National Commerce Corporation (NASDAQ:NCOM) Q3 2018 Results Earnings Conference Call October 24, 2018 9:30 AM ET
Will Matthews - CFO
Richard Murray - CEO
John Holcomb - Chairman of the Board
Davis Goodson - EVP, Senior Lender
John Bragg - EVP, Bank Operations
Catherine Mealor - KBW
Tyler Stafford - Stephens Inc.
Christopher Marinac - FIG Partners
Good day, ladies and gentlemen. And welcome to the National Commerce Corporation Third Quarter Earnings Release Call. [Operator Instructions] As a reminder today's conference is being recorded for replay purposes.
It is now my pleasure to hand the conference over to your host, Mr. Will Matthews. Sir?
Thank you, Haley, and good morning, everybody. And welcome to the National Commerce third quarter 2018 earnings call. I’m joined by Richard Murray, John Holcomb, Davis Goodson and John Bragg.
As is typical, after our prepared remarks, we'll open up the call for questions. This call is being recorded and a replay will be available on our website, which is nationalbankofcommerce.com in the Investor Relations link under the Learn More tab.
Before I turn the call over to Richard, I'm going to read a few customary disclosures. During today's call, we may make statements related to our future operating plans, expectations and performance that constitute forward-looking statements within the meaning of the federal securities laws. Any such forward-looking statements only reflect management expectations based upon currently available information.
Such forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties. These risks and uncertainties are more fully described in our documents filed with the Securities and Exchange Commission, including the risks described in our most recent annual report on Form 10-K.
Our actual results, performance or achievements may differ materially from those expressed in or implied by such forward-looking statements. We undertake no obligation to update or revise any forward-looking statements to reflect events or developments after the date of this call.
During today's call, we will discuss financial measures derived from our financial statements that are not determined in accordance with U.S. Generally Accepted Accounting Principles. Such non-GAAP financial measures include tangible common equity, return on average tangible common equity, tangible book value per share, efficiency ratio, operating efficiency ratio, and others. These non-GAAP financial measures should not be considered a substitute for results determined in accordance with GAAP.
Additionally, the non-GAAP measures presented by our National Commerce may not be comparable to those used by other companies. We do provide a reconciliation of each of the non-GAAP measures discussed on this call to most directly comparable GAAP measure in our earnings release.
I’ll now turn the call over to Richard.
Thank you, Will. Good morning and will also say welcome to the call. As Will said joining us in the room John Holcomb, Davis Goodson and John Bragg, and similar to prior quarters, I’ll make some introductory remarks about the quarter, talk a little about the balance sheet, asset quality and then turn the call over to Will to give more detail around the operating results and the business lines, and then we’ll all take questions.
But before we get started, I want to give a welcome to the First Landmark Bank team to the company. First Landmark merger closed on August 1st as you know right on the heels of the Premier Community Bank merger which closed July 1st. We’re very excited to have Stan Kryder and Terry DeWitt and their entire team join our company.
The addition of First Landmark makes Land our largest single market representing 23%, 24% of our loans and our deposits and we couldn’t be more excited to have Stan and Terry lead our efforts there. We really like our prospects for success going forward in that very important market.
We're pleased with the overall results of the third quarter. As you can see loan growth picked up in the quarter with roughly 16% linked quarter annualized growth there, asset quality remains strong, credit cost low and we continue to make progress at our non-core bank businesses. Strong loan growth we did have was heavily weighted towards the backend of the quarter so we’ll experience the benefits of that more in Q4 than we did in Q3.
For the quarter, we reported just under $12 million in net income, $0.59 per diluted share. Included in the quarter, we recognized roughly $900,000 in merger-related expenses which is about $0.04 per share after tax mostly associated with those two acquisitions. So $0.63 per share excluding those merger-related expenses and that compares to $0.61 reported last quarter, or $0.63 again adjusted for merger related expenses and compared to a year ago $0.48 a share after merger related expenses.
The reported return on assets was 1.23 adjusted would be 1.31 reported return on tangible equity was 12.09 versus an adjusted 12.85. Asset quality metrics remained strong. Overall, non-performing assets were approximately $1 million all in the acquired portfolio but flat as a percentage of assets and with a percentage of loans.
Net charge-offs declined to three basis points. Factoring company had another good quarter, both recourse and non-recourse purchased volume showed linked quarter increases, as well as year-over-year increases.
The mortgage business, while still dealing with the challenging environment we reported a decline in origination activity but we continue to show improvement there operationally, and Will will cover both of those businesses in more detail.
Transition to the balance sheet, third quarter loan growth as I said showed a nice rebound from first and second quarter to exclude the acquired loans from Premier and from First Landmark was $103 million with just over 16% annualized growth rate that brings our year-to-date growth rate annualized to roughly 9%.
And while we experienced the second half quarter ever in loan payoffs, we also experienced the past quarter level of loan originations that we had so far which is about 16% higher than last quarter so we’re pleased with the loan production during the quarter. Majority of the growth was in Alabama and Florida it represented roughly 70% of that growth but we also experienced growth in Georgia and in the corporate building portfolio.
By loan type, we pretty much had growth across the board the largest increases were in wonderful family arms, owner occupied CRE and traditional income producing CRE. Deposit growth was on the opposite end of the spectrum compared to loan growth after growing roughly 14% in Q2 deposit growth was essentially flat up $3 million from last quarter. As you recall we had roughly $90 million in deposit growth in the second quarter, even after roughly 25 million in wholesale runoff but that growth did include funds from recent asset conversions that we knew would not stick.
We felt that roughly 50% would leave in Q3 to be distributed or invested and we did experience that plus some seasonal drawdowns. These drawdowns were mostly in Georgia and Florida. On the flip side we experienced some nice growth actually in Alabama roughly 14% linked quarter annualized for deposits in Alabama.
So overall the business activity remains good, the pipelines are still strong, still a good bit of competition for all good opportunities both loan and deposits but we remain optimistic that Q4 will show continued growth in the balance sheet and in our core profitability.
On the operating front, our conversion team has been hard at work on the First Landmark conversion which is scheduled for this weekend. The test conversion went well and we are great leadership on the ground in Atlanta with Stan and Terry, as well as with our veteran conversion team led by [Larry Waters]. So we feel good about where we are but we all have a healthy level of respect for all that goes into a successful conversion and it’s not done till it’s done but not that.
I’ll turn the call over to Will now to give us more detail on the results.
As Richard noted with those two acquisitions in the quarter and the conversions of each not yet occurring with Landmark this coming weekend and Premier schedule for the spring a lot of the non-interest expense saves that we expect to achieve from - till not yet been achieved. We did know their press release so we have a closure one of our Jacksonville branches is somewhat reflected of another that will close sometime in mid-December.
Other high level comment as Richard said good performance at core bank continues to be a tough environment for the mortgage business but we feel good about the operating structure we have there.
On the margin, Richard mentioned the loan growth improvement and the fact that putting this for full benefit of it during the quarter because much of that came in the latter two months of the quarter but we’re glad to see the pickup there in spite of another heavy quarter of payoffs and paydowns.
As we mentioned that deposits were flat we do have some optimism about the next quarter to respect deposit growth in a couple of areas one our existing customers we tend to have some seasonal pickup in deposits in Q4 for many of our customers. And we also have a nice pipeline in the HOA business that we picked up with the Premier Community Bank merger and we’re hopeful that pipeline will develop into good deposit growth the next couple of quarters.
On the margin for the quarter was 4.69 as compared with 4.77 in the second quarter of 2018 and 4.58 in the 2017 third quarter. Included in our net interest income in the third quarter was accretion income of 1,866,000 which was down just slightly from 1,880,000 in the second quarter in spite of the few additional banks that join company through acquisition.
If you exclude accretion income the margin was three basis points lower than the second quarter or 4.47 versus 4.50 and just by way of comparison our schedule accretion income was out and the early payoffs for Q4 while we have both of the acquisitions in for the full quarter is schedule to be right at 1.9 million.
Our loan yields were flat with the second quarter with the core bank loan yield excluding the factoring business up nine basis points and then if you also exclude accretion as well as the factoring business the core bank loan yields were up 16 basis points.
The factoring business represented about 10.8% of the total interest income in the quarter compared with about 13% in the second quarter and that reflects the growth in the bank as well as the two acquisitions that closed in the third quarter.
And if you exclude the accretion and the factoring business, our core bank margin excluding accretion and factoring was up about six basis points from Q2. So, relatively flat margin performance if you back out some of the things the core performance up a little bit.
On the deposit side our interest rate deposit costs were up 13 bps with our total deposit costs up 10 basis points and we calculate that beta to be about 61% beta on interest bearing about 47% beta on total deposits so slightly down from our Q2 betas in both those categories.
And on the loan side as I mentioned excluding the accretion and the factoring business, our loan yields were up about 16 basis points which we calculate to be about 74% beta. So in spite of an 8 basis points decline and the reported margin, our core margin is up slightly about 6 bps, excluding factoring accretion and with the core loan yields ex-accretion are factoring up 16 basis points and deposits up 13 basis points or 10 for total deposits with a slightly better core bank loan betas and deposit beta.
Some balance sheet comments, our capital ratio were pretty flat with the second quarter ending numbers we filed the two acquisitions in the quarter. Our leverage ratio grew by 16 basis points, our risk-weighted ratios declined 30 to 40 basis points and our TCE ratio declined 45 basis points to a still very healthy 10.82%.
Our ending tangible book value per share was $20.09, which was up $0.23 from Q2 sort of reconcile and the impacted item in the quarter we reported EPS of $0.59, we had AOCI impact of a nickel negative, and then the impact in acquisitions reduced to tangible book value per share buyback $0.31 or 1.5% roughly. So, the $19.86 grown to $20.09 reflects those three items.
The factoring business, Richard mentioned continued good performance there. We had $315 million in purchase volume of about $5 million from Q2 that business has a lot of positive things going on right now. We are pleased with it. Our discount rate is pretty consistent with prior two quarters at 164 basis points, and the turn rate was 44.6 days, up a couple days from prior quarters. But we don't detect any real trend there in that.
Credit results continue to be excellent there, they had three basis points or $81,000 worth of net charge offs, three basis points of purchase volume. So, very good performance there. I do want to remind everyone, we have a call option on the minority interest fees of corporate billing that we don't presently own. And now that we're within a year, that call option window opening up, I just wanted to point it out remind folks.
Let me preface this by saying clearly that no final decision has been made with respect to options, but then our present attention would be to exercise the option upon the opening of the window and I'll refer you back to the forward-looking disclaimer on the beginning of the call.
Having said that, just reminding we've got 7% in corporate billing at the end of August of 2014, and we have the call option window of three years on the remaining 30% with that window opening at the five year anniversary to purchase price. So the end of August of 2019 and that window remains open through the end of August 2022.
And the call option is a function of the trailing 12 pre-tax income adjusted for interest expense to how our interest rate of LIBOR plus 300. Our trailing pre-tax income from that business if you look at the numbers in the minority interest fees and do the math, it's about $7.2 million. It's been growing nicely in our Q3 2018 pre-tax income was up about 25% from that annualized trailing 12.
So the options price and future contribution of that business is of course both subject to changes in performance over the remaining months until exercised. But with the option exercise we'll of course pick up the remaining 30% of the income we don't recognize today. If you just look at the trailing 12 performance, that will be about $0.08 a share and of course that number grows higher if the growth we've had in last couple of quarters were to continue.
Mortgage business as I mentioned has become a tougher environment like for everyone but our volume of $117 million was down $33 million from the second quarter and pretty similar to Q1s volume. Our revenue in that business was $1.8 million, down $400,000 from the second quarter's revenue and continues to be below our expectations for the year.
Like the second quarter about 40% of the volume went into NBCs portfolio, which would include construction firm loans and arms. In our second reporting including what our 10-Q and annual 10-K filings, the mortgage division we credited with revenue for those portfolio loans while the consolidated entity, of course reports no such revenue at closing.
That's why we expect net interest income on the loan over twice portfolio loan origination typically has lower initial day one profitability for the Company, in fact up in the loss at day one in the reported financials versus one sold in the secondary market.
The credit segment revenue in the quarter would have been $1.1 million similar to what we had in the second quarter for that business and up from about $700,000 in the first quarter. Refinancing activity is about 23% of our volume, including the internal credit revenue for portfolio loans the mortgage division had a pre-tax profit of about $232,000 for the quarter. But obviously if you exclude that $1.1 million in revenue, it would have shown a loss as reported.
Other non-interest income are merchant sponsorship processing business continues to have good results there. Revenue was $750,000, up about 20% over the year ago quarter. There are some seasonality in that business. Operating expenses were obviously impacted by the two mergers with two months worth of Landmark and three months worth of Premier in the quarter.
Our CDI amortization expense also increased about $568,000. With those two acquisitions our Q4 run rate for CDI should be right at $1.470 million including the four quarter worth of Landmark and movements in the other existing CDI amortization schedules.
Our non-interest expense for the third quarter was $26.2 million, and again that's two months of First Landmark. If you add another month of First Landmark, that's about $1.3 million to $1.4 million additional non-interest expense at the Q3 run rate. Of course commission expense and incentive compensation in our various businesses will fluctuate with revenue and performance those businesses.
Richard noted we did have merger expenses in the quarter which was about $900,000 pre-tax or $750,000 after tax of about $0.04 a share. All that resulted in efficiency ratio of 61.1% for the quarter or 59.1% if you back up merger related items.
Richard mentioned on this, the good credit result in our loan loss provision was $1 million for the quarter reflecting $158,000 net charge-offs at the bank and $81,000 in net charge-offs at the factoring division with the loan loss provision at the factoring division matching that charge-off number. Our allowance to non-acquired loans ended the quarter with 91 basis points, which is down slightly from Q2 levels and we continue to have good asset quality as Richard noted.
So, in summary, loan growth recovered, asset quality remains very good. We feel pretty good about our growth moving forward both in loans and deposits. We did have a higher efficiency ratio on the quarter due to the closing of the two acquisitions without achieving much of the cost saves yet. Our margin reflects competition that's still very strong and some slight improvement in the core margin.
Factory business continues to have record performance and like everybody we've got a difficult environment we face in the mortgage business but we do think we've got a good operation and cost structure leadership in that business such that we can take advantage of a better market at some point in the future. So it's of course a difficult market environment to predict.
And I'll close by just saying we're excited again to have our friends from Landmark and Premier in the Company, it's colleagues and excited about the opportunity to both of them present for us to capitalize on the growth in both the large Atlanta economy and the vibrant Sarasota and Bradenton market and also build out that HOA businesses available funding source moving forward.
We'll now take questions. Haley?
[Operator Instructions] Our first question comes from Catherine Mealor of KBW. Your line is open.
Firstly, is about the margin. Really nice stable margin this quarter. If you look at the core loan yields that were up I think really went up nearly 16 bps excluding corporate billing and accretable yield. How much do you think of that in a rough gap? How much of that do you think was attributable to the Landmark and Premier deals versus just your core portfolio reprising higher?
If you look at the net legacy company core bank loan yields excluding the acquisitions would've been up about 8 basis points not the 16 that we had with the acquisitions. So, they were slightly improved our loan yields.
And did they do anything incremental on the funding side as well?
Catherine I didn't look closely. There wasn't much impact. I listed our margin, just the reported margin excluding - acquisitions was one basis point higher legacy versus 4.69 or 4.70, so I don't think there was much impact from the two Legacy Bank from the funding side to really move the needle.
And then on mortgage, what's your outlook for mortgage revenue just given the lower volumes?
That's a tough question. As you know, I mean I think we did a lot of work as you know in over the last year in merging two mortgage units from the one we acquired in Atlanta versus our core one and we feel very good about the leadership of mortgage business, very good about the cost structure, very good about businesses we converted from you know really two different properties this mortgage operations this is to a third one in the last year and we fairly got our business very well positioned.
We always are looking for additional originated talent but feel very good about the positioning of the business. The hard part is figuring out what the environment will give us. And now you probably been a good position as we would to speak to that but we feel good how we had position business position but it’s hard to predict what the economy will give us in that regard.
Is there anything on the expense side or is this just more about the growing revenues faster just given how the platform kind of come together?
I think we got the cost structure where needs to be. We have opportunities to achieve some operating leverage though with additional revenue without - as much incremental expense in some of the figuring some of our markets where we are new entrance to the mortgage business. It’s always hard to identify number one and reprove and attract number two good originations some of you mark to take some time to build up those relationships and banks where we haven’t had the mortgage presence before.
And so we just add some operating leverage including that but in terms of the actually structure we feel good about our contracts. So we had 8 new originators during the quarter so hope those folks will get up and be productive producing revenue and many times when you hire the originators of course you do have some guarantee draws and what not so your expenses do proceed your revenues sometimes but we hope those folks will start to kick and produce revenue this quarter and next quarter.
Our next question comes from Tyler Stafford at Stephens Inc. Your line is open.
I just wanted to follow-up where Catherine left off just on the compensation and expenses around the mortgage business. I guess I was a little surprised the commission based comp didn’t come down considering the production. Was that just a reflection of the hiring that you just mentioned throughout the quarter and with the variable compensation piece, should that decline from here as we think about kind of a softer 4Q just from a seasonality perspective as well?
Tyler that's a great question and I’m glad you asked because there is two business lines in that commission based comp line and one is the mortgage business is yes the guarantees would it impact that. So the factoring business also if sales people are paid on the commission basis and with the growth it had that line item has been growing as well. So those will be the two business lines in that affecting that commission based compensation.
And just a question on the deposit growth, I know you mentioned the HOA business and some tailwinds you got going forward. I am just curious, can you comment on what you saw this quarter from deposit acquisition standpoint and a deposit pricing standpoint obviously the deposit growth was a little bit softer this quarter, I’m just curious what you saw in the market?
Yes, the market hadn’t really changed that much in terms of the competitive environment. It was flat, we draw about $3 million. We did see some draw downs in some of our municipal deposits that is generally - the end of Q3 is generally the low point for municipal deposits. And we also have some seasonal customers, a couple in particular in Georgia that kind of drawdown they print in the middle of the year and they should build backup one in Central Florida as well but build backup traditionally in the fourth quarter.
In Atlanta we did experience, I mean - excuse me in Alabama we did experience some nice wins in terms of some new municipal relationships, as well as just some good core relationships that had contributed to that linked quarter growth we had in Alabama really a pretty good quarter in Alabama for deposit growth.
And we have a pretty decent deposit pipeline although it’s a little less predictable it seems like in the loan pipeline and Will mentioned the HOA business - those deposits have increased to roughly $50 million I think they were like $35 million when they joined the company.
So we feel like we do have an opportunity there that’s relatively seasonal in terms of its build up as well, it seems like a lot of those management companies haven’t changed their banking relationship that they’re going to in Q4 late Q4 early Q1 and deposits build up in the first and second quarter of the year.
So we feel like a decent pipeline of opportunity there with some things that should close in the interim. And also as Will mentioned we do have seasonal build up in municipal deposits that occurs in the fourth quarter that generally begins to bleed out again in the first quarter. But in terms of the competitive environment, we’re still very competitive but I’m not sure it’s more competitive than it was six months ago.
I’m just reminding on the HOA business Tyler, we actually had a couple of different wins recently we have another one we’re hoping to get but the funding on those really starts around one/one when new statements go up to the residence, new coupon books et cetera. So that's generally when you start to see that business build up. We've got a good team there and we have some optimism though continue to see a good core funding source force.
Now with Premier and Landmark on your book, is there any loan pruning that we need to be thinking about just in terms of kind of future growth that of credit that perhaps you may not want to be in?
Yes, I don’t know I think one thing that we talked about was and this is not necessarily particular to Landmark or Premier but one of the things that we have been doing is making sure we’re very selective and maybe cutting back a little bit on some of the acquisition development activity that we might have had a year or two years ago.
Just realizing where we are in the cycle it’s not a big piece of the business so it’s not a huge meaningful something that would necessarily be noticed but that’s something that we would certainly do and those two banks.
But we're doing and also around the company I don’t think that from a product line either one of those banks has a product line that were particularly not as interested in the way that they handled their business. So, it’s probably not a meaningful number to answer your question directly.
And then just last one from maybe for Will. Just obviously a lot of moving pieces around the expenses what the partial quarter close at Landmark the cost size that are yet to be realized. Just any help you can give us in terms of just a starting point for expenses as we move towards the fourth quarter. And then just remind us - was the timing of the cost saves with the two conversions again?
Yes and I’ll also remind you - the commission piece which is the hard one to predict sometimes on the revenues of those business. But so our Q3 actual was right at 26.2 if you add First Landmark and for the other month that we didn’t have them you’re looking at about 27.5 million. We are converting this month and then we’ll have some extension of the conversion process and sort of the - hand holding the extra expense to kind of move over staffing at branches post conversion to follow that and run into early November.
Premier, we will be converting in not till the spring so that will be later event there. The cost save estimates we have for First Landmark and Premier total a little less than $5 million at the two we got to achieve a little bit of that. So far we should start to achieve more of the Landmark ones and I would say December.
So that’s an annualized rate so you should see some improvement Q4 depending upon what happens to some variability and commissions. And then begin to see a good run rate Landmark in Q1 and then begin to see a good run rate in the second part of the second quarter for Premier million.
So roughly 27.5 million from the full quarter with the two deals whatever normal expense growth for the combined bank plus 5 million or so is a rough point to be at kind of entering the back half of next year?
[Operator Instructions] Our next question comes from Christopher Marinac of FIG Partners. Your line is open.
Want to follow-up on the remaining merger charges coming out of First Landmark and also Premier. You have I think on a pre-tax almost $12 million to take. Will we see the rest of that in Q4 and Q1 or what's the rough idea as to when those will come out?
So Landmark during this quarter, I'm looking at John Bragg along with [Larry Waters] our conversion team. So we have - we'll have - Landmark this quarter will have Premier in April. The de-conversion penalty we've got to pay their core providers.
That final payment for Landmark later this week, we'll have one trailing bill and those charge-offs in the savings from the differences in their cost and ours December. And then I'll hand the next year.
Chris, I don't have a schedule in front of me, I apologize. The remaining unrecognized merger expenses the big ones of course are at closing. Of course we've got advisors and lawyers that at the time of the closing or the first quarter. Thereafter - and then the de-conversion penalty depending upon how much time is remaining on core DP contracts with the seller. And then service costs of course will be there, which kind of kicks in after you convert it and you've then gone through a normalized operating state.
The penalty of First Landmark is not very must at all. There's not much left on the DP contract more so for Premier. So like that final payment won't be too severe. So, we've seen the bulk of it, you have to pay a big portion of it up front, something that's shouldn't be a whole lot less.
Well, let me clarify my answer to Tyler's question, make sure that was clear there. The cost saves number I mentioned that we had modeled for the two acquisitions was an annualized figure of $5 million. I think that's probably evident to everybody but I want to make sure that no one misinterpret that as a quarterly number.
Okay. No problem, thanks for the explanation. That's kind of what I needed to, that's fine. When we look at the CBI business, the change in average turn this quarter, is that just sort of seasonal noise or is there anything else to read into that?
Yes, it's mostly seasonal. We have seen in the business, there's some of the larger account that are fewer companies are being a little more aggressive in how they treat suppliers and they sort of dictate we're going to pay you in this term, take it or leave it.
So depending on that, we then have to take that information when we're picking up a client and price accordingly. And so sometimes we'll adjust the discount rates, sometimes we’ll use split rate. So we say you get a discount of X and then we're going to charge you prime plus Y over the time that's outstanding so we're not suffering the rest of the term.
You do have some noise month-to-month depending upon really how many business days you have in a month, how many Monday's you have in a month, that sounds strange I know but that's you get a lot more checks on Monday so to speak or lot more payments in Monday.
So if you look at it, you kind of look at it month-by-month because it will vary widely based upon the number of business days and number of Mondays. But we don't see any core concerns there other than I just mentioned the larger very credit worthy accounts being little more abusive of their suppliers it seems in payment terms.
And then final question just on, as you continue to execute in Atlanta, is there sort of a minimum level of C&I business that you think will happen in terms of health productions flows in the next year?
Yes, it's hard to answer that question. Davis, I don't know if you have a…
Chris, in Atlanta specially the C&I or…?
Yes, and probably it's better to ask about the mix between C&I and CRE really is kind of what I'm striving to.
Yes, overall in the last quarter we had obviously good loan growth, good mix. Of that we had some C&I, good growth on owner-occupied those stuff, that's probably with some of growth financing that we've been doing probably 30% of the overall growth, I think it's pretty healthy for our C&I book.
With Atlanta's economy we'd like to see that kind of mix as well, I think we can. As Richard said earlier some of the great ownership that we wanted to do from a business mix over there, some of the new stuff and that’s been a model and so forth that but we think the C&I is obviously good contributor for sure over there.
Thank you. Ladies and gentlemen, this concludes today's question-and-answer session. I would like to turn the call back to Richard Murray for any closing remarks.
Thank you, Haley. I will just say thank you everyone for joining the call. Thank you for your interest in the Company. We look forward to reporting the fourth quarter results in January. Thank you so much.
Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Have a great day.