AGNC Investment Corp. (AGNC) Q1 2015 Earnings Report, Transcript and Summary

Good morning and welcome to the American Capital Agency First Quarter 2015 Shareholder Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference call over to Ms. Katie Wisecarver in Investor Relations. Ms. Wisecarver, the floor is yours, ma’am.

Thank you, Mike, and thank you all for joining the American Capital Agency’s first quarter 2015 earnings call. Before we begin, I would like to review the Safe Harbor statement. This conference call and corresponding slide presentation contains statements that to the extent they are not recitations of historical fact, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All such forward-looking statements are intended to be subject to the Safe Harbor protection provided by the Reform Act. Actual outcomes and results could differ materially from those forecasts due to the impact of many factors beyond the control of AGNC. All forward-looking statements included in this presentation are made only as of the date of this presentation and are subject to change without notice. Certain factors that could cause actual results to differ materially from those contained in the forward-looking statements are included in the Risk Factors section of AGNC’s periodic reports filed with the Securities and Exchange Commission. Copies are available on the SEC’s website at www.sec.gov. We disclaim any obligation to update our forward-looking statements unless required by law. An archive of this presentation will be available on our website, and the telephone recording can be accessed through November 12 by dialing 877-344-7529 or 412-317-0088 and the conference ID number is 10063169. To view the slide presentation turn to our website, agnc.com and click on the Q1 2015 Earnings Presentation link in the upper right corner. Select the webcast option for both slides and audio or click on the link in the Conference Call section to view the streaming slide presentation during the call. Participants on the call today include Malon Wilkus, Chair and Chief Executive Officer; Sam Flax, Director, Executive Vice President and Secretary; John Erickson, Director, Chief Financial Officer and Executive Vice President; Gary Kain, President and Chief Investment Officer; Chris Kuehl, Senior Vice President, Mortgage Investments; Peter Federico, Senior Vice President and Chief Risk Officer; and Bernie Bell, Vice President and Controller. With that I’ll turn the call over to Gary Kain.

Thanks, Katie and good morning to everyone on the call and thank you for your continued interest in AGNC. 2015 got off to an extremely volatile start. I can't remember a quarter with more two-way volatility in interest rates in my 25 plus years in the business. We started off the year with a 50-basis point rally in January, which saw the 10 year treasury go from 2.17% at year-end to 1.64% on January 30th. We then witnessed a complete reversal of this move in just over one month with the ten-year peeking at just under 2.25% on March 6. So, a couple months into the year, we experienced both the 50 basis point rally and the 60 basis point sell off. And that wasn't the end of it though, as we closed the quarter with a 31 basis point rally that brought the ten-year yield back down to 1.93% at quarter-end. Now we discussed on our Q4 earnings call that we believed it was prudent to take a more conservative approach toward positioning the portfolio in light of the rally we experienced in the fourth quarter, the strong performance of agency MBS and our view that interest rate volatility was likely to remain high. More specifically, we highlighted that toward the end of Q4, we reduced our position and higher coupon generic MBS, lowered our duration exposure and were operating with relatively low leverage. These moves allowed us to comfortably manage the portfolio throughout the quarter without having to make major adjustments to our position and without experiencing significant inter-quarter swings in our book value. Looking ahead, we remain concerned that the tug-of-war between global economic headwinds and a fed that would like to raise rates during 2015 is likely to continue. And that, as a result, interest rate volatility could remain elevated for the next several quarters. In response, we anticipate continuing to prioritize risk management over incremental returns in the near term. Consistent with this defensive mindset, we decided to make a modest reduction in our monthly dividend to $0.20 per share from $0.22. The reality is that there is a cost of a considerably more conservative position and we want to be transparent about that. It is important to keep in mind that the $0.20 per share dividend still translates to approximately 11% dividend yield based on yesterday's closing stock price. With that as the introduction, if we turn to Slide 4, I will briefly touch on a few of the Q1 results. First, despite the volatility, and our relatively small duration gap, we were able to generate an economic return of 1.7% for the quarter or 7.1% annualized. Based on the combination of $0.66 per share in dividends, and the small decline of $0.21 per share in our book value. Our net spread income for the quarter totaled $0.70, inclusive of dollar roll income and excluding $0.05 of catch-up amortization cost. The decline from the run rate of the last few quarters is a function of a number of factors, including lower leverage, a smaller dollar roll position, reduced duration gap, and a somewhat faster prepayment estimates. Now, to this point, lowering leverage and reducing our duration gap were proactive decisions management chose to make. If we were to become more constructive on one or both of these, then the impact on earnings per share could be meaningful. For example, depending on market conditions and other factors, an extra turn of leverage or an additional one-year duration gap could each add approximately $0.10 per share per quarter to our net spread income. As I indicated earlier and as is depicted on Slide 5, our March 31, leverage declined to 6.4 times, which is our lowest level since 2008. Again, while there's a cost to lower leverage, we believe this approach is prudent in today's environment. Now I'd like to turn the call over to Chris to discuss the market conditions on Slide 6, in the portfolio.

Thanks, Gary. Turning to Slide 6, you can see in the top rate panel that five and ten year swap rates had more or less a parallel shift lower by 24 and 26 basis points respectively during the quarter. While this was a significant move in rates, what it doesn't show is the extreme inter-quarter, interest rate volatility that Gary just discussed. Mortgage has performed reasonably well given the rate move with the exception of TBA 30-year fours, which underperformed quite significantly relative to other coupons, 15 year MBS also did well especially 15-year threes, after closing the fourth quarter on a weaker note relative to 30s. For example you can see that relative to the five-year treasury note which was up in price by more than a point during the first quarter, 30-year fours increased in price by less than a quarter of a point while 15-year threes increased in price by nearly a point despite the fact that they have generally thought of just having similar durations. Let's now turn to Slide 7. As we discussed on the call last quarter, the increase in both interest rate volatility, and prepayment uncertainty warranted, in our view, a more balanced and lower risk investment portfolio. Given the changes that we made during the fourth quarter, we were well-positioned to weather the extreme moves in rates that we have experienced over the last several months, without having to bet that the rate moves were temporary. As you can see in the top left chart, the investment portfolio was $66.2 billion as of March 31, down from $71.5 billion at the start of the quarter. Our mix of 15-year and 30-year MBS was unchanged as of quarter end with 15-year MBS representing 37% of the portfolio. I would like to point your attention to the fact that our 30-year holdings included a significant position in Ginnie Mae pass throughs as of March 31, as noted in the footnote on the bottom of this slide. As you may know Ginnie Mae’s securities carry an explicit full faith in credit government guaranty and because of that they enjoy certain bank regulatory capital and liquidity ratio benefits. Ginnie Mae's are also the investment of choice for many overseas investors and [doing] these benefits they've historically traded with a significant premium on average to conventional Fannie Mae and Freddie Mac securities. However, in the first week of this year, the White House and HUD jointly announced that the annual insurance premium, which is equivalent to a guarantee fee would be lowered from a 130 basis points to 80 basis points, effective January 26. The announcement took the market by surprise, raising significant prepayments and supply concerns for the sector. As a result, Ginnie Mae prices were down significantly in relation to conventional MBS. Generally speaking since Ginnie Mae pass-throughs typically trade with a significant premium to conventional MBS, they are not an attractive REIT asset for the simple reason that the bank capital and liquidity ratio benefits do not apply to our rate. Nor are the repo funding terms anymore attractive relative to conventional MBS. That side the price correction following the announcement was an overreaction in our view and we were comfortable establishing the position. As of March 31, 30-year Ginnie Mae TBA holdings were approximately $3.7 billion down from an intra-quarter peak of $4.6 billion. I’ll now turn the call over to Peter Federico to discuss funding and risk management.

Thanks Chris, I’ll begin with our financing summary on Slide 8. Our repo funding cost was unchanged during the quarter at 41 basis points. Consistent with the shift in our asset composition, toward a greater share of on balance sheet pools, relative to off balance sheet TBAs, our repo balance increased $6 billion to $54 billion at quarter end. During the quarter we adjusted the maturity profile of our funding somewhat by increasing our share of longer term repo. In particular, we added about $1.5 billion of funding with maturities, ranging from three-years to five-years. And as a result, increased the average days to maturity of our repo funding from 143 days to 164 days at quarter-end. We are pleased to announce today that AGNC's captive insurance subsidiary has recently been approved as a member of the Federal Home Loan Bank of Des Moines. The Federal Home Loan Bank system has proven to be a reliable source of liquidity to the U.S. Housing Finance System even in times of great financial stress. We sought membership with the Federal Home Loan Bank of Des Moines, given their size, credit quality and experience in providing finances for agency MBS. The membership process took longer than originally anticipated, given the self-imposed moratorium initiated by the Federal Home Loan Banks themselves and due to FHFAs, notice of proposed rule-making. We like 100s of other interest parties submitted a comment letter in support of maintaining the eligibility of captive insurance companies as Federal Home Loan Bank members. Mortgage REITs are permanent capital vehicles that are mandated by law to invest in real estate-related assets. From this perspective, we believe the mission of mortgage REITs, FHFA and the Federal Home Loan Banks are perfectly aligned and we are hopeful the membership eligibility for captive insurance companies who are in the business of providing liquidity to the U.S. Housing Finance System is maintained. On Slide 9, we provide a summary of our hedge position. At quarter-end, our hedge portfolio totaled just over $49 billion and covered 78% of our repo and other debt balance. In response to the drop in interest rates experienced during the quarter, we chose to terminate $3.5 billion of our receiver swap options at a gain of $13 million. We replaced the down rate production provided by these options with intermediate and longer-term treasuries. As a result, our treasury position shifted from a short position of 2.9 billion at year-end, to a long position of just under 1 billion at the end of the first quarter. On Slide 10, we summarize our duration gap and our duration gap sensitivity. As Gary mentioned, given the uncertain global interest rate environment, we've chosen to operate with a lower risk profile, which included limiting our exposure to interest rate changes by minimizing our duration gap. Consistent with this approach, our duration gap at the end of the first quarter was two-tenth of a year long. With that, I'll turn the call back over to Gary.

Thanks, Peter and before I open up the call to questions, I want to expand on the current interest rate landscape. And how it has impacted AGNC's performance. On Slide 11, the graph on the top left highlights the volatility I touched on in my opening remarks. The large two-sided rate swings stand out, but so does the continuation of a five-quarter trends lower in rates. It is really pretty amazing that a little over a year ago, the yield on the ten-year treasury was at 3% and the consensus was that rates were only headed higher. Today, the ten-year yields less than 2%. Moreover, in the midst of this rally the unemployment rate has declined from 6.7% at the end of 2013 to 5.5% today. The Fed ended QE3 over six months ago and now seems intent to trying to begin to raise rates later in 2015. Yet, today, the consensus view on rates is more balanced, despite the rally, the stronger data, and The Fed. Why? A big part of that answer relates to the information summarized on the table to the right. US rates have certainly not trended lower in isolation and most market participants attribute the bulk of the rally in U.S. rates to what is happening globally and in Europe in particular. Weak global growth and deflationary forces have led to substantial quantitative easing on the part of the ECB and Japanese Central Bank. The combination of these forces have pushed some overseas sovereign yields to what would have been thought of is impossible levels a few years ago. If you look at the table to the right, you can see what has happened to one, five and ten-year rates in some relevant countries. In the interest of time, let me focus on the five-year rates for a moment and let me at the top with Switzerland. No, that is not a typo and yes you do have to pay the Swiss government 40 basis points for the privilege of lending them money for five years. In Germany, you have to pay them ten basis points, while French and Japanese five-year rates were yielding just north of zero as of March 31. Against this back drop, U.S. rates look very attractive to global fixed income investors, especially when coupled with the view that the dollar is likely to hold its own or strengthen. This is a key reason why many participants are convinced that U.S. rates are unlikely to rise much, even if The Fed does tighten in 2015. When you couple this technical support with a more fundamental view that there are significant headwinds on the inflation front, such as the negative implications of a stronger dollar, low energy prices, and the implications of global competition and technological advances on the U.S. wage picture. A reasonable case can actually be made for even lower U.S. rates. That said, what makes this environment so difficult is a tug-of-war between these arguments and a U.S. economy which is clearly made substantial progress on the employment front and a fed that wants to start to normalize rates. In addition, it is also reasonable to believe that the massive global stimulus currently being supplied, coupled with soaring asset prices will kick in and at least temporarily boost global growth and take some pressure off the dollar. If that happens or is believed to be happening that a spike higher in rates, given The Fed's stance is quite possible. We believe this conundrum has been a key driver of the recent volatility where the market tends to overshoot in either direction. When you couple this with an overall decline in bond market liquidity, partially as a result of the regulatory environment and partially due to the outside Central Bank activities, you get an environment where idiosyncratic risk is elevated. Now, if we turn to Slide 12, I want to conclude today's prepared remarks with a good news. We've already discussed why we feel it's prudent to be conservative with our positioning in light of the heightened volatility in global rates markets. But I also need to stress how manageable this volatility has actually been for our portfolio. AGNC's decision to start reporting monthly NAV estimates beginning last October provides investors with significant insight into our quarter performance. As the gray bars on the top left graph show, our book value has not changed by more than 1% from the prior months NAV in any of the last six months. Even against the back drop of the substantial interest rate volatility we just discussed. This result wouldn't be possible if we were running large duration or curved positions. The blue line on the graph, on the right, is even more important. It shows that we have seen steady and consistent growths in our economic returns over the past six months. It was only one-month which didn't produce positive economic returns and in that month, the economic return was essentially flat. Additionally, in February, when interest rates spiked, we had our best monthly return during this six-month period. The bottom line is while there's a great deal of volatility in the markets, the agency MBS market is not even close to being at the eye of any potential storm like it was in 2013. And yes, the rate picture is cloudy, but it is also very manageable with the right combination of prudent portfolio positioning and active management. So, with that, let me open up the lines to questions.

Thank you, sir. We will now begin the question-and-answer session. [Operator Instructions] The first question we have comes from Joel Houck of Wells Fargo. Please go ahead.

Thank you. Can you hear me?

Yeah, I can hear you, Joel.

Okay thanks good. So if we stick to Slide 12 here, is the message that you know, given the uncertainty, you're running a tighter book, therefore, returns are going to be stable, but - what’s you give up, I think, is the higher alpha from higher interest rate volatility, because if you look at the history of AGNC, it's usually that the big swings is when AGNC has taken advantage of that. So, I guess the question is, is that kind of a strategy changing because of the uncertainty in the environment? Or is just a function of the company's so large right now that it's more difficult, to be nimble and take advantage of rate volatility, like we've seen in the past.

So, very good question, Joel. I'd say it's the former, look as you mentioned, we take a lot of pride in the alpha or the performance that we've been able to generate over an extended period of time. Over six-year period, but there are times, practically-speaking, where the way you can, in a sense, add value to your shareholders is by reducing the volatility of returns, rather than, in a sense, trying to get extra returns. And so, what I'd say is, this is very much a temporary position, related to kinds of the interest rate environment that we discussed. It's also related to the pricing of agency mortgages and so forth and it's an environment where we feel the right approach for our shareholders is to minimize volatility, see what develops over the next three to six months and then react from there, again, very easy to increase duration gap, to increase leverage and you know, if those opportunities present themselves, you know, we're not at all taking kind of we want to move to a more normal position, we just feel this is the right place to be right now.

All right, thank you.

Thank you.

The next question we have comes from Doug Harter of Credit Suisse.

Thanks, Gary I was wondering you could shed some light on how you are thinking about what would be kind of – what have to happen in the macro environment for you to want to go to a sort of that more normal risk position?

Great question. I think the short answer is, there are a lot of different outcomes that could create, that could allow us, in a sense, to move back to a more normal risk position on either, let's say the duration front or the leverage front or both for that matter. I mean go through a couple examples, if it turns out that while the Fed obviously would like to raise rates there are lot of questions as to whether the inflation picture in for that matter the economy are really going to allow that to happen. And if it becomes clear that's not going to happen and we rally further, it is likely that mortgages will widen and some due to prepayment exposure, and production, that would probably led us to be very willing to take up leverage and you know, that could happen relatively quickly. Alternatively, if, if we kind of go in the other direction, where the global economic force is kind of weaken or strengthened and the deflationary forces weaken, then, and we end up at higher interest rates, it's - it's very likely that we'd be willing, at least first to increase our duration gap because our mindset is that it's very likely in that scenario that move is somewhat temporary. So I think it’s likely that we'd be willing to increase our duration gap meaningfully, if that were to happen, and then depending on the performance of mortgages, if mortgages were to weaken in that environment, then we'd love to take leverage up as well. It's very possible that they'll actually perform relatively well in which case that the increasing leverage scenario may take a little longer. But- and then lastly, if we just kind of grind in one direction or the other, but we reduce some of this kind of two-sided uncertainty, then I think you'll see movement either way, back toward, over time a more normal position. I mean again, we don't, we look at this as being a reaction to kind of the current environment and I think there are number of ways where that position can change.

And just to clarify, the $0.10 quarterly number that was for either leverage or duration?

Yes, they are not exactly the same and it's obviously going to be depending on the shape of the yield curve obviously as to how much you pick up with duration and it's going to matter whether or not you're going to use TBAs in which case it'd be, noticeably more than the $0.10. So I don't want to, I mean that's just a very rough approximation. I mean I think that the leverage number is probably biassed a little higher in terms of maybe more than $0.10 and then the one-year duration gap again very dependent on the yield curve. But that - is probably in that zip code.

Great. Thanks, Gary.

Thank you.

Next we have Matthew Howlett, UBS.

Gary, what was the argument against, potentially further deleveraging and just repurchasing stock for the time being? You guys have done that before. In this environment, what would be the case against it versus the sort of this - I don't see any buybacks this quarter, but what would be the case against it?

I guess, let me start by saying, I mean, you mentioned deleveraging, I mean, stock buybacks would actually be increasing leverage essentially if we were repurchasing stock, everything else being equal, our leverage would actually go up.

Yes, I mean at selling…

Right, and obviously as we've disclosed, we were taking leverage in the other direction. Just big picture, we were looking at a lot of factors with respect to stock buybacks. We do see this environment as different than - a little over a year ago. I mean if you look at the environment a year ago, the mortgages we had just come out of the taper tantrum. Mortgages were, in our minds, oversold relatively cheap. Interest rates, again, the 10-year was at 3%, the yield curve was steeper. We felt the rates market was oversold as well. There were a lot, it was not only where you at an attractive price to book, but you also had very attractive underlying asset valuations. So when you piece that whole thing together this environment is somewhat different than the environment we saw a year ago.

Right, I thought that, but if, I know you didn’t see, but let just presume that mortgages are rich today. You know, given that the stimulus that the Fed to reinvesting. I mean would there be cases of selling those back to them and you know, returning capital via buybacks versus dividend. I mean just – I mean we’ve seen rates – it’s enormously accretive long-term for a REIT to buyback its shares we sort of see this done before and it seems like shareholders come out the other side. You know, rewarded with it. Just looking at it, I mean, do you look at a rich cheap analysis am I just trying to – with the start 20% below book, that's the reason why I really dig in on the question.

Look, I think we understand and as you mentioned we did repurchase a fair amount of shares a year and a half ago. I think we understand that equation, but I do think you know, again, price to book is an important factor, it's not the only factor in the equation. And you know with respect to selling mortgages, I mean, in a sense, by delevering, we're doing that. You know, we are selling mortgages into the market at these valuations, essentially, given, you know, the reduction in the balance sheet and in the price to book ratio, I mean I’m sorry, reduction in the leverage ratio.

Got you. Fair, enough. Thanks, Gary.

Thanks.

Tim Young, West Family Investments.

Yes , hi, Gary, could you talk about your relationship with the Des Moines Federal Home Loan Bank? How do you see this relationship developing over time and how do you expect to access the funding?

Yes, this is Peter, I'll be happy to answer that question. Again, we're pleased to become a member of the Federal Home Loan Bank of Des Moines. We review this as a very valuable source of financing, particularly in times of stress. We also look at it as a very beneficial diversification to our funding base. It's likely not going to be a source of funding that we use sort of every day, but it is something that we're very pleased to have and we also want to point out that it's still, you know, there's still a process underway with FHFA as to whether or not the eligibility will be maintained. So we’re not approaching this as a permanent source of financing yet, but we are very hopeful that it does become one.

Okay and secondly, with respect to the share buyback question. Gary, you mentioned that price to book is one parameter, but you look at others. What are those two or three other factors that are most important in the overall analysis, because again at this significant discount to book it does seem to make sense to buyback stock?

Sure, I mean first off, again, we absolutely look at the overall interest rate environment. As we talked about, we look at the valuation of our underlying assets as well and kind of our views about that. We think about, the likely drivers of kind of changes in valuations, both to the instruments and for that matter, to the stock and so forth. So there are a host of different things that we look at. We obviously also have other constraints with respect to share buybacks, such as, window periods. It's not just a simple kind of trading or investment decision it’s not executed the same way, it’s a different decision making process.

Mr. Young any further questions, sir?

No, I'm all set, thank you.

Okay, yes sir. I apologize we'll go and proceed to the next question comes from Brock Vandervliet of Nomura Securities.

Thanks very much for taking the question. Just with respect to dollar role, just trying to get a sense, some of the companies have been tactical in your approach to it. Is your current exposure kind of the new normal? We can expect going forward?

No, I don't think it's a new normal. It's also a function of the reduction in leverage. I mean, TBAs are the most liquid if you're going to reduce your balance sheet. That's a logical place to start, but what we’ve always stress with the dollar role in TBA position, is that it's a trade-off between knowing the underlying, characteristics of the pool versus the funding advantages in the dollar role market. And those trade-offs change, but I think even in today's environment there are definitely opportunities on the dollar role front and we haven't live moved away or abandoned that. I think its more a function of that we did feel it was important to move the coupons around our position. But we're also, we are reducing leverage, and so it was sort a natural outcome from that.

Okay, thank you and just as a related question, is there anything you would call out with respect to cost of funds? I'm just, for modeling this going forward; there was a fair amount of movement in your cost of funds this quarter, if you could just speak to those dynamics, that'd be helpful, thank you?

Brock this is Peter. I would think the biggest move in our cost of funds this quarter was the balance sheet allocation between on balance sheet and off balance sheet. So that's really going drive – that’s going to be the significant driver as to how much we fund on balance sheet versus off balance sheet. If you look at our, our hedge ratio, it is up a little bit, it’s a 78% up 2% for the quarter. But we've been operating at this sort of hedge ratio now for awhile. So I'd expect us to maintain this sort of hedge composition for your modeling purposes.

Okay, thank you.

Sure.

Our next question comes from Mike Widner.

Good morning, guys, I think one thing you haven't touched on too much was the prepaid protected stuff in the portfolio and you know, you’d mentioned kind of what your thoughts were on you know, prepaid protection premiums in past quarters and you know, with the portfolios sort of being more, you know, more heavily concentrated on that stuff today, just wondering what your view is. Do you still think those are good buys? Would you be adding to that or potentially reducing that exposure?

Sure, so, you know, in the current environment, it's still not you know, it's not clear whether or not you should be more concerned about call risk or extension risk and at the same time, the highest quality specified pools are, are relatively fully valued. If you look on Slide 24 in the appendix, you can see that around 50% of our holdings are in higher quality specified pools. But we also have positions and pools that have lower negligible pay-ups. It's still, we expect to perform very well and more in line with sort of the respective cohorts, but far better than the cheapest to deliver securities. Those, you know, in addition to decent performance from a cash flow perspective, those positions also provide a fair amount of flexibility you know, for example, if roles spike, we could be opportunistic and deliver those pools in and take advantage of attractive financing rates.

Okay, I appreciate those comments. I guess just related to that, how did the CPRs across the portfolio look in the April data? You know, most recent months? Just relative to kind of what you saw in you know, 1Q on average.

On Slide 7, we do give you the most recent release and you know, speeds were definitely higher during the quarter overall, just given lower driving rates, but the prepayment speeds, you can see on our holdings were very well-contained relative to the universe without any real surprises. At this point, we've seen sort of the peak speeds from this kind of the levels in this rate cycle over the last couple of months. Next month speed should probably be around 10% slower just given higher driving rates. But also the composition of the portfolio will vary and is actually probably migrated to something that’s favorable on that front too. So I mean that I think there are a lot of moving parts.

Yes, clearly a lot of moving parts, sorry, I missed the April data on Slide 7, but that answered my questions and thanks, and congrats on the FHLB membership by the way.

Thanks a lot.

Our last question for the day will come from [John Carmichael], Investor.

Gary, how are you doing? Congratulations on the FHLB membership.

Thank you.

I’m assuming that you guys like your existing portfolio and so that sort of raises again the issue about share buybacks and why you wouldn't be want to add runoff to your own portfolio. That’s my only question.

I mean guess we’ve had a couple questions on share repurchases. I really don't - not sure what else I can add to the answers that I provided earlier.

Thank you?

All right. End of Q&A

And we have now completed the question-and-answer session. Now I'd like to turn the conference back over to Gary Kain for any closing remarks. Sir?

I'd like to thank everyone for their participation on the call and we look forward to talking to you next quarter.