American Capital Mortgage Investment Corp. (NASDAQ:MTGE)
Q4 2015 Earnings Conference Call
February 4, 2016 11:00 AM ET
Hannah Rutman – Investor Relations
Gary Kain – President and Chief Investment Officer
Aaron Pas – Senior Vice President-Non-Agency Portfolio Management
Chris Kuehl – Senior Vice President-Agency Portfolio Investments
Peter Federico – Senior Vice President and Chief Risk Officer
Malon Wilkus – Chairman and Chief Executive Officer
Douglas Harter – Credit Suisse
Bose George – KBW
Joel Houck – Wells Fargo
Good morning and welcome to the American Capital Mortgage Q4 2015 Shareholder Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Hannah Rutman, Investor Relations. Mrs. Rutman the floor is yours ma’am
Thank you, Mike and thank you all for joining American Capital Mortgage Investment Corp.’s First Quarter 2015 Earnings Call. Before we begin, I’d like to review the Safe Harbor statement. This conference call and corresponding slide presentation contains statements that to the extent they are not recitations of historical facts, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
All such forward-looking statements are intended to be subject to the Safe Harbor protection provided by the reform act. Actual outcomes and results may differ materially from those forecast due to impact of many factors beyond the control of MTGE. All forward-looking statements included in this presentation are made only as of the date of this presentation and are subject to change without notice. Certain factors that could cause actual results to differ materially from those contained in the forward-looking statements are included in our periodic reports filed with the SEC. Copies of these reports are available on the SEC’s website. We disclaim any obligation to update our forward-looking statements unless required by law.
To view a webcast of this presentation access our website, MTGE.com and click on the Earnings Presentation link in the upper-right corner. An archive of this presentation will be available on our website and a telephone recording of this call can be accessed through February 18th by dialing 877-344-7529 using the conference ID 10078452.
Participating on today’s call are Malon Wilkus, Chairman and Chief Executive Officer; Sam Black, Director, Executive Vice President and Secretary; John Erikson Director, Chief Financial Officer and Executive Vice President; Gary Kain President and Chief Investment Officer; Aaron Pas, Senior Vice President, Portfolio Management; Peter Federico Senior Vice President and Chief Risk Officer; Chris Kuehl Senior Vice President of Agency Mortgage Investments; Don Holly, Senior Vice President and Chief Accounting Officer and Sean Reid, Senior Vice President, Corporate and Business Development.
With that, I’ll turn the call to Gary.
Thanks, Hannah, and thanks to all of you for your interest in MTGE.
The Fed raised rates for the first time in almost 10 years in the December. Against this backdrop the Treasury yield curve they were flattened with shorter-term rates higher by 40 basis points and longer-term rates up by around 20. Spreads on agency MBS, credit risk transfers, legacy non-agencies and CMBS were all modestly wider while high yield IG and emerging market spreads tightened somewhat as equities rebounded in the market adopted more of a risk on sentiment.
2016, however, is off to a very different start. To date we have seen significant declines in equities, weaker oil and commodity prices, wider credit spreads on most sectors of the fixed income market and a rally in interest rates that more than offset the backup in rates experienced in the fourth quarter. In light of these significant market developments, I will discuss our views on the global economic landscape and the implications for MTG at the end of my prepared remarks.
With that I will quickly review the results of the quarter on Slide 4. MTGE reported a net loss of $0.13 per share in Q4. Net spread income excluding catch-up AM and our net servicing loss but inclusive of dollar roll income totaled $0.52 per share. As Peter will discuss later, the $0.10 net servicing loss includes some non-recurring charges associated with the sale of our servicing operations and related assets.
In aggregate for the quarter, MTGE generated a positive 0.6% economic return or 2.6% annualized comprised of our $0.40 dividend and $0.27 decline in our book value. Our book value was negatively impacted by wider spreads on both agency and non-agency MBS but benefited from approximately $0.25 of accretion from share repurchases. During the fourth quarter, we repurchased $35 million or 4.8% of our outstanding shares.
Turning to Slide 6, I want to quickly review some key results for the year. First, MTG generated a net economic loss of 2.1% for the full-year 2015. In addition our average leverage during the year was 4.4 times down from 5.3 times in 2014. As we discussed throughout the year, we were concerned about deterioration and the risk return equation for mortgage investments following the strong performance in 2014.
I’m also very aware that our total stock return was materially weaker than our economic return as our price-to-book ratio declined significantly over the course of the year. In response to this weakness, we repurchased $53 million or 7% of our outstanding common stock. As I will discuss later, we feel very strongly that our recent stock valuation is inconsistent with the fundamentals of our business and the evolving interest rate environment.
If we start to Slide 7, I’ll quickly review how our capital was deployed at quarter-end. The percentage of our capital allocated to agency MBS declined again in Q4 to approximately 46%, while equity assigned to non-agency positions increased to 48%. At this point our capital is essentially even lease led between the agency and non-agency sectors.
With that let me turn the call over to Aaron to discuss non-agency investments.
Thanks Gary. Please turn to Slide 8, for a brief update on our portfolio composition and fourth quarter activity. As Gary mentioned our equity allocated to the non-agency portfolio increased again in Q4 by six percentage points, which was driven by new investments and credit risk transfer securities.
Legacy non-agency prices decline marginally last quarter and spreads on last cash flow CRT widened by approximately 20 basis points. Fortunately, our incremental purchases during the quarter largely coincided with GSE issuance which priced materially wider than the end of Q3 levels. Additional, given the significant carry on these positions, total return on these investments was still slightly positive for the quarter.
Now if we turn to Slide 9, I want to briefly review a snapshot of fixed incomes spreads from 2015 and also address development since year-end. Spreads on credit sensitive assets for the beginning of 2015 on the tighter end of the spectrum, in almost all sectors experienced material widening during the year, moreover, these moves have continued and in some cases accelerated so far in 2016.
Securitized products ranging from CLOs, entire CMBS capital structure, credit risk transfer securities and to a lesser extent legacy residential MBS, spreads have been under pressure against the backdrop of concerns around the global economic slowdown and the significant declines in global equity and commodity prices.
It is important to note some material differences and the fundamentals backing mortgage credit relative to other debt and structured products. On the corporate side balance sheets have deteriorated due to stock buybacks funded by debt issuance. Energy and commodity related credits are considerably worse off than a year ago and are now pricing significant levels of stress.
Turning to the commercial mortgage market, this faces headwinds on both the fundamental and technical side. Valuations are full as cap rates have declined materially over the last five years, partially as a result of overseas demand for commercial assets. Additionally, the retail sector has weakened and these properties make up roughly one quarter of originations. Combining this with approximately $100 billion of likely refinance volume, driven by loans originated and securitized in 2006 with 10-year maturities is not that surprising that spreads on the entire capital structure have widened.
The outlook for residential credit investments, in particular those backed by conforming balance or lower price properties is much better. While an economic slowdown is not favorable on a relative basis we think the conforming mortgage credit space is likely to be a strong performer for a number of reasons.
To this point, we think housing valuations remain reasonable and unlike the commercial space, they’re still below the peak we saw in 2006. Additionally, the post crisis strong focused on tight underwriting standards which has limited credit availability will support credit performance for newly originated conforming mortgages even in the unlikely event of the stress scenario for housing prices.
As I have said in the past, it appears that tighter underwriting guidelines is the X factor has led to much better conforming mortgage performance than in prior books of business of comparable loans. The conforming mortgage should be more stable and insulated from global events than the jumbo market. Some areas of the jumbo market are approaching frothy levels and face headwinds from the decline in demand from foreign cash buyers and the risk of possible tech and startup related correction in California and other isolated markets.
Lastly, in the stress credit scenario, the conforming space would also benefit from lower rates more than other sectors given the dominance of GSEs and FHAs which should ensure the supply of credit is not interrupted. With this backdrop on housing and mortgage credit, we view the majority of the recent price decline as an increase in risk premiums as investors demand wider spreads and all credit sensitive investments given the risk of mindset rather than being driven by specific cash flow issues.
In light of wider CRT spreads, I wanted to take a minute to walk through where we currently see ROEs. With the most recent issuances, unlevered yields are in the low-to-mid 7% yield range with spreads in the mid-high 500s to 600 range. This translates to 11% to 15% base case ROEs if you employ one to two turns of leverage. ROEs are also available in the low double-digits on more season securities or ones of more credit enhancements. We believe these returns are quite durable and could be realized even under reasonably stressful scenarios.
In our opinion, it would require significant shock to both housing and employment such as a deep recession coupled with at least to 15% national decline in housing to begin to take losses on many of these assets.
With that, I’ll turn the call over to Chris to discuss the agency portfolio.
Thanks, Aaron. Turning to Slide 10, I’ll start with a review of what happened in the markets during the fourth quarter. As you can see in the top two tables the yield curve continue to flatten with five and 10 year swap rates increasing 33 basis points and 18 basis points in yield respectively. Agency MBS generally underperformed the move and swap rates during the quarter. At the bottom of Slide 10, we have a time series of average daily option adjusted spreads for both 15-year 3% and 30-year 3.50% MBS which will wider on average during the quarter by approximately ten basis points and eight basis points respectively.
As Aaron mentioned, 2016 is off to a very difficult start for most risk asset classes. Agency MBS, however, have performed well relatively speaking and are more or less unchanged on it option-adjusted spread basis, despite the sharp move lower end rates. Agency MBS are benefiting from the combination of their liquidity and lack of credit risk relative to other spread product. Performance is also benefited from the growing consensus that the Fed’s reinvestment program will likely remain in place for the foreseeable future.
Let’s turn to Slide 11 and I will quickly review our agency investment portfolio composition. Agency at risk leverage declined slightly as of quarter end to 6.6 times. The investment portfolio also declined slightly, given a combination of share repurchases, capital allocation, higher interest rates, and MBS underperformance. At a high level, our portfolio composition was largely unchanged quarter-over-quarter, as we believe the combination of both seasoned pools and cold perfection [ph] position us well for the current environment.
And lastly with respect to prepayments, as you can see in the table in the top right of Slide 11, the portfolio continues to perform well.
I will now turn the call over to Peter to discuss funding and risk management.
Thanks, Chris. I’ll begin with our financing summary on Slide 12. Our total financing cost was 88 basis points at year-end, up from 74 basis points to previous quarter. The 14 basis point increase in costs was due to the Fed’s December rate hike, as well as an uptick in the cost associated with our non-agency funding in our Federal Home Loan Bank advances.
As I’m sure most of you are aware the FHFA recently published its final rule on Federal Home Loan Bank membership. We like the rest of the mortgage REIT industry are disappointed with the final rule which prohibits our captive insurance company from remaining a member of the Federal Home Loan Bank of Des Moines. This decision reverses a 10-year practice among Federal Home Loan banks of allowing captive insurance companies as members.
We are hopeful that Congress will ultimately preserve our access to the Federal Home Loan Bank system. Until that time, however, FHFA has mandated that our advances be terminated at the earlier of their contractual maturity or February 2017, one year after the effective date of the final rule. As such the outstanding balance of our advances will gradually decline to approximately $275 million by the end of 2016.
Turing to Slide 14, we provide a summary of our interest rate risk position. Our duration gap at the end of the quarter was 0.7 years long, unchanged from the prior quarter.
Lastly, on Slide15, we provide an update on our mortgage servicing business. As we have discussed previously the subscale nature of our mortgage servicing operations coupled with our diminished view of the investment opportunity with respect to mortgage servicing rights led us to undertake a full review of our servicing operations in 2015. At the conclusion of that review process we entered into a definitive agreement to sell substantially all of the subservicing assets and associated operations of our mortgage servicer, residential credit solutions to Ditech Financial, a subsidiary of Walter Investment Management Corporation. The transaction closed on January 28, 2016 and we expect that the servicing transfers to occur in the first quarter of 2016.
Importantly, RCS will continue to be a subsidiary of MTGE and will retain its servicing licenses and current investment in MSR. MTGE’s MSR position will be subserviced by Ditech going forward. Upon completion of the servicing transfers RCS will transition to a servicing oversight platform thereby retaining MTGE’s ability to invest in MSR, should attractive investment opportunities arise in the future.
Some costs associated with the sale transaction were recognized in the fourth quarter. Specifically, of the $0.10 servicing loss that we’ve recognized $0.04 was related to the sale transaction. In the first quarter, we expect to incur a net servicing loss of approximately $8 million, about half of that loss will be one-time charges related to the sale transaction.
As noted on the slide, after the first quarter we expect MTGE’s total net servicing loss to be in the range of $2 million to $4 million for the reminder of the year. This estimate is based on cash flow assumptions with respect to our MSR as well as certain ongoing expenses associated with the wind down of the servicing operations and the transition to a servicing oversight platform.
With that, I’ll turn the call back over to Gary.
Thanks Peter. At this point, please turn to Slide 16. As I would like to conclude today’s prepared remarks with the discussion of the current environment and our outlook for 2016.
As you know 2016 has been very challenging. The equity markets have experienced one of the worst Januarys on record with indices down close to 10%. The Chinese equity market which is obviously garnered a fair amount of attention of late performed even worse and is down 25%. This risk of sentiment has impacted spreads on credit sensitive fixed income assets, leading to a material widening in almost all sectors.
The year-to-date spread moves as Aaron highlighted earlier in some cases have approached or even exceeded the aggregate moves we experienced in all of 2015. In response, investors have sought the relative safety of treasuries causing rates to rally on most maturities by around 40 basis points. Surprisingly, yields on treasury maturities longer than three years are now lower than they were at the end of the third quarter despite the Fed’s rate hike.
Agency MBS have performed relatively well year-to-date, despite this challenging environment. These very significant moves in the financial markets are, in our opinion, indicative of broad economic weakness. As we have talked about for several quarters, there has been a growing dichotomy between the modest strength of the U.S. economy versus the increasingly apparent economic weakness abroad. We listed a few of these global economic headwinds on Slide16, including falling oil prices, weaker global demand and decreased foreign investment in the U.S.
Importantly, we also believe many of these trends may prove to be more structural than cyclical. Oil and other commodity prices will eventually stop declining, but the dramatic repricing over the past year will continue to create significant challenges for many commodity producing countries. As such, we believe sovereign wealth funds, central banks and other large overseas entities will continue to be net sellers of U.S. assets. This is obviously a significant reversal in the flow of these funds as these entities were massive buyers of U.S. assets over the last decade. The Fed appears to be very aware of this and it probably was a key reason why they released guidance indicating a much longer horizon for ceasing reinvestments on their treasury and MBS portfolios. Furthermore, and perhaps more importantly, we believe the Fed will be forced to abandon its current tightened bias at some point during 2016.
If we turn to Slide 17, I would like to discuss their thoughts with respect to MTGE in the mortgage REIT space in light of this outlook. We believe that the probability of returning to our lower for longer philosophy for rates has increased significantly. This backdrop existed for much of 2009 through 2012 and was a very favorable environment for the mortgage REIT space. In such an environment, we believe that levered investments in both agency and non-agency MBS could be compelling, especially given the material spread widening that has already occurred.
To this point, for the reasons Aaron noted earlier and that we summarized on this slide, we believe that the residential sector and more specifically, that conforming space has solid underlying fundamentals. We strongly believe it will hold up materially better than other credit sensitive fixed income instruments such as CMBS against the backdrop of a weaker global economy. As such, we believe the recent widening in spreads has been a product of just the general risk-off mentality and it presents an opportunity for higher returns and more attractive loss adjusted yields on these investments.
Lastly, I’d like to conclude my prepared remarks by discussing our views on the mortgage REIT space. From our perspective, recent price-to-book ratios can’t be justified in the current operating environment against the backdrop of asset valuations that have gotten considerably more attractive. A significant discount of book may be rationalized to risk adjusted levered returns are not compelling and the underlying investments portfolio appears at risk of under-performing. However, as valuations cheapen and returns become more attractive, the discount should contract. During 2015, with regard to MTGE and the rest of the mortgage REIT space, the opposite has occurred. As a result, common stock repurchases remain a very compelling use of our capital. We were very active last quarter, as I mentioned earlier and we will continue to be active this quarter unless our price-to-book ratio increases significantly from recent levels.
MTGE will also consider acquiring other REIT stocks as it has in the past. We will consider doing this only as a complement to our own share repurchases. To this point, we would seek to repurchase as much of her own stock as possible subject to SEC volume constraints and window period limitations before repurchasing other REIT stocks. In addition, we have no intention of purchasing the shares of any other REIT that is not actively repurchasing their own stock.
And with that, I would like to open up the call for questions.
Thank you, sir. We’ll now begin the question-and-answer session. [Operator Instructions] The first question we have comes from Douglas Harter of Credit Suisse. Please go ahead.
Thanks. Gary as you are thinking about potentially adding risk to the portfolio here, can you talk about the relative attractiveness agency versus non-agency and where you would look to be more than active in adding that risk.
Sure, I mean, look, spreads across the board as we talked about have widened. So agencies are more attractive. We believe the interest rate environment is transitioning to the one that will support the performance of that space and given kind of where spreads are, we feel the agency space is attractive. On the other hand, as we talked about, the conforming mortgage credit space has seen spread widening commensurate with other kind of parts of the fixed income space, or credit sensitive fixed income space. And we believe that the credit characteristics of the conforming space as we talked about on the call are considerably better than some of those other areas that I think where the credit headwinds are more real and more significant.
So, I mean, realistically we find both having cheapened and both are more attractive than they’ve been in a long time. And I think practically speaking – so then the bigger real issue comes down to the practical implications for a mortgage REIT portfolio. And when you do things like balance things like the whole pool percentages and some of the other things that we’re trying to do in terms of diversification, I actually wouldn’t look for a major change in the waiting between agency and non-agency investments over the near-term.
And on the AGNC call you guys talked about building out your broker dealer to enhance your funding profile. Is that something that make sense for MTGE was that something that they could leverage off of the AGNC broker-dealer?
Hi, this is Peter. What I would say with respect to MTGE and having a broker dealer is that it would be something that we would consider, but critical in that analysis would be the cost to build it, the cost to run it. And the offsetting benefit that we would expect to get from having a new source funded in a slightly cheaper source of funny. So that is something we will consider over time for MTGE.
So just to be clear, the scale benefit of AGNC makes it much clearer of a decision for the Company versus the smaller MTGE?
Yes. When you look at MTGE’s position when we had 21 counterparts [ph] we have a lot of excess capacity. We are in a very strong liquidity position. And so the incremental benefit of having access to FICC trades would be there but it wouldn’t be significant for MTGE.
Perfect. Thank you.
Well scale does matter.
The next question we have comes from Bose George of KBW.
Yes, good morning. Just wanted to ask about nonagency repo, markets since year-end, any changes there in funding cost availability?
Hey, Bose. This is Peter. Yes I would say that, first off, let me go back over the course of the year. What we’ve seen over the course of the year is an increasing the liquidity associated with non-agency collateral. We see more counterparties in fact a movement toward nonagency space. I think in part because of the better returns from a return on capital perspective from our lenders. But we did see an uptick in a cost of it over year-end, more so this year-end relative to the previous quarter as a previous year-end. So I think that’s just a matter of the type of clinical collateral that our counter parties wanted on their balance sheet over reporting period. But in general, it was higher and also in general going forward, I expected it to continue to be strong.
Okay. Great, thanks.
And then if you just sort of one on book value. Can you just give us an update on how the portfolio value has moved since year-end?
As we’ve talked about spreads across the Fixed Income space are wider so book value is down a little bit. But probably, I don’t really want to put a number on it given the volatility in the markets, but it is a little lower in January.
Okay. Thanks. And then just a follow-up on the broker dealer question, so if AT&T is the broker dealer can MTGE kind of access that if necessary or is it sort of two distinct companies and they wouldn’t do that?
It’s possible that they could. There would be some hurdles related party type hurdles. So I would say it’s possible, not particularly easy.
Some simplifications, as well. Okay.
Yes, okay. Thank you.
And our last question will come from Joel Houck of Wells Fargo.
Thanks. I think you mentioned that you had to have a 15% decline in HPA to have losses, was that only the legacy nonagency MBS or was that the entire noncredit book?
Hey Joe, this is Aaron. That was specifically run credit risk transfer investments.
That was the…
The last cash flows. The lower rated bonds of those transactions.
Okay. So presumably its much higher for the legacy non-agency CMBS. Will that be accurate?
It’s hard to say, because we do have investments that have no credit enhancements at this point where we effectively just on interest in the trust but it’s effectively just loans. So it’s going to vary by our different positions within the legacy book.
Okay. There has been a lot of noise around, I guess, GSEs originating, I guess, underwriting standards loosening somewhat. I’m not sure where the line is drawn in terms of conforming credit. But my question is in the stacker and cast bonds, have you seen any, I guess, erosion in integrity into what loans are being put into securities? In other words are there higher LTV loans are there old of a loans that are sneaking in those securities?
So I think the one thing to keep in mind is when they create the securitizations or the risk transfer mechanism, they have bucketed LTVs. So they would have a 60 LTV transaction to 80 LTV transaction and then 80-plus transaction. So let’s say always invested in the 60 to 80, you always had the same range or roughly the same original LTV composition. What we have notice and I think I’ve said either on the last call or a couple of calls ago, we have noticed a little bit of a deterioration, not necessarily in underwriting standards but they credit box to your point is a little bit wider. So the fight go tales the percentage that might be below 650 is a little bit higher. But it’s still extremely low at this point.
And is that for both buckets or is it just the higher LTV bucket?
I would say they both have trended a little down
Okay, great. Thank you.
Unidentified Company Representative
Joe, the vast majority of positions are not in acquisitions are not in the high LTV bucket. It’s not that we don’t have any but it’s a fair
It’s around 85 or so percentage of the portfolios in the lower LTV buckets.
Right. I think it’s obvious the CRT securities have widened this year but it might be helpful to point out that is very different by credit bucket, if you will. I think there might be some perception that there’s more exposure not just for you guys but with a lot of firms that just isn’t the case. So I don’t know if there’s any additional color you can share in terms of the spread widening within, say the lower LTV buckets versus the higher LTV?
Unidentified Company Representative
Yes. The widening that we’ve seen has been pretty comparable on both the lower LTV and higher LTV. The absolute level of spreads on some of the more seasoned securities that have more built up HPA, those are trading at tighter spreads but they are also wider than they were previously, which is to the point that I made in the prepared remarks some of those quotes better bonds have lower they are on the lower end of the ROE spectrum. It’s because they are trading at tighter spreads.
Unidentified Company Representative
But I think I mean the key thing to keep in mind in the widening is that in the case of the CRT positions, you are writing an out of the money option. You need a pretty significant tail event for conforming mortgage credit before you’re going to take a hit. And what we’re seeing in terms of wider spreads is actually very, very logical against the backdrop of a risk of environment kind of led by things like high yield widening, emerging market debt. I mean, this kind of knock on effect in the widening in CRT, especially against the backdrop that you have a noneconomic seller of the product that comes out every quarter and those noneconomic sellers are mandated by regulatory reasons and they are big and they are GSEs. When you put all that together, we are not at all surprised and have talked over and over again about the anticipated spread volatility of the products.
On the other hand, we firmly believe that that spread volatility creates opportunities as well. And so you have to size your positions appropriately given the volatility. But I think it’s a very, very reasonable conclusion to come to when you think about everything that this is much more of a technical widening than a true increase in the out of the money risk do for conforming credit.
I think that’s a very good point. I guess these are being conforming mortgages are not necessarily tied to the high-end of the codes where there’s some sentiment that higher end home prices are softening. So that’s a good thing. Are you able to go in and mitigate exposure to, say, energy-related MSAs perhaps in Texas, Louisiana? I don’t think the Dakotas are big enough to make a difference. Or do you just simply by the security and it’s a, cross-section of all MSAs in the country?
Yes Joe, this is Aaron. It’s really the latter. You’re getting the cross-section of what the originate within the LTV buckets. Texas as an example typically ranges between 4% and 10% of the pool with obviously a smaller percentage of that in the Houston area. We haven’t seen any uptick in delinquencies or performance deterioration there. So obviously it’s an exposure we think it’s somewhat muted. But we’re keeping an eye on that.
But I think the key thing it sort of naturally muted by the nationwide imprint of the GSEs. So, yes, you can’t pick a particular or excluded particular region, but by definition you get a very manageable amount of it. And if you contrast that with the jumbo space, I think, they are just by the nature of the product, I think, the vast majority of the jumbo space is in areas where you have a lot of exposure to cash buyers and technology boom and things like that. So between the two areas we’re much more comfortable in the conforming space.
All right very good. Thanks guys.
We have now completed the question-and-answer session. I would now like to turn the conference back over to Mr. Gary Kain for any closing remarks. Sir.
Well I would like to thank everyone for their participation on the MTGE Q4 earnings call and we look forward to speaking to you again next quarter.
And we thank you, sir and to the rest of the management team for your time today. The conference has now concluded. An archive of this presentation will be available on MTGE’s website and a telephone recording of this call can be accessed through February 18 2016, by dialing 877-344-7529 using the conference ID10078452. Again the telephone numbers 877-344-7529 conference ID10078452.
Again we thank you for attending today’s presentation. At this time you may disconnect your lines. Thank you and have a great day everyone.
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