The Bancorp (TBBK) on Q2 2016 Results - Earnings Call Transcript

| About: The Bancorp, (TBBK)

The Bancorp, Inc. (NASDAQ:TBBK)

Q2 2016 Earnings Conference Call

July 29, 2016 08:00 AM ET

Executive

Andres Viroslav - Director, IR

Damian Kozlowski - CEO

Paul Frenkiel - CFO

Analyst

William Wallace - Raymond James

Frank Schiraldi - Sandler O'Neill

Operator

Good day ladies and gentlemen, and welcome to The Bancorp Incorporated Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call may be recorded. I would now like to turn the conference to Andres Viroslav, Director of Investor Relations, you may begin.

Andres Viroslav

Thank you, Nicole. Good morning and thank you for joining us today for The Bancorp's Second Quarter 2016 Financial Results Conference Call. On the call with me today are Damian Kozlowski, Chief Executive Officer; and Paul Frenkiel, our Chief Financial Officer.

This morning's call is being webcast on our website at www.thebancorp.com. There will be a replay of the call beginning at approximately 12 PM Eastern Time today. The dial-in for the replay is 855-859-2056 with a confirmation code of 47292256.

Before I turn the call over to Damian, I would like to remind everyone that when using this conference call, the words believes, anticipates, expects, and similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties, which could cause actual results to differ materially from those anticipated or suggested by such statements. For further discussion of these risks and uncertainties, please see the Bancorp's filings with the SEC. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Bancorp undertakes no obligation to publicly release the results of any revisions to forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Now, I'd like to turn the call over to the Bancorp's Chief Executive Officer, Damian Kozlowski. Damian?

Damian Kozlowski

Thank you, Andres. Good morning and thank you for joining us today. My name is Damian Kozlowski; I am CEO of Bancorp and the President of The Bancorp Bank. I’ve been in these positions since June 01 and I welcome you to my first earnings call.

Our second quarter earnings were disappointing, but I believe there are significant positives that will improve our earnings and lower our earnings volatility on a go-forward basis. First, we have revenue momentum across our lines of business.

In time when banks are struggling for a single digit revenue growth, The Bancorp delivered revenue growth across these lines of business and grew net interest income 23% on aggregate year-over-year.

There are several positives to highlight that support our continued growth. We closed on a 60 million leasing acquisition that will be accretive to revenue. We hope to do similar transactions in the future to grow our leasing business through acquiring new clients and entering new geographic markets.

We also hired a new leader of our SBA business, Jeff Nager, who comes to us from SunTrust, where he had led and build their SBA business. And lastly, despite regulatory constraints the gross dollar volume generated by our payments business continues to experience double digit growth by retaining and growing our client relationships.

Second, expenses will decrease in the coming quarters. Our BSA related look-back has now been completed and additional K2 expenses should be significantly less in the third quarter versus approximately 13 million in the second quarter. I expect lower volatility from our discontinued operations that have been a drag on earnings.

We are looking to realign our expense base and focus our businesses. We believe we can substantially lower our operating run rate by 20% to 25% without significantly affecting revenue, and then long term have a healthy operating leverage with double-digit business revenue and single-digit expense growth.

In addition, as we resolve regulatory and performance issues, I believe we will also find additional opportunities to streamline our platform, reduce the reliance on consultants and lower our regulatory costs.

Third, we are very focused on addressing all regulatory issues quickly. We have made significant progress in this area, but the new focus has been [tight] and dealing with all issues that face the bank and resolving them comprehensively. We are developing an integrated plan to deal with all issues under a systematic process. This process will be institutionalized to prevent further issues with our regulators.

Fourth, we are currently creating an integrated and comprehensive business plan for the company. The plan will be completed by September and many of its provisions will be implemented by the end of this year. The plan focuses on reducing cost and maintaining business momentum, while significantly increasing our platforms’ productivity. The plan will include an enterprise view of both strategic priorities and risk management, and the plan will help us realize our earnings potential over the next three years and have a significant impact on the 2017 results.

In summary I believe that Bancorp has the unique opportunity for success. We have significant fees as a percentage of revenue, higher spreads, low risk, specialty lending businesses and a low funding pace. The Bancorp should simply be more profitable. I believe we can make significant progress in creating returns for our shareholders over the next year, and I look forward to updating you on our progress in these earnings calls.

Now I’m turning the call over to Paul Frenkiel, our CFO. He will review the financial results in more detail.

Paul Frenkiel

Thank you Damian and good morning. Two significant factors were reflected in the reported net loss for the second quarter. First, charges related to discontinued operations loans based on quarterly valuation by third party loan review companies was $17 million. An additional $15 million of charges were taken on discontinued loans which were financed by the bank and recorded as investment in unconsolidated entity on the balance sheet.

Second, look-back expense during the quarter amounted to $13.4 million; however, look-back expenses were concluded in July so post second quarter expenses should be significantly less. As a result of the above charges, after tax income was additionally reduced during the quarter by $3 million in additional deferred tax valuation allowances.

In addition to that allowance, $5 million of previous years’ allowances are projected to reverse in 2017. Thus is 2017 net income should benefit by a total of approximately $8 million based on those projections. Sales of discontinued loans continue to be pursued, notwithstanding that there were no sales during the quarter, discontinued loan balances continue to be reduced.

At June 30, 2016 unpaid discontinued loan principle of $494 million includes $70 million of residential mortgages, which may either be sold or retained. That leaves $424 million of commercial loan principal less a mark of $23 million or approximately $401 million of net discontinued commercial loan balances which compared to $451 million at March 31, 2016.

The reductions reflect loan pay-offs and loan charges of $17 million in the second quarter. The $23 million mark at June 30, 2016 compared to a $46 million linked quarter mark. The difference reflected loan balances and marks which were offset based on review of the underlying loans.

At June 30, 2016, the largest 15 discounted loan relationships amounted to $300 million and had a mark of approximately $11 million. Of the $300 million, approximately $37 million are non-performing. Those non-performing loans had minimum marks as the accumulated marks were largely offset against principal based upon a review of individual loans as noted earlier. The $300 million principal for the 15 largest relationships compared to $337 million at March 31, 2016.

Year-over-year increases in our primary lending lines of businesses were reflected in a 23% increase in net interest income. The year-over-year increase for SBLOC balances our largest lending line was 18%, with 40% and 42% growth for SBA and leasing respectively. The leasing increase reflected a $60 million purchase of small fleet lease receivables similar to those we originate.

Loans held for sale to secondary markets continued also to contribute significantly to net interest income. Linked quarter change in certain loan categories were modest, reflecting seasonality and organizational changes in the SBA department. These lines of businesses have historically had low charge-offs.

Bancorp increased its period end investment balances over the linked quarter by approximately 6%, primarily with highly rated variable rate securities. Investment securities are not planned to be increased significantly as a result of continuing loan growth.

Prepaid deposits are the largest funding source and should adjust to only a portion of future increases in market interest rates. Prepaid deposits at June 30, 2016 amounted to $1.9 billion or approximately 17% higher than the 1.6 billion at June 30, 2015. The interest margin should also benefit from the impact of rate increases on variable rate, SBLOC and SBA loans.

The net interest margin for the quarter was 2.73% compared to 2.23% in Q2 2015. The increase reflected a reduction in balances at the Federal Reserve Bank earnings nominal rate and a 25 basis points increase in rates since December 2015. The reduction in Federal Reserve Bank balances and improvement in net interest margin reflected the full quarter impact of the exit of non-strategic deposits in first quarter 2016.

Bancorp supports many of the industry’s leading players and payments, continuing initiatives are projected to contribute double-digit GDP growth and corresponding fee growth. Prepaid card fee income increased approximately 21% to $13.5 million for the quarter, compared to 11.1 million in Q2, 2015.

Non-interest expense excluding BSA look-back for Q2 2016 increased to $43.7 million from $37.2 million for Q2 2015. As Damian indicated, detailed planning for expense reductions is well underway and is expected to significantly impact 2017 results.

Damian, this concludes the financial report.

Damian Kozlowski

Thank you very much Paul. Operator, please open the calls for questions.

Question-and-Answer Session

Operator

[Operator Instructions] our first question comes from the line of William Wallace of Raymond James. Your line is now open.

William Wallace

I guess it’s probably early to talk about the ongoing operations. Damian you’re putting together a pretty comprehensive plan, is you expectation that you will announce the plan with specifics on target metrics, (inaudible) efficiency ratios, dollar expense levels, ROA, ROE, how should we expect to learn about this plan.

Damian Kozlowski

Well we are going to detail it in different format to different audiences. We are going provide where we expect to be over the next three years. We are not obviously going to predict earnings, but we’ll give you targets around the ratios that we’re looking at, how we’ll sit in the market, versus overall profitability in the market and also compare it to our competitor stat. So we will give you a lot of transparency around which businesses we’ll be in, what are our targets, what we expect growth to be, but we won’t expressly predict earnings.

William Wallace

And we’ll get this next quarter?

Damian Kozlowski

Yeah, we’ll be pretty done. In September we’ll have this plan reviewed and approved by our Board of Directors and we will release parts of that to the market place after that, probably at the end of the third quarter.

William Wallace

So you haven’t had a lot of time to dig in to the discontinued portfolio, but to the extent that you have knowledge of it, I’m a little bit confused as to exactly what happen and Paul through it pretty quick in the prepared remarks. But you have 494 million of unpaid principal as of the end of the second quarter, 424 million of that is commercial and has a $23 million mark against it, is that correct?

Paul Frenkiel

Correct.

William Wallace

And that mark was 46 million last quarter?

Paul Frenkiel

Correct.

William Wallace

So what happened to the 23 million?

Paul Frenkiel

So what we did was we reviewed individual loans within discontinued operations that had marks against them. So I’ll give you an example, if you have a loan that was marked down to the appraisal and we expect based on the current planning to sell at the appraised amount, we would then offset the accumulated marks against both the loan principal and the mark account. In other words, it’s a better presentation to reflect the loan balance at what you really expect to collect.

William Wallace

But then there was a $17 million charge in the quarter. So are you writing down (inaudible).

Paul Frenkiel

Here is the math; we had $46 million in accumulated marks at the end of the third quarter. We added 17 and we subtracted 40 and the 40 was basically what we offset against principal, and that was based on situations like the one I just described that if at this point in time based on our review of the loan, we’re going to get the net amount, it’s a better presentation to show the loan principal net of the reserve. So you basically reduce the accumulated mark and you reduce the principal.

Damian Kozlowski

The thing I was going to add is that I have spent a lot of time since I’ve joined on June 01 with our third party but also internally to review those loans. That’s one of the things that were the highest priorities when I came in to the institution. So I feel comfortable that the process is in place to review them adequately and make sure that the marks are correct.

I’ve even gone to the extent of visiting some of our collateral to make sure that I felt comfortable with the appraisals.

William Wallace

So I guess these are quarterly appraisals. These seem like big moves especially given what was said last quarter about the confidence and the carrying values of these loans. So you got to get of these loans, right, so how can you get them, is there a plan in place so that you can get rid of them quickly. Did you take the last hit this quarter? I mean just how do you get rid of these things.

Damian Kozlowski

Well we do think - I do personally believe that we’ll have less volatility of this portfolio. Having done these workouts before, I think we’re looking at a three period where these loans will run down. There are portions of the loan book that are performing well. So if you can think about - we think we’ll be able to have the exposure in the next year and a half and then get down to a small under $50 million within the next 2.5 years. That’s the plan.

What we’ve done is again chart each loan to make sure we know the timeline, when we can pay down the principal and make either dispose off the loan by getting a collateral or giving the borrower the opportunity to refinance the loan. That’s generally.

William Wallace

So was there any change in the firm that was hired to do the appraisals this quarter versus last quarter?

Damian Kozlowski

No. There was a third party provider and then it’s reviewed by our auditors.

William Wallace

Okay. And so in one quarter the value of these loans deteriorated 17 million? Is it a collateral value or is this a cash flow value?

Paul Frenkiel

We’re looking in to some possibly giving more detail in the 10-Q. I would say that loan charges during the quarter partially reflected strategies to liquidate certain unique collateral and properties to expedite resolutions. In other words, we want to put these loans behind us and get on with our continuing operations. So there were strategies to do that.

William Wallace

I think it would helpful as an outsider looking in, if we could see - it sounds like you’re writing down principal balance. So what’s the original contractual balance of these loans? You’re writing down principals, am I correct, is that what’s the -?

Paul Frenkiel

Correct. We are writing down the principal to the amount that we believe we’ll actually collect in the example I gave on the sale of the underlying property.

William Wallace

So the $424 million, if you net out the $23 million mark on that, you have $401 million. What is that value versus the original contractual value, how much have you written these down to, is that something that could provide?

Paul Frenkiel

I don’t know that right now. We’ve actually have to go back.

William Wallace

But maybe you could put it in the Q.

Paul Frenkiel

Yeah, I’ll make a note and look to see how practical that is. Some of these loans go back a considerable amount of time, so it actually is not an easy thing to do. I think the significant -.

William Wallace

I guess, I can’t figure out if you’re trying to say that maybe you guys ripped the Band-Aid off this quarter and you’re trying to take a hit now to not have to take another hit in the future, and if so whatever color you can provide around how low these things are being carried now versus some level of value par is probably the best way that we can look at it as outsiders.

Paul Frenkiel

I will look at that issue. That’s a fair point; I will look at that issue. Understood.

William Wallace

And then can we talk a little about the charge on the off balance sheet trust that you guys financed when you moved what was the bad part of the portfolio at the time. What’s going on there?

Paul Frenkiel

It was related, the largest component of that charge was actually related to a loan relationship that we took in the charge in discontinued operation. So it reflects as I mentioned before our strategies to liquidate certain unique collateral and properties to move on and resolve those loans.

William Wallace

I thought that there was another party that was managing that process for that loan.

Paul Frenkiel

Yeah. Right, because there was independent investor and the loan the charge that we did take was partially absorbed. Our charges reflect our portion of the loss, but the independent investor also realized the loss in those properties.

William Wallace

So don’t you have a loan financing that trust?

Paul Frenkiel

Correct. Yeah, it appears on the balance sheet as investment in unconsolidated entity.

William Wallace

And so this doesn’t flow through as a charge-off, you just write down the value of the investment.

Paul Frenkiel

Exactly, that’s exactly really, and that appears in a separate line. That appears in a separate line item in the income statement.

William Wallace

Okay. And do you have the same person or firm or company that’s valuing the value of those loans versus the ones that are in your discontinued ops.

Paul Frenkiel

We actually use multiple companies, but our primary loan review company, we have one loan review company for discontinued ops and we have another one that also does work on that, but it is more specific to the one that’s [doing] the investment in that consolidated entity.

William Wallace

And then my last question and I’ll hop out. On the balance sheet where can we see the carrying value of that? You said it’s an investment in an unconsolidated entity, but where’s the line item for the loan.

Paul Frenkiel

Well that is the loan in essence, that is the financing it appears with proper --.

William Wallace

Okay, so that’s the [162].

Paul Frenkiel

Yes, exactly.

William Wallace

So there’s no principal pay-off in the quarter, just the $15 million charge.

Paul Frenkiel

It was minimal during the quarter; the principal pay-out was minimal during the quarter, correct.

William Wallace

Okay. Obviously I think for us as outsiders looking at the stock it would be helpful to have some view of where these things are being carried relative to par just to get a sense as to how much of a discount you’ve taken and that any color you can provide on non-accruals, delinquencies, inflows in to non-accrual, just to get a sense of this, because I think we’d like to - as you mentioned we would like to put it behind us as well as outsiders. I know everybody would like to put it behind us. There’s some level of comfort around whether or not we’re close as much as you can provide I think would help us. So that’s all, I’ll hop out and let somebody else ask a question.

Operator

Our next question comes from the line of Frank Schiraldi of Sandler O'Neill. Your line is open.

Frank Schiraldi

For the value of a par, I think it was 93% last quarter, you had marked off a par and so I’m just getting like 87% now on this discontinued ops book. Is that reasonable or do you have - does that sound right?

Paul Frenkiel

I’m going to look at the original marks, because there’s movement during the quarter because we made some adjustments in prior quarters where we offset the mark against the loan principal. So I’ll look at that and we’ll have to report back to you.

Frank Schiraldi

Okay, so you’ve done that in the past where you’ve offset where a part of the market reduced the principal and so --.

Paul Frenkiel

Yes.

Frank Schiraldi

Okay. Might be greater than that. And then in terms of like additional mark it seems like I don’t know, correct me if I’m wrong but maybe this mark is sort of bringing these items down to where the market is and you could potentially be able to move a decent amount of this off balance sheet through sales in the short term or is that not what you’re saying.

Paul Frenkiel

Yeah, I think that’s what the numbers say. In other words we’ve reduced principal to the amount that’s based on the current plans to dispose a property which may change, but as of now we offset the mark against the principal to reflect what we believe will actually receive in terms of payback.

Frank Schiraldi

Well in terms of payback or what you could get in the market now for if you -.

Paul Frenkiel

They’re the same because in the example I gave it was written down to the [appraised] amount. The current plan would be to sell the property and so that’s what we think we can get and it is current market value.

Frank Schiraldi

Would the same be for, you know in this investment on the consolidated entity. Is that who we start seeing more of that be liquidate as well given these marks do you think?

Paul Frenkiel

That depends on individual loan by loan analysis. We have a company that’s doing that and they are pursuing, clearly everybody wants to dispose those loans on an accelerated timeline but as Damian mentioned it’s a multi-year process, it’s not going to happen and it’s going to be spotty.

Frank Schiraldi

And then I just had a question on the size of the balance sheet. I think end of period the balance sheet was pretty similar in size to where you were in the period last quarter and the average size of the balance sheet was a bit lower through the quarter. So just wondering what’s the better way to look at the size of the balance sheet going forward because I know with deposit inflow and outflows it can move significantly in to or out at the end of the quarter. Is it a $4 billion balance sheet at this point, is that a better way to think about it going forward and is there more that you see coming off in terms of deposits that shrink the balance sheet further.

Paul Frenkiel

Okay, so really the only way to look at it is to look at the average balance sheet which we disclosed in the earnings release and the 10-Q. Because we are in the payments business we have certain very large customer that have significant fluctuations, for instance, payroll providers, their deposits tend to fluctuate on payroll days once a week, twice a month, end of the month, and so forth.

So if the quarter end happens to hit one of those days, which on a random basis they will, that distorts the deposit levels and the assets levels, which actually happened on June 30. So June 30 the total assets were 4.4 billion but the average is really the only way to look at it. So we averaged in the quarter 4.1 billion as you can see on the average balance sheet, that compares with about 4.4 billion in the first quarter.

And to answer the second part of your question, yes we are looking at other non-strategic deposits and certain other exists that’s one of the tools that we basically manage our assets with. So we’re looking at that and that is a definite possibility.

Frank Schiraldi

Okay. So you finished the quarter with 6.5% TCE ratio, which I think is a pretty good proxy for tier one leverage, and obviously if you just think about the average balance sheet instead, you’re up over 7% there. So where do you guys need to be on a tier one leverage ratio at the bank in the short term and can you get there with just further shrinking of the deposit base the balance sheet.

Damian Kozlowski

Well, I think short to medium term we have to be in the eight tier one leverage ratio. So there is a gap and as you know there are three ways to close that gap. We can either de-lever, reduce the balance sheet, we can accrete significant earnings or we could raise capital. And those are the three tools we can to raise that leverage ratio.

Frank Schiraldi

Right, do you think you can do that just with de-levering or will you need one of those other tools to get to 8% in the short term?

Damian Kozlowski

We can’t comment on which tools we specifically are going to use, but we need to be at a higher, we believe the Board of Directors, myself, the CFO all believe that we need to be at a higher tier one leverage ratio in order to support the business that we run and to be fully viewed by our regulators to make sure that we enough capital for the business.

Frank Schiraldi

And then I just wondered if you could talk a little bit about the prepaid growth, the fee income growth was really strong this quarter on a year-over-year basis. It was close to around 20%. I have been looking for low single digits, so if you could just talk about what’s driving or drove that and maybe your expectations. I know it can be choppy, but your expectations for run rate going forward.

Paul Frenkiel

We actually have numerous types of fee income that gets reflected in the fee income account as you correctly stated. It is somewhat choppy, so we’re not really predictive other than the GDP growth, we don’t really predict the fees. It’s very difficult to predict.

Damian Kozlowski

We do have a lot client stability, we are growing individual, our top clients, the part of the business where we can accept new clients we’re getting new clients, and so you’re getting this double digit GDP growth in the teens to mid-teens. And with all the types of transaction fees, incentive fees and everything else we get, those come a little bit spotty, but generally the volume goes up, your revenue is going to go up. And we’re still having strong client relationship.

This payment industry is maturing, there are players that are exiting, you can expect consolidation in the industry in this product sets but also you can expect slightly lower fees over time. So it’s something that’s been played out so many times in financial services. The life cycle matures, there’s bigger players, they get more scale, they get more efficient and fees drop. So we think we can be one of those players long term and so I think you’ll continue to see us increase our volumes.

Frank Schiraldi

And then have you talked about GDP, I mean GDP grew in the double digits, have you guys guided to any level of growth, I can’t remember going forward there. Is that kind of a pretty good consistent expectation of GDP growth ex any sort of depositive relationships you exit out of?

Paul Frenkiel

We continue to believe we’re going to experience double digit growth based on our knowledge and the department head is very, very good in that business. So that’s what we’re anticipating.

Damian Kozlowski

And then plus the macro environment that’s playing out. It supports continue the GDP growth.

Frank Schiraldi

I just wanted to make sure I didn’t have anything. I saw prepaid processing fees were up 20% year-over-year. You didn’t change the way you calculated that at or you’re thinking about --.

Damian Kozlowski

No.

Paul Frenkiel

No, we actually receive that income monthly, there’s no accounting for in essence. We received, we performed the services. Whatever income we received is actually received.

Frank Schiraldi

I guess not to beat a dead horse, so you would think in past GDP has kind of grown at a more accelerated rate than the prepaid processing fees, I think in part because there are big partnerships and there’s volume discount. So you would expect that relationship going forward, are you on the --.

Paul Frenkiel

I think what you’re seeing is the timing of incentive fees and that’s what you’re seeing the difference between revenue growth and GDP growth.

Damian Kozlowski

Generally what you’ll see going forward is that revenue growth should slightly trail GDP growth as pricing continues to compress slightly, and I would underline slightly overtime. For the next three year time horizon of our business plan there probably will not be substantial price compression, but there will be over the next five or 10 years, as there’s a lot more convergence in the payment space between this types of delivery system than others. So you’ll see a continued pressure, people leaving this part of the industry, volumes going up and pricing compression overtime.

Frank Schiraldi

And then just finally, Damian you referenced a couple of times resolving all regulatory issues is obviously something you guys are focused on. But when you say all regulatory issues, I mean you’re just talking about BSA AML right. I mean is there anything --.

Damian Kozlowski

No, I’m talking about all issues that face the bank across - as you know the regulatory environment has substantially changed over the last 10 years and so the standards for all banks are very high. So we’re focused on the enterprise risk management. We’re focused on every finding that our regulators have regardless of the regulator to make sure we’re talking that, resolving it, explaining it comprehensively within our business model and making sure the regulators proactively are up to date in the strategic moves of the organization and that’s very systemic and we’re going to make it very institutionalized. So that when there is a finding from our regulators we can interact with them in a way in order for us to understand together how we need to resolve it so they are comfortable and we can do business.

Frank Schiraldi

I mean obviously the big outstanding issue still is the BSA, right. That’s the --.

Damian Kozlowski

Of course, but it’s not - as banks have changed, it’s the entire [campus] the whole - there are many in this banks that are, I would consider at the state-of-the-art for the industry. So things change very quickly nowadays and we have to have a process in place to deal with them as they’re uncovered or as a guidance changes. And we just want to make sure that’s institutionalized.

Most of the organizations do get in trouble because they wait for the regulators to find things rather than you find them yourself, and you deal with them collectively. And that may be not a change in the way this bank is, but that’s how it’s going to be done going forward.

Operator

Thank you. And I’m showing no further questions at this time. I’d like to hand the call back over to Damian Kozlowski for any closing remarks.

Damian Kozlowski

Thank you. I just want to thank everyone for attending today. We appreciate your interest in your company and look forward to speaking with you again. This completes The Bancorp Bank’s earnings call. Thank you very much.

Operator

Ladies and gentlemen, thank you for participating in today’s conference. That does conclude today’s program. You may all disconnect. Have a good day everyone.

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