United Financial Bancorp's (UBNK) CEO Bill Crawford on Q1 2016 Results - Earnings Call Transcript

| About: United Financial (UBNK)

United Financial Bancorp, Inc. (NASDAQ:UBNK)

Q1 2016 Earnings Conference Call

April 20, 2016 10:00 AM ET

Executives

Marliese Shaw – Executive Vice President, Investor Relations

Bill Crawford – Chief Executive Officer

Eric Newell – Chief Financial Officer

Brandon Lorey – Executive Vice President, Head of Consumer Strategy

Mark Kucia – Executive Vice President, Chief Credit Officer

Analysts

Kevin Fitzsimmons – Hovde Group

Mark Fitzgibbon – Sandler O'Neill

Travis Lan – KBW

Matthew Breese – Piper Jaffray

Operator

Good morning, and welcome to the United Financial Bancorp, Incorporated Q1 2016 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note that today’s event is being recorded.

At this time I would like to turn the conference call over to Ms. Marliese Shaw, Executive Vice President of Investor Relations. Ma’am please go ahead.

Marliese Shaw

Thank you. Good morning everyone. Welcome to our first quarter conference call. Before we begin, we would like to remind you to read our Safe Harbor advisement on forward-looking statements on our earnings announcement. Forward-looking statements, by their nature, are subject to risks and uncertainties. Certain factors could cause actual results to differ materially from our expected results. Our comments today are intended to qualify for the Safe Harbor reported by debt advisement.

And now, I would like to introduce Bill Crawford, our Chief Executive Officer.

Bill Crawford

Thanks, Marliese, and thanks all of you for joining us on today’s call. Today my comments will focus on our strategic path forward and our CFO, Eric Newell will discuss our first quarter earnings results. We also have other members of our executive team here today.

Since our last earnings call, Eric Newell and I visited numerous investors and potential investors, and spent time with our Board, talked about interest rates and what we’re seeing in our markets. As a result, United’s management team has updated its strategic plan in three years earnings model. I will share with you now a high level overall of our four key management objectives.

Our first objective, it’s lot aligned to earning asset growth rate with organic capital and low cost core deposit generation to maintain strong capital and liquidity ratios. You can expect to see loan growth to be in the mid-single digit range, low cost core deposit growth will be equal or higher than earning asset growth and DDA growth will be in the low double digits. You’ve already seen the strength in our first quarter 2016 results. In fact, over the last 12 months, United has averaged 16% non-interest bearing deposit growth and 9% total deposit growth. But the company had 19% loan growth with the gap funded by borrowings.

We believe we can drive more favorable earning asset yields and lower funding cost on lower loan growth which should gradually improve our net interest margin and result into return on assets and drive stronger earnings per share. The company's organic capital generation after paying its dividend to shareholders has a mid-single-digit growth rate; therefore we should maintain strong capital and liquidity capital ratios.

The second objective is to re-mix cash flows into better yielding risk-adjusted earning assets into reducing funding cost relative to peers. The goal is to transition the thrift deposit base to a mix that’s more reflective of a commercial bank deposit mix. Investor commercial real estate market is overheated on many levels, portfolio jumbo mortgage coupons are simply too low. United has about $1 billion in cash flow for our balance sheet that can be reinvested. We’re focusing our lending relationship customers and where we can generate favorable risk-adjusted returns, grow core deposits and fee income. Slower loan growth is expected to reduce pressure on funding costs, producing funding cost as a significant opportunity for United.

Over the last 90 days, the company has passed on several hundred million dollars of new opportunities, which either didn’t meet our credit or return standards. We could have easily booked enough good credit quality, but low-priced variable commercial real estate loans to generate an additional $1.4 million in current quarter’s swap income, but we’re taking a different path.

Over the previous 12 months, we were shorting loan book duration and that effort is now complete. We think the industry is late stage in the business cycle and we see irrationally price lending throughout our core Connecticut and Massachusetts community banking markets. United maintains a very strong credit culture, so lower loan growth rates is our best choice for now.

On the deposit side, we’ve used technology like our new cash management system to get into the wiring and plumbing of for customers financial operations versus simply being placed as part of our excess cash for a price. Our new cash management system went live this quarter.

Our third objective is to invest in people, systems and technology to grow revenue, improve customer experience, while maintaining a very attractive cost structure. This week we implemented efficiency driven organizational restructure. Our goal is to centralize operational responsibilities throughout our company, while we add positions in information technology and operations. Centralizing certain operational functions into our back-office will allow our sales teams to increase the service provided to our customers. These organizational changes will result in about $3 million of pretax cost saves and $1.5 million pretax of one time restructure charges in the second quarter 2016 related severance cost. Over time, we’re confident that we can drive improved sales and service at a lower total operating costs. We are very focused on lower funding cost by growing low cost core deposits; we believe this action this week will help us achieve this goal. These decisions are never easy, but it’s what we need you to do drive new revenue opportunities, improve customer experience and lower our operating cost.

Our projected annual non-interest expense run rate will decline from $133 million to $130 million, which is expected to improve the non-interest expense average ratio to 2% below by the year-end 2016. Non-interest expense is expected to grow by 2% to 3% in 2017. The effective implementation of technology can bend down the cost structure for banks, provide a better customer experience and grow profitable revenue. Reducing operating cost is essential to today’s operating environment for banks.

Our fourth objective is to grow operating revenue, maximize our operating earnings, grow tangible book value and pay our dividend. We plan to map more of our revenue into net interest income and core fee income, while more volatile loan level hedging and mortgage banking revenues are planned to decline relative to total revenue. The last five years is about acquiring talent, growing the balance sheet, integrating merger, generating earnings investments and normalizing excess capital levels.

The path forward is about maximizing predictable core earnings, growing tangible book value, paying our dividend and increasing franchise value by building even more valuable low cost core deposit base and maintaining a strong balance sheet and asset quality. I’m excited about the progress United is making to grow core fee income, which you’ll be able to observe in our earnings results during the second half of 2016. All of these objectives should operate together over time to normalize our evaluation, and clearly it's a very challenging environment, and we will focus on controlling that which we can control. The valuations sweet spot for banks is $5 billion to $10 billion; we believe the plan outlined above will enhance shareholder value over time.

In five years, United Bank has grown from $1.7 billion to $6.3 billion in assets, that’s a lot of change. The management has been aggressive in making changes to improve operating performance in a very difficult operating environment. That said, our strategic plan is set and you should expect to see us execute against this plan. We expect our three year earnings plan to deliver significantly improved assets and higher earnings per share.

Now I will turn the call over to our CFO, Eric Newell to discuss first quarter results and then we’ll take questions.

Eric Newell

Thanks Bill. Yesterday we announced GAAP earnings per share for the first quarter of $0.24 per diluted share. Notable items in the quarter included an optimization of our investment portfolio in which we took advantage of the shape of the yield curve, adding longer duration investments in the portfolio to optimize income for the remainder of the year, as well as reducing higher cost borrowings.

You’ll note that we had a gain on sale securities and a similar amount of prepayment penalties expense from the extinguishment of FHLB debt during the quarter. Second, mortgage banking income was negatively impacted by nearly 50 basis point drop in long-term rates. This rate decline resulted in a $1.6 million reduction and the value of our mortgage servicing asset during the quarter.

Our GAAP net interest margin improved to 3.09% from this quarter – this from 3.02% and the linked period. A large portion of the asset was expected from the on boarding of the late fourth quarter loan portfolio purchases. Further, during the quarter we had higher short-term interest rates, which had the impact of increasing yields on our adjustable rate portfolios and are exposed to short-term rates, and this was partially offset by increased cost of funds given our relatively neutral balance sheet positioning our interest rates.

In the fourth quarter, we had expectation of more rate tightening that actually occurred in the first quarter. We went out and occur for funding on CDs, which was a main driver for the increase in the cost of funds for that line item. We pulled back on that specialty given the change in market expectations and we hope to see some benefit in coming quarters. As Bill mentioned, in the quarter we have made some shifts in the long-term decisions about the direction of our balance sheet in terms of growth and composition. In an effort to stabilize net interest margin, we made a decision to reduce the level of originations that are swapped LIBOR, which reduced our net hedging income recognized in the quarter by $1.4 million from the linked period.

While we do not expect to bring this line to item to zero, we do not anticipate that we will show as meaningful of a contributor to income in 2016 from loan level hedging income as the prior year and instead will see a relative benefit in net interest income. Due to change in our expectation of the composition of our balance sheet, we revised spread expectations up by about 6 basis point in 2016, which was a result of lower level of swaps loan origination – loan originations of investor commercial real estate and lower loan originations of investor commercial real estate and lower assumptions adjustable-rate mortgage production placed on our balance sheet.

Given our expectation of higher yields and the commercial loans and slower expected loan growth, the GAAP NIM is forecasted to be consistent with the first quarters NIM for the remainder of 2016. As Bill noted in an earlier comments the areas of balance sheet growth changed during the quarter, which is indicative with the long-term goals the company has for balance sheet composition. High level, we seek to reduce the level of first mortgages on balance sheet and investor commercial real estate loans, while we increased commercial business, owner occupied commercial real estate and other consumer loan products, which have more favorable rate characteristics.

The more moderate loan growth should improve our funding composition and assist in preserving our net interest margin during a flat rate environment. While the investment portfolio show the linked quarter growth, year-over-year growth you can see was flat while total assets showed strong growth, which is indicative of our strategy pursuing to the investment portfolio.

Over the next 12 months, you can expect mid-single-digit loan and earning asset growth. You'll find some additional estimates for 2016, from a revised plan and our earnings release deck. Non-interest expense was impacted by the aforementioned expenses related to the FHLB prepayment penalties.

When adjusted for the one-time expense, our non-interest expense was in line with our expectations as set on our last earnings call. Nevertheless, we are continuingly evaluating for operational efficiencies to deliver products and services that meet our customers need and expectations, as well as set us up to acquire new customers. Monday, we executed on a reorganization process that will result in $3 million of annual expense savings, reducing our expense run rate to $130 million for the year.

Finally, you will note our effective tax rate is lower than initially planned for the year. In late December, Congress approved a 5-year extension to the investment tax credit for solar energy properties and that credit will remain in full effect through 2018, before it phases down gradually through 2022. Prior to the lease extension in December, the investment tax credit was to be reduced in 2017. As a result of the legislation and given the favorable returns of these investments and our desired bill book value, we closed our tax investment in the late first quarter, which will drive our effective tax rate down to 15% for 2016.

We expect to leverage our new financial holding company designation from the Federal Reserve and the extension of the law to maintain our effective tax rate at around 15% for the foreseeable future. We have a strong enterprise risk management approach to our due diligent before entering to these investments, as well as ongoing monitoring for compliance to all associated rules and regulations to ensure a reduced level of accounting and recapture risks.

Thank you for your time this morning and the management team and I would be happy to answer questions you have.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first question today comes from Kevin Fitzsimmons from Hovde Group. Please go ahead with your question.

Kevin Fitzsimmons

Hey good morning guys.

Bill Crawford

Hey, Kevin.

Kevin Fitzsimmons

So, I just want to get it straight on this change in the profile and the composition, it's just – is it really been driven by the recognition that work kind of in this lower for longer environment, and rate hikes maybe slower than might've been anticipated, so you want to pull back on loan growth because of the pressure it may be applying on the funding side, is that the right way to think about it?

Bill Crawford

Yeah, Kevin. Sort of the way I would think about it is, right now when you look at the areas we’re trying to slow down commercial real estate what you’re seeing is those – those loans have just been going lower and lower, and so the attractiveness of doing that and doing a swap and hoping rates are going to go higher is doesn’t really work quite as well. And the other thing we look at it is, we can grow loans more efficiently and grow net interest income more efficiently actually at low levels because we’re more efficient on the funding side. The harder we push loan growth as you go out, the more inefficient the funding becomes and we combine that with the dynamics of the market, our people are being very, very aggressive in how these price these loans, the economics just don’t make as much sense, whereas on the owner occupied in the C&I and some of our consumer areas, we get credit that we are really like, we get the better price to get some extra return on equity.

Kevin Fitzsimmons

Got it, okay. And if I could just ask on the margin, just the one thing I was a little surprised at that we didn’t see a little more list from the new portfolios coming in because I thought a lot of that was driven on getting higher-yielding loans, and then is that – is part of that thought that you really, you bought the portfolios, but that business really is not started going specifically the Marine finance unit and you expect more lift in the yields?

Eric Newell

I think that’s one factor, as well as the fact that short-term rates were more elevated than what I initially modeled, and our plan when we do margin modeling, and so that had the effect of increasing our cost of fund a bit more than I initially thought.

Kevin Fitzsimmons

Got it. And one last one, any change in how you guys are looking at buybacks, I know last quarter wasn't really something that was on the front burner in terms of how it was looking on the rate lock model, just curious how you are looking at it today?

Bill Crawford

You know it’s always a tool we have, we don't have a lot of excess capital, so I don’t know that we will be improving earnings per share using the buyback, but it’s a tool, we have an authorization out there. We’ve certainly used it in the past and we reserve full optionality to use that, we did have a nice increase in our share price from where we closed at the earnings call last quarter till now.

Kevin Fitzsimmons

Right. Fair point, okay, thank you.

Operator

Our next question comes from Mark Fitzgibbon from Sandler O'Neill. Please go ahead with your question.

Mark Fitzgibbon

Hey guys, good morning.

Bill Crawford

Hey, Mark.

Mark Fitzgibbon

It look like you guys had pretty solid commercial loan growth this quarter, I wondered if you could update us on how many commercial lenders you have or teams and maybe what your plans are for adding additional people in this area?

Bill Crawford

Let me have Dave Paul to sort of take the commercial lending question. Dave?

Dave Paulson

Hey Mark, so what we’re looking at in terms of bankers on the field. We’ve got 21 commercial lenders, two C&I lenders on the field as complemented with business bankers, five or six commercial real estate lenders and about 10 cash management officers. So that complement post our reorg just recently announced, that puts us in a really good place to execute on our three year plan.

Mark Fitzgibbon

It is their plan to add new folks?

Dave Paulson

In terms of our plans for new books, that’s something we’re always going to look at, but the key is are these people that are coming from banks that had significant portfolio, they’re sort of marquee players in their marketplace and for the moment that’s probably not something that we’re going to exercise in the year. We are always looking and are always opportunistic.

Mark Fitzgibbon

Great. So that lending team is capable of handling a much bigger book than you have today?

Bill Crawford

Mark, what I would say is to hit this goal we really don’t need to add that many lenders. They do want to talk sort of about the quarter, you know what our production look like, our opportunities look like.

Dave Paulson

So let me provide a quick analysis on Q1, so we closed two times of the loan production in Q1 of 2016 versus what we accomplished in Q1 of 2015, which as you’ll remember are seasonally lowest production quarter and we did that at better margin. So it’s difficult to analyze any banks Q1 numbers because those are again, seasonally low numbers.

Last year in Q1 our production was insufficient to cover amortization, and so our loan outstandings on the commercial book actually declined last year in Q1. This year with more disciplined production, we actually covered amortization, grew the overall commercial book by about $38 million. On top of that, our gross pipeline in terms of given the sort of a view going forward, while it might be 84% about of what our pipeline was this time in Q1 of 2015, we passed on 3.7 times more deals during the first quarter than we did in the comparable first quarter last year. And what’s really important about that sort of 3.7 times pass rate is that 60% of the deals that we passed on, exactly what Bill alluded to earlier, it was not because of credit addition that was passed on, and it would have been resulted in a transaction that has sub-optimal return, probably sort of below 10% ROE.

And that would have been destructive to our net interest margin. So, I mean really we could have booked with relative ease at least another $100 million in lower margin longer durations in the transactional commercial real estate business, but this would have adversely impacted NIM and ROE. So what we are focused is both Eric and Bill alluded to, but relationship based pricing on C&I transaction, they come with better return and more importantly a materially better opportunity to drive low cost deposit growth.

Mark Fitzgibbon

Great. And just one other question if I could, Eric, you had said that effective tax rate should be in the 15% range for this year. It sounded like based on what you said about the change in the tax laws that it will be fairly stable going forward, so we shouldn’t see an awful lot of volatility in that effective tax rate from quarter to quarter?

Eric Newell

Yeah, I mean that’s a desire. Effective tax rate in the annualized number, so sometimes things pop in and out for a particular quarter that when you annualize it, it kind of will exemplify it or amplify it, but I think the focus would be that when you look at the effective tax rate for the full-year you’re going to be at around that 15%, and we think that that's sustainable for the foreseeable future beyond 2016 as well.

Mark Fitzgibbon

Terrific. Thank you.

Operator

Our next question comes from Travis Lan from KBW. Please go ahead with your question.

Travis Lan

Yeah, thanks, good morning everyone. I just – expenses to start with, just to clarify, your first quarter annualized expenses were $135 million with the debt prepayment penalty, if you back that out, the core expense was closer to $32.3 million, which annualized I guess to $130 million, so I guess my question is for the rest of the year we’re looking at kind of stability on the core expense line, as opposed any absolute reduction, does that make sense?

Eric Newell

Do that math for me again.

Travis Lan

So, the forecast slide in presentation says that this quarter the actual expenses was $135 million annualized, that includes the debt prepayment penalty. If you exclude that you're at $130 million annualized for the first quarter and that’s what you project for the rest of the year, so there is no absolute expense reduction coming, it’s just stability from these levels, does that make sense?

Eric Newell

Well, we originally, when we talk about 2016 last quarter, we had forecasted $133 million of NIE spend. So there was some benefits that we had experienced in the quarter on a core basis for NIE, but we were trending towards a $133 million annualized, and that’s what we guided to last quarter. And I think you’re going to see that bent down to $129 million to $130 million.

Travis Lan

Okay, got it. That's helpful. And then just on the change to the provision outlook, is that a product of lower charge-offs expectations or something else that you guys see?

Eric Newell

It’s a function of lower origination, lower net growth that we’re expecting, we’re expecting high single digit loan growth now, mid-single-digit loan growth, so that net growth is reducing the level of provisioning that we need to have. As well as I would say that, that’s number one and number two is the case of transition from the purchase portfolio that does not have any allowance to a covered portfolio that phenomenon, which we've been experiencing since we closed on the merger of equals is slowing, and so therefore we’re not having to cover as much of the purchase portfolio.

Travis Lan

Okay, got it. That's helpful. Just on the margin, so your outlook for the GAAP NIM is stability from here, but you’ve gotten, you got $2 million of purchased accounting benefit in the first quarter and you expect $4 million to $5 million for the year, so that’s going to fall pretty significantly, it would seem like for the rest of the year, so that would just imply O guess that core NIM is going to expand pretty meaningfully, does that kind of make sense?

Eric Newell

Yes, the phenomenon there is because of the shift in what we’re producing in terms of – in the commercial as well as the consumer portfolio, as well as our ability to grow deposit at a faster pace than the earning asset production, we’re going to see some benefits in the cost to funds as well as the earning asset side of the equation.

Travis Lan

Alright. And then just lastly on the C side, the new tax strategies, I think you said hit late in the first quarter, so what does the full quarter look like in the LP loss line?

Bill Crawford

I think for the year on – the limited partnership line you’re looking at about $2 million of, I’ll call it a contra fee, but that is included in the guidance on the fee income for 2016.

Travis Lan

That was my next question, that $24 million to $27 million range includes this $2 million of contra fees?

Bill Crawford

Correct.

Travis Lan

Got it, alright, that’s good. Yeah, thank you guys very much.

Bill Crawford

Thanks Travis.

Operator

And our next question comes from Matthew Breese from Piper Jaffray. Please go ahead with your question.

Matthew Breese

Good. Could we just walk through the difference between the GAAP and the core margin this quarter? I just want to make sure I had the numbers right. What was the total accretable yield impact and was there any prepayment penalty income in there?

Bill Crawford

The accretable impact for the quarter was $1.9 million, which is on last, one of the last tables that we have on the press release, so you could see the detail there. So that would result in an operating NIM of 2.95% and that would reconcile for the 3.09% on the GAAP NIM. In terms of prepayment, we did have some, but it was not meaningful. Generally, or I think if you compare it to last year that we had a lot higher prepayment fee income in the first and second quarters last year, I would say it probably may not have even adjusted the GAAP NIM this quarter.

Matthew Breese

Okay. And then the FHLB prepayment, what was the dollar amount, the terms and when did that happen in the quarter? So what would be the ultimate margin impact from that prepayment?

Eric Newell

What happened Matt, it won’t significantly alter what you're going to see going forward and that’s incorporated in the guidance on the stability of the GAAP NIM, 3.10%, the cost of debt that was much higher than our current stated rate for borrowings, but it happened in the middle of the quarter and I think that the reason you're not seeing a benefit in the borrowings line in the quarter in terms of the cost was, first it wasn’t a meaningful amount relative to the average balance, as well as that portfolio or that sleeve of funding is fairly short, and short rates were up 20 basis points to 30 basis points, and so the large kind of influencing factor there was that the cost of our federal home loan bank advances increased because of the rates.

Matthew Breese

Okay, got it.

Eric Newell

Rates up.

Matthew Breese

Maybe you could walk us through – so the projection is stable NIM around 3.10%. What are the factors on the loan side? What loan yields are helping that, so are accretive to your current average yield and then conversely what are the deposit products you're looking to put on that will help lower the cost of funds?

Eric Newell

Well, when you look at, we want to reduce the on balance sheet exposure for investor CREE example. When Dave Paulson was talking about the deals, or Bill, I don’t know one of them was talking about, but deals that we passed in the quarter, a lot it is actually a net investor CREE category and the spreads are just so narrow on that, that when you reduce our production estimates and the exposure on our balance sheet that it has the effect of actually helping us on our earning asset yields. So it’s kind of two-fold, we’re not expecting to put on the balance sheet in terms of the investor CREE and residential real estate and even some arms, and it’s more focused on more adjustable rate products, but whether it’s C&I, home equity, other types of consumer products, and then also looking own or occupied CREE, which is more probably fixed versus variable.

On the funding side because we’re moderately slowing our earning asset growth to mid-single digit because we've been growing assets for several years now, faster than our deposits, with our focus on deposit growth and particularly DDA or transaction accounts, whether it’s in our commercial business with leveraging our new cash management system that went live this quarter, whether it’s executing on our small business strategy in terms of growing deposits there, which is definitely a huge opportunity for us.

I think that you’re going to start to see our DDA as a percentage of total increase, which will help us bend down the cost of our deposits, as well as are all-in cost of funds will bend down because we’ll be able to grow those deposits faster than our earning assets, so then we’ll be able to reduce our use of wholesale funding, which generally is just more expensive than deposits, and it doesn’t allow us to get that fee income that often times can get when we build a relationship, particularly around a transaction.

Matthew Breese

Right, right. Okay. And then last question, can you just give us an update on the marine lending team and the balances related the floor plan lending, and then also the balances related to retail versus where they were on 4Q?

Bill Crawford

Sure. It's going as expected. I'll have Brandon Lorey, our Head of Consumer talk about that. Brandon?

Brandon Lorey

Yeah, thank you. So the portfolio itself is still below the 3.5% of total assets, we’re expecting as we bid out last quarter to see $100 million in growth in that pool between the C&I, a mix between the C&I and retail. I’ll tell you, we’re really liking the credit quality and particularly the asset strength of the borrowers that we’re seeing coming through that channel on both the C&I and the retail side, so we continue to be very optimistic with that business the team is in Baltimore and functioning as expected. And on the flipside of that, even internally our self-generated home equity variable rate line of credit businesses have seen some record production as well as retail network is moving to that consistent sales concert.

Matthew Breese

Do you have the balances for that? I was just curious to see what kind of progress was made on growing the floor plans.

Bill Crawford

Well, I think Matt in terms of the balances relative to what you saw at year-end we’re down a little bit, just – and that was expected because of the on boarding of the whole unit and team, and a lot of that the growth that Brandon was talking about, and what we alluded to in the last earnings call was more in the second half.

Eric Newell

And what I’ll say is we closed one significant floor plan deal and we're in negotiations on others, they just take a little while, they get through our system and when you have dealers involved, it's just a little more complex because we have to underwrite them as well, but the business is going as we planned.

Matthew Breese

Okay. That’s all I had. Thank you.

Operator

And ladies and gentlemen, this will conclude our question-and-answer session. At this time I’d like to turn the conference call back to Bill Crawford, CEO for any closing remarks.

Bill Crawford

Alright guys. Well, the key takeaway I think is we have a three-year plan, we’ve built out, and we’ve modeled it very carefully. We expect to grow NIM, to grow return on assets and deliver strong earnings per share and close the valuation gap between where we are and where peers are from a valuation perspective. We appreciate you interest in the company, and we hope you guys have a great day.

Operator

Ladies and gentlemen, that does conclude today's conference call. We thank you for attending. You may now disconnect your lines.

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