NetBank Q3 2006 Earnings Call Transcript

| About: NetBank Inc. (NTBK)
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NetBank, Inc. (NTBK)

Q3 2006 Earnings Call

November 8, 2006 10:00 am ET


Rich Jeffers - IR

Steve Herbert - CEO

Jim Gross - Chief Finance Executive


Christ Donald - Sandler O'Neill

John Hecht - JMP Securities

Sam Caldwell - KBW


Hello, participants and welcome to today's NetBank Conference Call. All lines will remain in a listen-only mode until the question-and-answer portion of our program. (Operator Instructions). At the request of our host, today's conference is being recorded. Any objection, one must disconnect at this time.

I am now turning the call over to our first speaker, Mr. Rich Jeffers. Sir, you may begin, when ready.

Rich Jeffers

Hello, everyone. As you know the purpose of today's call is to discuss NetBank, Inc.'s financial results for the third quarter of 2006.

Please be aware our commentary or responses to questions may contain forward-looking statements. Forward-looking statements regarding the intent, belief or current expectations of NetBank, Inc. or its officers can be identified by the use of forward-looking terms. Examples include may, will, should, believe, expect, anticipate, estimate, continue or any other comparable phrasing. Information concerning risk factors that could cause actual results to differ materially from those contained in the forward-looking statements is available in our SEC filings.

Along with this morning's press release, we posted additional financial information directly to our website. This quarterly data provides statistics and further detail on the company's financial performance by business segment. We may refer to this material during the course of this morning's discussion. You may access the information on our web site at in the Investor Relations area. There is a link titled Financial Data.

We will take live questions following our summary of the results. Steve Herbert, our Chief Executive Officer and Jim Gross, our Chief Finance Executive, will lead today's call. We will begin with Steve Herbert.

Steve Herbert

Thanks, Rich. And let me just start by thanking everybody, that's on the call for taking an interest in NetBank today. And I am sure you probably had an opportunity by now to look at the third quarter press release. And Jim will go through that in greater detail a little bit later, but I think it's pretty clear that the results were definitely disappointing. All of the transactions and activity that occurred in there is probably a little bit confusing, and Jim is going to take you through all that a little bit later. But, what I really want to share with you today is my excitement that lays up under the disappointment in the third quarter results.

What I really want to talk about is the progress that we have made on executing a plan to see to it that third quarter results are not repeated, that the fundamentals of the company are changed, and that we find a firmer foundation as we go forward from than the one that we find ourselves standing on at the end of the third quarter. And we have made substantial progress.

So, Jim is going to really take you through the third quarter results and try to eliminate as much confusion as he can and explain the disappointments. But I am the CEO and I want to talk about what I am excited about. And so I want to talk about the progress that we have made today, what have we done? 30 days ago, when I took over as CEO, what I said was we were going to aggressively refocus this company on its core banking and core conforming mortgage operation. We were going to take a hard look at every underperforming business that we had and we were going to make the difficult decisions that needed to be made.

So, if you dig back through this morning's press release and you dig back through some of the other press releases that have come out in the past several days, here's what you are going to find. We have sold the majority of our mortgage servicing rights, check it off the list. We have the sold the RV, boat and aircraft financing operation, which was an underperformer for us, check it off the list.

We are currently in process of closing the sale of our net insurance units, check it off the list. We are in process of making decision and executed an agreement that will facilitate the exit during the fourth quarter of our nonconforming mortgage operation, check it off the list. We have made the hard decision that we had to make with respect to QuickPost and FTI and we are in process of exiting that business and expect it to be completed by the end of the year, check it off the list. And our management downsizing is currently underway and although we can't check it off the list, there are a number of employees who have been checked off the list.

Well I realize that there's a lot of confusion in the quarter, but there is three basic questions if we move beyond the third quarter that I think most investors would be interested in. If you got all these things checked of the list, and they are going to be done by the end of the quarter, what's left? What else is there to do, and when will you be all the way down? What's the additional downside risks tangible book value and I believe that's important, because I think that's where our shareholders are focused in today to put a value on the company's start. And, to get it all done, what are you going to look like, when you are done? I mean you lost $1.58 this quarter, how can you fix that big of a problem?

So, I am going to spend my time and try to answer each of those questions for you as best as we can. The first question, what's left and when will you be done? At the end of day, we will be substantially done by the end of the year. There may be a few minor items that carryover into next year, but we should be able to explain them by the December 31 and tell you, what we think the outcomes are going to be in connection with our first quarter release. So, we plan to be substantially done with the reorganization by the end of the year.

I do have to acknowledge that the operating improvements to get full traction and see full results on the operating improvements probably will be the second quarter of next year, before we see all of the benefits from the changes that we are making.

What's left to do? The areas we are still looking at are auto lending and our ATM servicing business. And although, we haven't really made any final decisions there, we are well down the path of looking at our alternatives with respect to that. To help put that in context for you; as we look at our auto operation, one of our best-case scenarios would be to maybe find another lender that's more interested in it than we are, long-term. So, we can avoid some shutdown costs.

Our worst-case scenario there might be $1 million of exposure to tangible book-value, if we had to go with a worst-case scenario. I think it's improbable that we would be able to see any significant premium related to a transaction with that business, because of the nature of that business and the limited number of counter parties that would be interested in it.

On the ATM side, the stories are much more positive one, and currently we have about $28.5 million of intangibles capitalized in our balance sheet. And if we were to move in the direction of exiting that business through a sales transaction, those cash proceeds would convert intangibles to tangibles and actually enhance tangible book value by potentially a pretty significant amount of money. Add book value, the improvement intangible book value would be about $23 million.

So, as we talk about the second question, that really leads into it, what's the additional risk to tangible book value and to put that in words for you, we think that estimated fourth quarter charges as we look forward to Dec 31, the exposure to tangible book value is probably about $0.50 to $0.60 per share. There is two pieces to that; the two pieces are, we talked about all the things that are checked off the list and that our estimate of one-time charges related to those items, there is about $14 million to $15 million after-tax; that obviously would take tangible book value down in connection with fourth quarter one-time charges about $0.30 to $0.32 a share. That includes all the activities that I discussed earlier, as well as management downsizing and the other management changes that have already been announced.

The remaining difference to $0.50 to $0.60 of $0.20 to $0.28 represents a reasonable expectation for core operating results, which we think will show a market improvement over the prior quarter, but still, we are not going to have all these issues resolved. The operating results for these under performing businesses are still going to be included in fourth quarter results for at least a part of the quarter, if not in some cases, in most of the quarter. So, it'll be first quarter before we see the benefit of exiting those underperformers.

And I also have to point out, that it is kind of a little difficult to predict exactly what the operating results will look like in a wind-down situation for some of these businesses, or some uncertainty about exactly how the revenue profiles will appear as we go through the transition. So, if you do the simple math on that we are at $5.10 per share of tangible book value today, and if these numbers prove to be reasonably accurate, that shows an exposure of up to tangible book value down to about the $4.50 and $4.60 level.

But as I said, there is a downsizing in management that’s included in the estimates above but the resolution of the auto lending and the ATM businesses is not included, and so the big point there would be if we were to execute on an option and realize that value related to the ATM business, we could see a significant improvement of as much as $23 million, $0.50 a share from the ATM business. So, you would be quickly back-up to around $5.

The third question, and probably the most difficult one to answer is, what will the operating profile look like when you're done? And I think if you sit down, take pen to paper and you look at the various businesses, the underperformers that were committed to exiting and adjust quarterly results to exclude all those items; one of our core challenges is going to be to take our conforming third-party mortgage business, which we believe to be a core competency, and restore it to breakeven performance.

So, if you assume, we are successful on that and we exit these various businesses that we've talked about; just those changes alone would leave you with an operating profile of about $0.10 to $0.12 per quarter loss. But that's before the positive benefit on an operating profile that we think we can achieve with cost saves and with the management downsizing, and from improved operating profiles it could be associated with auto and ATM issues that are underway.

So, the bottom line is as we think that, that gap that we can close, most of that gap with those other initiatives and get very near to breakeven. If we were to couple these initiatives with even a modest improvement in the overall market for our basic businesses and overall economic conditions, we think we are well on our way. We just plan of returning to profitability. That's a lot of information but at this point I’m going to turn it over Jim to talk a little bit about third quarter results and his outlook for the fourth quarter.

Jim Gross has been working for me, here at the company for going on 10 years. I know Jim very well. Jim really is the CFO; the (inaudible) CFO; he has been for quite some time. Jim has 30 years of experience in the financial services industry. He has held a number of executive level accounting positions with various national mortgage companies and banking institution. And when it came time for me to replace myself, Jim was the obvious answer; he knows all the people. I have 110% confidence in him; Jim has everything well in hand and will do an excellent job as CFO.

So Jim, I will let you to bring up [stead] on third and fourth quarter.

Jim Gross

Thanks Steve for that endorsement. I will first walk you through the unusual items that we reported in the third quarter, to help you take some of the noise out of the numbers. Next, I will prepare the adjudged results against the guidance Steve provided you last quarter, and lastly, I will provide you with some guidance in addition to what Steve already provided for the fourth quarter.

We have four large usual items or transactions I want to call to your attention. First, we normally review goodwill for impairment during our third quarter each year. As we said in the last quarter, we began to explore strategic alternatives with respect to our sub-primary and Meritage Mortgage. We announced earlier this week, that we were exiting Meritage on a personal placement transaction. We reflected a full write-off of Meritage goodwill in the third quarter financial statements. The impact of that was $19 million and as for with pre-tax and after taxes, we had no tax basis in that goodwill.

Secondly, we also took a hard look and had some evaluation work done concerning the intangibles reported in our ATM and merchant processing operation. We reported a partial charge-off of $3.7 million pre-tax of the goodwill associated with this operation. Some of the key drivers of that include an increasingly competitive landscape as well as recent rule changes for VISA.

Next, we announced on October 13 that we completed the sales of the 8.5 billion of Mortgage Service Rights in two sales which closed on September 29. Our loss on sale was $29.7 million on a pre-tax basis. We also elected to liquidate certain Ginnie Mae securities with insurgence and economic hedge of the Servicing Rights. We realized loss on sales on those securities was $13.5 million pre-tax. These securities were carried as available for sales securities on June 30th, with an unrealized loss of plus $20 million pre-tax. So, the market value during the third quarter enabled us to execute this trading to a more favorable result.

Lastly, I would like to provide you an update on the progress we've been making in reducing our FIN 45 reserve provisions. During the second quarter, we reported totaled FIN 45 provisions of $20.3 million. During the third quarter we missed upon a drop in charge-offs and drop in new repurchase request, we were able to reduce our total provision to $12.2 million representing an improvement of $8.1 million. The $12.2 million is still $6.5 million above our former (inaudible) calculations and we still considered unacceptable.

However, we are still pleased with the progress. We remain hopeful that the product changes and distal per-funding processes that we've been implementing during the year will slow down the frequency of repurchase.

On the third-party conforming side, we are also centralizing the underwriting processing of our all of our loan's [in our company's] South Carolina operating centre, where we can better monitor the underwriting and loan approval process. Our loan personal placement and shutdown of Meritage should perceptively take care of the early payment default related and other pre-purchases that we have been experiencing in that unit.

I will now turn to the actual results for the quarter compared with our expectations, as Steve communicated last quarter. At the end of last quarter, Steve indicated the production in sales volume and margins in our conforming operation will likely be in the range of the second quarters. We indicated that the real issue was to stabilize repurchase frequencies and having more normalized reserve outcome. Production and sales volumes will push those reported in second quarter; however, the margin on sales was down significantly.

Our repurchase reserve situation did improve slightly from $7.5 million above formula in the second quarter due to adjustment like $4.25 million above formula in the third quarter. On a non-confirming mortgage side, we thought that the third quarter operations would look, not much -- too much different in the second quarter, as it turns out, actual production was down $66 million, and sales were down by a $103 million. In part, due to reduced sales volume, we lost $6.1 million on pre-tax basis, excluding the goodwill charge-off. This compares favorably with the loss of $9.8 million we reported during the second quarter. Much of that improvement relates to the decrease, I mentioned earlier in repurchase reserve provision.

In the second quarter, the retail bank earned $1.8 million, if you exclude the QuickPost expenses and take out the gain on sales of HELOC. Given the flat yield curve and leveraged profits, we guided slightly to the negative in the third quarter. Actual third quarter results were pre-tax income of $1.6 million, excluding QuickPost expenses.

Turning to QuickPost, we stated last quarter, that we thought most of the fixed costs of that product line were already in the second quarter numbers, and we thought we were going at slightly worse and the third quarter report start to get better. That is in fact how it turned out.

We lost $3.3 million in the third quarter compared with $3.2 million in the second quarter. Last quarter Steve also said we expected slow and long-term improvement in transaction processing results, excluding the partial goodwill charge-off in our ATM operations, which I mentioned earlier, that improvement did in fact materialize.

Last quarter, we stated our goal is to breakeven on the net hedge performance, but the servicing asset results could be volatile, adjusted for this loss on the sales and servicing and the loss on the two main securities that served as [accounted] cash. We have lost $1.8 million during the quarter -- I am sorry, $8.1 million during the quarter.

Net hedge results aggregate to $5.8 million in that total loss, so in fact volatility did come into play.

In terms of fourth quarter expectations, as Steve indicated, the fourth quarter is shaping up to be another transition quarter as we decided to shut down various conforming underperforming operations. We will be (inaudible) QuickPost and PowerPost initially toward the last part of fourth quarter, and we expect loss from normal operations to therefore be reduced by perhaps as much as $1 million depending on the timing of that shut down.

As Steve mentioned, there will be some shut down expenses that we will be recording. We do expect to payback shut down expenses very shortly. The Retail Bank segment continues to be adversely affected by leverage and flat yield curve. We therefore guided slightly downward in the fourth quarter.

Our non-conforming production operation side, we will be shutting that down after our personnel replacement (inaudible) included during the quarter. It's been typically loosing about 1.5 million per month, (inaudible) reserve adjustments. I guide slightly upward, to be most favorable outcome; however, I caution that we will be reporting shut down expenses. Like the QuickPost shutdown, I believe that the payback period of this initiative is pretty quick as well.

We are entering into one of the seasonal low periods for production volume and conforming mortgage operations. However, I do expect better secondary marketing execution in fourth quarter, so I would guide upward for the quarter. Transaction processing really doesn’t move the needle much, however, I would guide slightly lower due to the downward volume in sub-servicing, the price inherent in our sub-servicing agreements.

Servicing assets are down as a result of the recent sale, assuming that our revenues volatility and basis risk don’t really hedge. I would guide slightly upward on servicing asset results. Keep in mind, the potential volatility of net hedge results is significantly lower, since we sold two-thirds of that portfolio at the end of last quarter.

I also remind you that the fourth quarter results will contain one-time adjustments related to management organization and downsize. Certain executives and other employees will not be needed in a simple organizational chart, after we have completed restructuring of our operations. Likewise, there are several operations that Steve mentioned that we may be selling or closing in our restructuring plan that been -- has not yet been announced.

Other operations that we are taking a hard look at include our Indirect Auto Lending operation and our ATM operation. I don’t think that the transaction -- any transaction with respect to our indirect auto operation would pose much risk to tangible value. And the ATM operation, as Steve mentioned, will benefit tangible book value once we monetize intangible assets reported in that business unit. Those decisions we have made, could result in additional shut down charges.

Overall have roughly lost to the quarter at a range of $0.07 loss per share to a loss of $0.28 per share. As Steve mentioned, and I echo, I believe that we will see marked improvement in results from normal operations in the fourth quarter, compared to quarter three. I would be biased towards a low [higher] loss and of that range for operating results. And recognize there is some still downside risk. The press release that Steve had provided to give some guidance on the one-time charges we expect during the fourth quarter, as always we will provide additional guidance as appropriate in our monthly statistical press release.

I now, will turn this back over to Steve.

Steve Herbert

Well thanks Jim, I am going to up open it up to calls -- questions really, in just a matter of seconds, but first of all probably two key things that I would like to cover. I completely believe we are headed in the right direction. And we are doing what needs to be done. And secondarily, we certainly understand that we are talking about a short-term tactical plan whose goal is to return the company to breakeven or modest profitability, in the -- as fast as we can get there. There is certainly, in the normal business uncertainties about our ability to execute as such. Like I said, we are definitely headed in the right direction.

But it's got to be about more than just breaking even, we understand that for the shareholders. That over the long haul as we refocus on what our core competencies are, the online bank and the conforming mortgage business. The essential questions, are can we make money in those businesses. And I, in fact, believe that we can. We have got to get that online bank back to growing deposits. We've got to aggressively revisit our value proposition, our price, our service and our commitment to quality in customer relationships and convenience for our customers. And I believe that we can be successful, we can get the online bank back on a better path than it's been on.

The conforming mortgage business, most stories are the same. I think we have taken our eye off of the ball. We've been pointed in so many different directions and fighting on so many fronts, that when we take our resources and refocus them on our core competency, that we can be successful there. And I think same is also true with the conforming mortgage business. Can you make money in the conforming mortgage business in the current marketplace? A lot of people are. So, I do believe that it is possible to make money in the current market. And so, I think we just have to get refocused on that business. The real key for the conforming mortgage business is the latent earnings power and the significant upside potential that it has there. So, when we're done and we're refocused as an online bank in a conforming mortgage operation with a significant small ticket equipment leasing operation, I believe we have a platform that we can move forward from to generate appropriate shareholder returns and to generate value for our shareholders on a long-term basis.

With that as a closing, we'll open it up now and take questions.

Question-and-Answer Session


Thank you. (Operator Instructions). And we are showing our first question from [Christ Donald] of Sandler O'Neill.

Christ Donald - Sandler O'Neill

Hi, Steve.

Steve Herbert

Hey Christ.

Christ Donald - Sandler O'Neill

I really have one question and thanks for going through all the detail on it. It is a confusing quarter and I think you’ve explained it as well it can be explained. In terms of the supervisory agreement with OTS, can you give us a little more color on that? How much of that is -- you are just notifying them, and how much of it is -- them saying, approving or disapproving of what you may or may not do?

Steve Herbert

Well from the perspective -- the OTS has a good familiarity with the plans that I am executing through right now and have asked for a formal, their regulators. So, they want that plan documented with formality. They then will approve it. They may have addends or changes or questions concerning the details of the plan that we provide to them, but at a higher level, they have a good understanding of the direction we are going and what we are doing and are supportive of it. So, we'll give them that detailed plan and there is a considerable amount of oversize that’s involved in the nature of the agreement and which we will have to regularly report to them on our progress against the plan. The bottom line is, the OTS plans to hold us accountable to the plan and frankly I don't have any problem with that, because I expect to be held accountable to deliver all the plan that we are executing through. As a matter of fact, I feel pretty good because there is like 10 items on the plan and I have just checked seven off the list for you this morning.

Christ Donald - Sandler O'Neill


Steve Herbert

I got three more to get done. I am going to get them done and I can't answer with certainty, exactly what the company's financial performance will be, when we are done, but I can tell you that the financial performance will be dramatically better than it would have been, if we had not executed this plan. And as I said before, I am excited and optimistic and believe that we can return to profitability under this plan.

Christ Donald - Sandler O'Neill

Okay. And then in terms of the duration of the plan, is this multi-year, I mean you have checked off over half of it already. How far is it expected to run out?

Steve Herbert

It's really open-ended, I think the OTS is going to monitor our performance as planned and wait to see improved financial performance, which the process we are looking at now, we are going to have a very noisy fourth quarter and the first quarter will not fully reflect, all the impacts of the changes that we are making. So, it's going to be the second quarter before really we begin to see the full benefit of all the efforts that we have taken. The business plan that we are providing to them will be -- will have a three year term to it. So, that's what they'll be looking at is, how things are going to unfold through the next two quarters and the rest of next year and then 2008 and 2009 as well.

Christ Donald - Sandler O'Neill

Okay. Thanks, Steve.

Steve Herbert



Thank you. Our next question comes from John Hecht of JMP Securities.

John Hecht - JMP Securities

Good morning guys. Steve, could you tell us, I am sure I could figure out some of the details, but what the gross be in it margins before the repo activity was in the conforming and non-conforming segments.

Steve Herbert

Jim, are we going to be able to give him that quickly, or do we want to follow-up with him on that.

Jim Gross

Yeah, we will call him up on that.

Steve Herbert

We will send you a schedule, reconcile that for you. It's in our 10-Q, we have got a draft of that, but that won't be filed until tomorrow.

John Hecht - JMP Securities

Okay. And then maybe just on that note; what trends do you see, I guess, more importantly for you guys now on the conforming segment? And I guess what type of volumes and margins are you guys expecting to get that back to breakeven over the coming months?

Steve Herbert

On the conforming mortgage side, you are definitely right. I think what you alluded to is competition picked up about 90 days ago in that market, as we have seen softening in the overall real estate market and softening in purchase activities in general. So, the competition definitely picked up on that front, retail operation performed very well throughout that cycle. We are currently looking for third-party conforming mortgage business to deliver about 75 basis points gross revenue, and believe that we are going to adjust the operating expenses consistent with that level of revenue. Our recent performance in that third-party channel has been lower than that for a number of different reasons, but we are currently pricing to within five basis points in the aggregate of that goal.

John Hecht - JMP Securities


Steve Herbert

On the non-conforming side, I am happy to report that I won't have to talk about that too much longer. That business is brutal. I mean, we are down to 150 -- looking at 102 execution levels, 102.5 is a number that I've heard recently thrown out, and for the type of business that we are running, making money 102.5 won't be happening any time soon.

John Hecht - JMP Securities

Okay. And then can you talk about the repurchase trends during the quarter. I know they were substantially down. I guess what time period are the loans you are still repurchasing, what time period they originated? Just to give us the sense, are these newer or older loans and should we continue to see these trends and at what point should that issue be largely behind us?

Steve Herbert

Yes, you asked great question there. On the non-conforming side, which is more really than half of our issue, with the exit of that business, we are going to stop creating any new problems and we will have -- take the appropriate legacy adjustments in connect -- during the fourth quarter when you'll need. So hopefully, we will have that resolved at the end of the year. On the conforming side, at the end of the day the issues that we are seeing there are about half early payment defaults and about half legacy product issues. So, overall the market has seen increased EPD frequencies, we are seeing that as well. But there is more that we can do. Part of the plan, contemplate the consolidation of all conforming mortgage, third party operations into Colombia, South Carolina, there's new leadership, there has been a leadership change on the operational side. We can do better than this is my opinion and I think it comes down to the issue of communications among all the various disciplines that are involved in origination. Once we get them all under one roof and they can get in a conference room and resolve issues and problems and address customer and client service issues, it's going to be a lot easier than trying to do that on via conference call, FedEx, phone and fax. So, I believe operational efficiencies, communication are the key to us improving the overall quality of our loan product, that’s what's going to enable us to get to the next level and stop the ongoing issues. The legacy issues mostly relate to products that we have taken of the rate sheet.

So, I think the combination of the two is, to really see the benefits of it, we are hopeful that we will see a substantial improvement in the first quarter from the changes that we are making, but the re-organizational efforts in this area will take into the end of the first quarter, to get completed and we should see full traction, we think by the second quarter or next year.

John Hecht - JMP Securities

Okay, last question in the servicing, back; will we still see some sub-servicing revenues there, or is that--

Steve Herbert

Yes, the servicing operation still has about 3.5 billion owned portfolio and obviously a sub-servicing of about a little over $8 billion in connection with the transaction we did. So, there will be -- sub-servicing revenue is going to go up.

John Hecht - JMP Securities

Okay thanks very much guys.


Thank you and now our next question comes from Sam Caldwell, KBW.

Sam Caldwell - KBW

Good morning Steve.

Steve Herbert

Hey Sam.

Sam Caldwell - KBW

My question relates to something you kind of said in passing was, that you talked about focusing on growing the deposits. How are you planning on doing that? And are you planning on changing your current affinity relationships and may be you could just provide more color around that?

Steve Herbert

Well when we look at our -- the internet banking platform, I think, the core product, the lead product is our money market product. And certainly after that core retail CDs are also an important dimension of what we're doing. But let's focus for -- I mean, really what I think is the core product, which is our money market product. And overall our value proposition -- it was the intersection of price, convenience and (inaudible), and in order to get deposit to growing again, we are going to have to increase price. And we are going to have to focus on also delivering better service. But I think our fundamental issue is price. And so the plan that I have basically, looks at -- I think some of the issues of our internet bank is our cost structure is out of portion, to what we can afford as an internet bank. And so we have got to really focus on cost savings, being more efficient in that channel. And the plan is for every dollar of cost saved, that we find inside the bank. We plan to take half of it and put it back into price, restructuring of our price-value proposition with our customers.

So, we have already made a nine basis points improvement in our price and as we find additional cost save, we plan to continue to make additional price changes that would be favorable to the customers.

Sam Caldwell - KBW

Interesting, thank you.


Thank you. (Operator Instructions). And currently we saw no questions registered.

Steve Herbert

All right, well that being the case, again I'll thank everybody for -- your participating in the call today and taking a continuing interest in NetBank and the challenging times that lie behind us and ahead. And yeah we'll look forward to have an additional conversation with you between now and our next quarterly conference call, or we will talk to you again then, as the case may be. Thank you for participating.

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