United Financial Bancorp's (UBNK) CEO Bill Crawford on Q2 2016 Results - Earnings Call Transcript

| About: United Financial (UBNK)

United Financial Bancorp, Inc. (NASDAQ:UBNK)

Q2 2016 Earnings Conference Call

July 20, 2016 10:00 AM ET

Executives

Marliese Shaw - EVP, IR

Bill Crawford - CEO

Eric Newell - CFO

Analysts

Kevin Fitzsimmons - Hovde Group

Mark Fitzgibbon - Sandler O'Neill

Collyn Gilbert - KBW

Matthew Breese - Piper Jaffray

Operator

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

I’d now like to turn the conference over to Marliese Shaw, Executive Vice President of Investor Relations. Please go ahead.

Marliese Shaw

Thank you, Nan. Good morning, everyone. Welcome to our second 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 expected results. Our comments today are intended to qualify for the Safe Harbor afforded by that advisement.

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

Bill Crawford

Thank you, Marliese, and thanks all of you for joining us on today’s call. In the second quarter of 2016, United’s operating earnings declined compared to the linked quarter to $0.20 per diluted share from $0.22 per diluted share or by 9%. On an annualized basis compared to the linked quarter, operating revenue increased 8%, but net interest margin decreased by 1%, and non-interest expense to average assets was reported 2.08%.

This was the company’s worst quarter out of the last five in terms of operating net income. However, I remain optimistic that our results will strengthen from here. We continue to focus on the four key objectives we discussed last quarter. Compared to the linked quarter on an annualized basis, average balances were up 4% for DDA, 3% for total loans, and deposits up 2%. There is some seasonality in the linked quarter period end results for deposits, and we were intentionally running off some higher price deposits as we slow overall loan growth.

Like all banks, United is battling the 2-10 spread, which is the difference between the 2 year treasury and the 10 year treasury. This number has declined from about 2.40% at the time we announced the Rockville-United merger to about 82 basis points today. Lower interest rates drive faster prepayment speeds and new loans got originated at lower than portfolio yields. Our CFO, Eric Newell will go into more detail on this in a minute.

Over the last 12 months, United Financial has increased tangible book value by 5.3% and average to 3.74% dividend yield. In this low for long and highly competitive operating environment we want to generate the best earnings we can, but we want to do this in a safe and sound manner that is focused on long-term shareholder value.

Gross tangible book value per share [indiscernible] solid dividend, maintaining strong asset value, improving deposit mix, optimizing expense structure and maintaining strong capital liquidity ratios are within our direct control. What happens to interest rates and prepayment speeds is not within our control.

We will not make short-sighted decisions to boost short term results. That’s exactly despite the operating environment, where poor decisions will overly extend on duration or reach too far on credit lead to problems down the road. Our cost saving reorganization plan was completed along with the fee income initiative in the second quarter of 2016. The benefits of these programs should begin to show over the next few quarters.

The second quarter of 2016, new retail DDA accounts opened were up 29% from the linked quarter. Commercial business loan balances were up 37%, and we have record investment sales in our United Financial Advisor's business along with strong mortgage banking results. United Bank also launched its new simple e-checking account, so I can point to strong momentum in all of our core business lines.

Now I'll turn the call over to our CFO, Eric Newell to discuss the second quarter's results, and then we'll take your questions.

Eric Newell

Thanks, Bill. Operating net income fell to $10 million in the second quarter from $10.9 million in the previous quarter. Linked quarter delta is among the most income expense categories offset each other. However, the main factors to the decreased operating earnings is the higher level of provision for loan losses from the linked period, due to higher prepayment speeds in our purchase portfolios, which had the effective increasing the size of our covered portfolio.

While period end loan growth was 1.7% in the second quarter, the covered portfolio grew periodically 4.7%, and this is what drives our provisioning for loan losses. There are no deteriorating leading indicators in asset quality that are driving the provision.

This quarter, we saw some improvement in our mortgage banking line, as we reported $1.1 million of revenue, a 7% increase from the first quarter, with commissions paid to our loan officers and the change in the mortgage servicing asset excluded from that number. This is a fundamental performance measure in our mortgage banking unit. Improved mortgage banking income contributed to a 2% improvement in our operating revenue compared to the linked period.

Operating expenses showed a linked quarter increase, due to higher commissions paid to the mortgage loan officers for an increased level of production and commissions paid to our sales team and our UNFA Financial Advisory program. Financial advisory services will drive future revenue generation as we have shifted much of our focus to products that are driven by trailing revenue from assets under management. We continue to expect a nice contribution in the second half from UNFA, as we're approaching the six month mark for installing a new leader, acquiring successful improvement talent with deep local relationships, as well as installing Series 6 team members in select branches, which work alongside our retail employees to ensure a cohesive sales approach to meeting the financial needs of our customers.

Finally, I would note that there was limited realized benefit in our reorganization strategy in the second quarter, given the timing of most of those exits were in the latter half of the quarter. We remain committed to the $130 million of non-interest income run rate.

Contributing to the headline earnings decline in the second quarter for our GAAP net income was the previously disclosed one-time expenses associated with the reorganization, which will result in a $3 million reduction of our non-interest expenses from our initial 2016 non-interest expense run rate of $133 million, but more significantly impacting GAAP earnings is the linked quarter change and the purchase accounting contribution to net interest income, which was an unfavorable change of $1.9 million pretax from the first quarter resulting in essentially no NIM benefit in the quarter.

In our forecast last quarter, I indicated that there would be approximately $4 million to $5 million of net interest income benefit over the 12 months ending June 30, 2017. So what changed? Quite simply, interest rates. Long-term interest rates fell early in the year, and this is causing higher than anticipated prepayment speeds, reducing the weighted average lives in our purchase portfolios.

We’re also seeing the slower transition of the purchase commercial portfolio to our covered portfolio, which means the recognition of the discount associated with this portfolio was also slowing, resulting in less benefit to net interest income. We expect that prepay speeds will continue to remain elevated over the next two quarters assuming steady long-term rates. We believe the recent step down in a 10 year treasury yield, subsequent to Brexit will drive further prepayments in the second half.

In an effort to provide more information on the purchase accounting marks, we’ve adjusted a disclosure on our earnings release deck to provide the remaining mark on loan portfolio segments as well as average life assumptions for each loan category, and to show a ratably impacted net interest income line assuming steady weighted average lives. In short, we are currently expecting about $1.2 million of positive impact to net interest income in the second half of 2016. To be clear, this is about half of what we expected just last quarter. The major change here is the effective prepayments on the weighted average lives of the portfolio.

Now as you are aware, this is outside of our control. Along with the similar information, we’re disclosing our forecast for operating NIM, excluding the effects of mark-to-market adjustments on the margin. And we expect that to remain flat over the second half of 2016 from the 294 -2.94% we reported in the second quarter.

In the second quarter, we showed progress with our cost of fund, which declined 1 basis point to 82 basis points. You also notice a 3 basis point improvement in NOW and money market cost and improving to 43 basis points. Average balances in this category declined by 2%, and period end balances showed a more significant decline.

The majority of this decline was due to seasonality in our municipal deposit business, and we expect those balances to come back to us in the third quarter, but contributing to the improvement in the cost of money markets, the money market accounts was our decision to allow higher cost money markets to price away from us. We’re honing our strategy for this products to better respond to competitive pressures in our market place, allowing this to respond to some irrational pricing to money market deposits from our competitors, but also meet the objectives of growing low cost core deposits as well as cross-selling those new incremental customers and to other products, which increases our propensity to keep the majority of the banking business with United.

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

Question-and-Answer Session

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Kevin Fitzsimmons of Hovde Group. Please go ahead.

Kevin Fitzsimmons

Hey. Good morning, guys.

Eric Newell

Hey, Kevin.

Kevin Fitzsimmons

Appreciate the additional disclosure on the purchase accounting and the core margin. I was just wondering, if we can pull back for a second look at the GAAP margin. So how should we think of the GAAP margin trajectory over the next the back half of this year and into ‘17 assuming we’re still in this kind of rate environment. It sounds like you’d expect the GAAP margin to be higher given some positive impact from purchase accounting in the back half, but not as high as you would have expected. But then, how does that translate into when we’re entering ’17? Does that tail, is there still a tail or is that fall off pretty dramatically, if we’re still in this rate environment?

Eric Newell

Okay. So yes several questions in there. So first, yes, I would expect that the GAAP NIM would be higher than operating NIM just given the fact that, we think that there is a positive net interest impact of $1.2 million, which is on page 8 of the slide deck.

In terms of 2017, I think that’s why we provided the additional information, so you can look to see the projected quarter net interest income impact at this point, if you believe that ratably, or just going to recognize that benefit you can see at least on the interest income side that it's largely negligible.

And those purchase liabilities, while we didn't give any information on that, those are more contractual, so we can at the appropriate time talk about those in 2017. But I think it was actually a disclosure that you could get out of our queue on that, but -- so not really a short answer, but I would say that, I think that, if there is more prepay speeds or prepay speeds come in faster than what we initially expect, I think that this small negative quarterly impact could probably be a little larger than the 136 that we’re currently showing as just it’s simple arithmetic, but I think that you will see a higher, slightly higher GAAP NIM than operating NIM in '17.

Kevin Fitzsimmons

Okay. Got it. Thanks. And just a follow up on the fee income space, the net loss on limited partnerships came in steeper than what you all anticipated last quarter. Just if you could give a little color on that, and how should we be thinking about that number going forward?

Eric Newell

Well, we didn't actually speak specifically about limited partnership losses, because what we do now rather than speaking specifically to that Kevin, we actually included in our non-interest income run rate number which is on page 7.

Kevin Fitzsimmons

Yes. I don't think it was part of your formal guidance, but I think in last year's -- last quarter's call, you all said it was -- you would expect about $2 million annualized pace for, unless I heard that wrong?

Eric Newell

I -- Kevin, I would say that the limited partnership expense is included in that second half number, the $24 million to $27 million. And so we did see a linked quarter increase. However, you also saw that the effective tax rate was slightly lower than what we guided. And so often times, if you see that higher expense in the limited partnership line are getting the benefit down in the tax slide as well.

Kevin Fitzsimmons

I see.

Eric Newell

So I was trying, I mean that might be slightly confusing, but I'm actually trying to simplify, if I just including the limited partnerships in that non-interest income line, and then also giving you the effective tax rate.

Kevin Fitzsimmons

Right. Because there is a linkage there, right. Okay. Great. Thanks.

Eric Newell

Thank you.

Operator

Our next question comes from Mark Fitzgibbon of Sandler O'Neill & Partners. Please go ahead.

Mark Fitzgibbon

Hey, guys. Good morning.

Eric Newell

Hey, Mark.

Bill Crawford

Hey, Mark.

Mark Fitzgibbon

Just Eric, a question on that slide 8, the $1.2 million of net interest income benefit in the back half of the year. Are you assuming now holding rates flat? Is that benefit, does it come in evenly split over the two quarters?

Eric Newell

I think that's a good assumption.

Mark Fitzgibbon

Okay. And then secondly to Kevin's question before the effective tax rate is also been pretty volatile as has the net loss on LP investments. How should we be thinking about that effective tax rate, I know you have 15% in your guidance, but is that going to bump around quite a bit in coming quarters?

Eric Newell

Yes. So the way effective tax rate works is its kind -- it takes the year-to-date, and then it annualizes it, so sometimes you see especially in the earlier parts of the year, where you only have one quarter or two quarter than you're annualizing it. If there is volatility in that pretax GAAP line, which there was this quarter, you’ll see a significant change and how that effective tax rate comes in. But we're still committed that once the year is done will be approximately 15% effective tax rate.

Mark Fitzgibbon

So next year, you're saying the effective tax rate will be 15%-ish?

Eric Newell

No. I'm sorry, Mark. I was referring to this year. Oh you're talking about next year, I think that we -- I don't think, I’ve specifically put out a number for 2017, but I did say last quarter that given the change in the large surrounding alternative energy tax credit. We believe that we can continue to make investments that will keep our effective tax rate in this geography.

Mark Fitzgibbon

Okay. And then, I just wonder, if you could maybe breakdown towards a little bit, what are the big items of the $3 million of annual expense savings that you're anticipating?

Eric Newell

It's largely people.

Mark Fitzgibbon

Okay.

Eric Newell

Salaries. Salaries and benefits.

Mark Fitzgibbon

Great. Thank you.

Eric Newell

Thanks, Mark.

Operator

Our next question comes from Collyn Gilbert of KBW. Please go ahead.

Collyn B. Gilbert

Thanks, good morning, gentlemen. Just quickly, just to clarify, to follow up on Mark’s question. So the -- was it the future savings, you guys are expecting is to come from people, or is that where - is that what you said?

Eric Newell

Yes. So Collyn, when we went into 2016, we were guiding to $133 million of NIE, and now we’re down at the $130 million level, that’s what our guidance is. And so, the reorganization that we completed in the second quarter, the savings at $3 million, we expect that to be in the salaries line.

Collyn B. Gilbert

Okay. And how did the $1.4 million in charges that you -- just while we’re talking about that, that you guys saw this quarter, did that, what line items did that come out of ? Was that predominantly in -- as well.

Eric Newell

Predominantly people salaries. Yes.

Collyn B. Gilbert

Okay. Got it. Okay. And then just also to on your outlook for fees, so you’re saying $130 million right for the full year for ‘16?

Eric Newell

You mean NIE? You said fees.

Collyn B. Gilbert

Oh, I am going back to fees, or sorry to your fee guidance that you are holding to. That you are still to sorry, yes

Eric Newell

The -- $27 million. Okay. To make you sure time of the feedback.

Collyn B. Gilbert

Yes. No. That’s good. Thank you, Eric. So you’re still comfortable with that even, because I think you had indicated right that you wanted to be less reliant on mortgage banking going forward. Is that right?

Eric Newell

Yes. So yes, we do want to reduce the reliance on mortgage banking, and we’re taking steps to do that, but we also have some benefits that we’re not -- we are expecting in the - we are expecting in the second half that aren’t fully into our run rate on the fee income line. Predominantly, we now have a new schedule of fees for our deposit accounts and that went into effect July 1, and we’re going to see some benefits there. And then also, the contribution of our wealth management business, which we call UNFA, that team was that whole business was essentially rebuild starting fourth quarter last year, and we are starting to see some nice benefits there. And I think that that we’re expecting that to be more meaningfully contributing to fee income.

Collyn B. Gilbert

Okay. That’s helpful. And then just on the loan growth that you saw this quarter that really good C&I growth. If you could just talk a little bit about that. And then was the -- should we assume that the kind of the reserve build this quarter, was that tied to the commercial loan growth that you saw, or but just maybe if you could give us a little bit of explanation as to what drove the reserve build?

Bill Crawford

I’ll handle this. Eric will take the reserve build question. The loan growth that’s just the teams we’ve recruited a while back a year and half ago or so, they are hitting on all cylinders and doing great job, winning new relationships, and they are winning them at attractive returns on the equity and full relationships, and so we feel very good about that. Eric, I’ll let you take the reserve build question.

Eric Newell

Yes. On the reserve build, Collyn, it’s more of a function of how our covered portfolio is growing, and we actually disclosed the balances there on our press release in the tables. But the punch line there is the covered portfolio, which is the nomenclature we use for covered by the provision, the transition from the purchased portfolio that have no allowance associated with it into the covered portfolio, that periodic change linked quarter change was 4.7%. And so that was higher than the stated loan growth of 1.7% on the balance sheet. So and that transition from the purchased portfolio to the covered portfolio is what’s driving our provision.

Collyn B. Gilbert

Got it. Okay. That makes sense. Okay. And then just one final question on the NIM. So you’re talking about the core NIM sort of seeing stability there. What are the drivers in that? And I guess, I ask that, because if we in this low rate environment, is it a mix shift benefit, is it - do you anticipate the new loans you’re putting on going to be at higher yields, or just curious, if you could give a little color as to what would be driving that stable NIM outlook on the core side?

Bill Crawford

I think, I would - First off, we have in our four key objectives that’s in the press release deck. We talk about matching our deposit growth with our loan growth. So our loan growth is slowing, but that allows us to be more focused on growing low cost core deposits. So we anticipate that we are going to see some additional benefits in our cost of funds, because if we’re growing fast and t we’re not able to do it with deposits, we have to go use wholesale funding, which is more expensive.

So we think that there is some benefits on the cost-to-funds line, which will help with NIM. And then also it’s a mixed shift on the asset side, where we're focused more on owner occupied commercial real estate, C&I commercial business loans, also consumer focusing on those loan sides and with the de-emphasis on investor CRE. And that de-emphasis has nothing to do with our CRE concentration. We're very comfortable with that, our regulators are happy with that as well. But the ROEs in that business are sub-optimal to where we want to be, and frankly, it also it's diminishes our NIM. And so with the de-emphasis on the investor CRE, we think that that's where we can get some stability of our operating NIM in 2016.

Collyn B. Gilbert

Okay. Great. Okay. I'll leave it there. Thanks, gentlemen.

Operator

[Operator Instructions] Our next question comes from Matthew Breese of Piper Jaffray. Please go ahead.

Matthew Breese

Good morning, everybody.

Eric Newell

Hey, Matt.

Bill Crawford

Hey, Matt.

Matthew Breese

I just wanted to touch on a few items, just for a point of clarification. Eric, we talked about the tax rate. In the second half of the year to get to the full year 2016 tax rate 15%, that implies that there is going to be some kind of lift in the tax rate in the back half. Is that accurate?

Eric Newell

Yes. Our effective tax rate this quarter, I don’t have it handy. But it was sub-15%. So yes, you're correct.

Matthew Breese

Okay. And then, at the start of the year, you guys brought on a marine lending team of portfolio. Could you just give us an update on the balances on the retail segment, and then on the floor plan lending segment?

Eric Newell

Well, so on -- in a business and its entirety, we’ve been seeing some more successes in the building that out, and we've been building out a floor plan. We're not specifically giving out balances on that line of business, but the purchase portfolio that we did get on the retail side has been paying down, which is good news and bad news, because that means, if they are good borrowers, the credit quality is good, and they have the ability to refinance. Bad news is that, they're refinancing at lower rates or they're going somewhere else.

So we continue to remain optimistic with that line of business, and I think you’re going to see some featured more meaningful contributions in this latter half of '16 and into '17 on that line of business.

Matthew Breese

Where are those balances? And what loan segment?

Eric Newell

They would be -- so the retail would be in consumer and the floor plan will in C&I.

Matthew Breese

Okay. And the bump up in C&I we saw this quarter, would you say, some of that was from marine lending or none of it, or how would you characterize the improvement in C&I loans for marine?

Eric Newell

De minimis.

Matthew Breese

Okay. Okay. Longer term, obviously the 2 to 10 year spread has come down meaningfully. But longer term, what kind of impact will that have on the core margin beyond just the back half of '16. Could we see that 2.94% triple down in 2017, if we maintain these kind of spreads?

Eric Newell

Yes. But I think the level of the compression we would see would be based on the success rate that we have and improving our cost-to-funds, because I think that that's where a lot of our opportunity lies. I'm sure it's not loss when you guys are cost-to-funds are slightly higher, and even our local peers and that certainly something that we have most of our focus on at this point is improving that.

Matthew Breese

Okay. And then you also touched on one of the new fee income drivers or upcoming drivers, such as on the wealth management side of things. Could you just give us an update on that business and its overall impact on non-interest income for the quarter?

Eric Newell

You mean second quarter?

Matthew Breese

Yes.

Eric Newell

I would say it's favorable. I mean, we haven't really put a box around that yet, and we're not prepared to. But I would say that we installed a new leader there, who was [ph] around a region for maybe more than a region for first value. And we've been able to successfully grab some proven talent that has local ties to our team, and fact that they hit the ground running and are doing amazing. And I think very importantly is one of our main shifts in our strategy as we previously didn't have Series 6 bankers, Series 6 folks sitting in our branches.

And so along with the new retail Head of retail, and Head of UNFA, they've really developed the strong relationship, and they're ensuring that, when a customer comes in, there is a cohesive sales strategy with the retail banker and the Series 6 banker. So we can make sure that we're meeting the full financial needs of our customers.

So we expect that overtime as those relationships with Series 6 bankers deepen with our customers and we're going to get more share of wallet and we're actually going to be able to grow deposits. Because inherently, the initial friction is the retail doesn't necessarily want to give up those deposits to the Series 6, because that reduces their deposits, but we've with the expertise of the leaders that we just brought in, they’ve proven and they've been able to actually do this at previous shops that they worked at. That overtime as those relationships deepen with the customers, they actually show growth in deposits. And those are low cost core deposits, because then when the customer just wants to simplify their financial picture and keep everything with the United.

So that's why we're optimistic in the second half of '16 on wealth management. I would say that we had pretty much negligible contribution in the first quarter from this business, because that was being built, and I would say it's improved dramatically in the second quarter, but still fairly de minimis. And then in the second half based on small numbers is going to grow, and then we think it's going to be more meaningful in 2017. And we hope to potentially put some additional information, so box it out for you guys.

Bill Crawford

And Matt, the other key point in terms of UNFA, I mean this will be sticky less volatile fee income what we did on service charges will be sticky less volatile income. And we're trying - obviously, we're doing less on interest rate swaps down, we're trying to map more of that into net interest income. So on mortgage banking, we're taking steps to make sure that doesn’t get too large, and we're even working things to get the volatility out of that.

So on the fee income line, we're just trying to create more stability there less volatility. And we think that will be helpful as we go forward in time.

Eric Newell

Yes. Previous -- Matt, one last thing on UNFA. Previously, before that rebuilt, we're more positively correlated to the revenue that was coming off was just kind of sales, one-time sales, whereas, this new group is more focused on assets under management, whether it's continued revenue that comes in. And then, if there is a change in somebody leaving us for whatever reason, it's not like that revenue goes away, the assets are still here. So it's definitely, and as Bill mentioned it's more stable and consistent.

Matthew Breese

Got it. And then, what was the -- if any loan level hedging fees fee income this quarter?

Eric Newell

I think we -- I don't know - for the quarter.

Bill Crawford

I think it's less than a penny, if it was. $400 and change

Eric Newell

Yes. $400,000 pretax. And it's down dramatically year-over-year. And this just comes down to us being -- keep in mind, one of the main reasons that we did that last year was we were more liability sensitive going into 2015. And so, we were working to get more neutral to even slightly asset sensitive, because that was the range back then. And we're still confident with our positioning on interest rate risk, and we're pretty much neutral, but our [PH] bias is on shortening duration on the asset side anymore.

Matthew Breese

Yes. Okay. Last question. Bill, you had mentioned that you are more optimistic on forward results. Could you just give us an update on the profitability metrics you're holding yourself and the rest of the management team accountable for?

Bill Crawford

Yes. How about this, I mean we're trying to like I said, I think this was our low quarter, and I think there is a lot of different areas I can see, where I think we'll do better than here. But when I think you have to look around the geography we operate in. Look at the geography, we operate in, and where the best banks are in terms of ROA, whether that's Webster or you look at somebody like People's Bank, Connecticut. When you look at how where those are ROAs are for us to be significantly higher than that would be difficult, but certainly we want to have one of the best ROAs in the geography we operate in.

We're also going to be very mindful about the risk map. The reason we're slowing loan growth, the commercial real estate, while we have plenty of capacity to do that. The spreads and yield, they are terrible. The price is very aggressive. We're being very thoughtful about the risk we're taking in this environment. And I think in this environment, the key thing is to grow tangible book value to produce the best earnings you can, pay good dividend and work on those four objectives that we talk about truly enhance franchise value.

But in terms of we’ve cut expenses down pretty significantly, our NIE and average assets operating at 2.08, it will probably drift a little lower, but that is a very strong number relative to most any peers. We're trying to stabilize NIM, operating NIM. Asset quality remains very solid, interest rate risk is solid. So I think the bad move in this environment is try to shoot at some artificial ROA target, where you have to take outsize risk to do that. And I think that's going to end badly, and that's sort of where we are.

Matthew Breese

Okay. I appreciate that. Thank you. That's all I had.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Bill Crawford for any closing remarks.

Bill Crawford

Okay. Well, thank you for being on the call. And of course, I want to thank my United Bank teammates for all their hard work. And we're going to go out and work on the finishing up strong for 2016. Hope everybody has good day.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.

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