SunTrust Robinson Humphrey

Mac Hodgson - SunTrust Robinson Humphrey

You might have mentioned this, I apologize if you did, what was the cash balance at the holding company at the end of the quarter.

Michael Hughes

Its $50-plus million, low $50 million.

Mac Hodgson - SunTrust Robinson Humphrey

And you feel like you could shrink the balance sheet at the bank level any more, or do you feel like this is a fairly stable level. I know you still have some liquidity down there.

Michael Hughes

We probably could shrink it a little bit more but we believe we’d like to keep it at this level. You see some pressure maybe going forward on the margin so to continue shrinking the bank probably isn’t the appropriate thing at this time.

Although I’d tell you I do think there’s other opportunities inside the company to allocate capital more effectively and enhance the margin.

Mac Hodgson - SunTrust Robinson Humphrey

What are the expenses at the holding company that would absorb cash and maybe limit your ability to downstream.

Michael Hughes

The expenses at the holding company we have the interest payment on the, the dividend payment or whatever you want to call it, on the trust preferred and them some minor expenses, I’d say $5 to $7 million a quarter.

Mac Hodgson - SunTrust Robinson Humphrey

A quick credit question, you mentioned the growth in classifieds coming, or two of the loans I think coming from commercial credits that were tied or related to the residential housing market, do you have an estimate by chance of how much of the commercial book is of similar type loans tied to the residential housing market. I know you’ve got an elevated level of classifieds in that book but nonperforming are actually pretty small. So I was just wondering if there was weakness going forward, I don’t know if that’s the type of loan its going to come from or not.

Sandra Bodnyk

Certainly in a regional bank portfolio you do have assets tied to the construction and housing industry, I don’t have the number here off the top, I could follow-up with you with that number.

Operator

Your next question comes from the line of Christopher Marinac - FIG Partners

Christopher Marinac - FIG Partners

Just a question about restructured loans, are you valuing those any differently from impairments relative to a traditional non accrual loan, can you just kind of walk us through any distinctions that you make between the two buckets.

Scott Fainor

I’ll just make one comment to you, I think we stated this in previous calls, we don’t sort of split transactions in regards to the way that we rate the credit so when we migrate the credit down to non accrual its in that bucket. If you bring it back to the troubled debt restructures, this particular quarter we had those mortgage modification loans in there and I’ll ask Sandra to comment on that.

Sandra Bodnyk

Basically the troubled debt restructures are not on the commercial side, they were on the residential mortgage side and they were put in that and we recognized either losses or those specifically those related to them based on cash flow impairment and collateral analysis.

Christopher Marinac - FIG Partners

Back to the similar question about classified loans do you think it’s a possibility that those flatten out sooner versus later or is there still a fair amount of uncertainty about that.

Sandra Bodnyk

As you can see the growth rate has significantly flattened and stayed flat. As we sit and review our credits on a monthly basis and we do that and we do forecasts, we talk to our customers about the forecast. We hear from our customers that they are cautiously optimistic about the third and fourth quarter in the company just as Scott has mentioned in his business with customers about the second half of the year.

That gives us some reasons to believe that we’ll see that growth sustained, or that growth level sustained I should say.

Christopher Marinac - FIG Partners

Any new trends you’re seeing in the wealth management business and I guess what’s the outlook for that piece of the business going forward.

Scott Fainor

I think we have, our wealth management group which includes our companies that manage investment assets, as well as on the custodial side, they have been seeing positive trends. They’ve been seeing more customers wanting to go and invest more funds so confidence has come back on that side of the business.

At the same time they have never stopped cross selling not only current customers but customers of other banking companies. So that whole sales process and relationship building process has been ongoing. Our wealth groups once again continue to see positive moves in the number of accounts plus the profitability for each relationship account.

And then also we have two other areas in our wealth management group as we call it, our private banking division and our insurance services group and both of those other divisions are seeing positive moves too with more activity from customers, more cross selling of products and services and more movement in profitability per relationship.

That’s good new.

Operator

Your next question comes from the line of Whitney Young – Raymond James

Whitney Young – Raymond James

Kind of going back to the classified loans I know you’ve been very aggressive since the second quarter last year getting ahead of those loans and also in resolving them before they become problems, so I’m just trying to figure out the $532 million, you addressed the $30 million or so, those three commercial credits, but what would that number have looked like, what else is going on there, either taking into consideration what you might have resolved during the quarter, or what is that, the inflows coming from, are they, is it a deterioration, do you feel like you’ve caught up with what’s going on in that portfolio and its just the random credit that’s flowing in now or what are you seeing there.

Sandra Bodnyk

If I look generally at the numbers and I think that’s the best I can do for you in this environment generally the inflows are getting much closer to matching regular pay downs. You clearly have the charge-off number, there’s just a slowing of movement in both directions.

Operator

Your final question is a follow-up from the line of Avi Barak - Sandler O'Neill

Avi Barak - Sandler O'Neill

This was sort of answered when Chris asked his question but I was hoping to get a little more color on TDR’s just in general because we’ve been hearing so much lately about it, when do you decide internally to take that route, commercial versus consumer and a tangent to that how do the regulators look at them. Is there, are they encouraging you to take that approach within loan categories or is it more of an internal decision and then they kind of give their stamp of approval.

Sandra Bodnyk

First of all we have been adverse to doing TDR’s into a commercial portfolio, not to say that we wouldn’t do one if it were prudent. But they tend to stay in nonperforming a long time when you do that. We have been more in favor of resolving credits and moving out of the portfolio. The credits that we took in the residential mortgage portfolio were based on an internal decision.

We obviously told the regulators what we did but they’ve had no opinion either way on that and it was based on the need to have a consistent modification program in our retail portfolio.

Operator

There are no additional questions at this time; I would like to turn it back over to management for any additional or closing comments.

Scott Fainor

Thanks to everyone for your participation today. Today having a live Q&A was the right thing to do at the right time for our company and we really appreciate all your support. We thank you for joining us today. We thank you for your continued interest in National Penn and we once again going to continue to work hard to strengthen this balance sheet and improve our profitability in order to maximize long-term shareholder value.

As always if you have any additional questions, please feel free to contact our Investor Relations officer, Michelle Debkowski at any time. This concludes our presentation. Thank you, have a great day.

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