Byline Bancorp, Inc. (BY) Q3 2017 Earnings Report, Transcript and Summary

Good morning, and welcome to the Byline Bancorp, Inc. Third Quarter Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Allyson Pooley from Financial Profiles. Please go ahead.

Thank you, Kate, and good morning, everyone. Thank you for joining us today for the Byline Bancorp Third Quarter 2017 Earnings Call. Joining us from Byline's management team are: Alberto Paracchini, President and CEO; Lindsay Corby, Chief Financial Officer. And Tim Hadro is also here, Byline's Chief Credit Officer, who will participate in the Q&A session. We will be using a slide presentation as part of the discussion this morning. If you haven't done so already, please visit the Events and Presentations page of Byline's Investor Relations website to download a copy. Alberto and Lindsay will discuss the second quarter -- third quarter results, and then we will open the call for questions. Before we begin, we'd like to remind you that this conference call contains forward-looking statements with respect to future performance and financial condition of Byline Bancorp that involve risks and uncertainties. Various factors could cause actual results to be materially different from any future results expressed or implied by such forward-looking statements. These factors are discussed in the company's SEC filings, which are available on the website. The company disclaims any obligation to update any forward-looking statements made during the call. Additionally, management may refer to non-GAAP measures, which are intended to supplement, but not substitute, for the most directly comparable GAAP measures. The press release that's available on the website contains the financial and other quantitative information to be discussed today as well as the reconciliation of the GAAP to non-GAAP measures. And with that, I'll turn the call over to Alberto.

Thank you, Allyson, and good morning to everyone on the call. As is our practice, I will start the presentation on Slide 3 and provide you with the highlights for the quarter and then pass the call over to Lindsay for more detail on our financial results. We executed well during the quarter and our performance was solid, driven by an acceleration in loan growth and an expanding net interest margin. Reported net income was $9.8 million for the quarter, EPS was $0.32 per square, which is up $8.2 million or $0.24 per share on a year-on-year basis. ROA came in at 117 basis points and 147 basis points on a pre-tax pre-provision basis. We had several one-time items impacting earnings this quarter, both positively and negatively. On the positive side, we recognized a $4.6 million tax benefit due to the changes in the Illinois corporate tax rate. On the negative side, we took an asset impairment charge of $951,000 by primarily through the disposition of an old headquarter's facility. Strong loan production was the highlight for the quarter. Last quarter, I mentioned we were seeing strong demand for credit that we believe would translate to a higher level of growth for the second half of the year. This was definitely the case in the third quarter. We had total loan production of $135.8 million, net of loans sold, which translated into net balance sheet growth of $67.1 million or 12.4% on an annualized basis. Payoff activity moderated from the first half of the year, but still remains somewhat elevated at this point. Credit demand and availability remained strong, which is driving payoff activity. This activity reflects both good loans paying off due to successful outcomes in a project or business being sold and lower-rated credits taking advantage of the environment. In those cases, we're comfortable allowing certain relationships to move on. On the funding side, deposits were stable for the quarter. In terms of our mix, DDAs accounted for 29.9% of the portfolio and core deposits increased to 86.2%, which is up from the linked-quarter figure of 84.9%. Last quarter, I mentioned we were seeing signs of an increasing rate competition on deposits in the market. That was the case during the quarter, as we saw increased pricing pressure, particularly on CDs. We instead focused our efforts on core deposit generation. As a result, we saw a nice increase in money market accounts that offset runoff from our CD portfolio. This strategy worked during the quarter, but we expect competition for deposits to continue. That said, from a cost standpoint, actual deposit betas outperformed our model, with total deposit cost up just 3 basis points from last quarter. From a revenue standpoint, our margin performance was very strong, with the margin up 16 basis points for the quarter. Excluding accretion income, our performance was even stronger, with the margin up 20 basis points. Noninterest income was $11.9 million for the quarter, which was lower than that of the second quarter of this year. This line item will always have some degree of volatility quarter-over-quarter, depending on the amount of loans sold as well as the mix. For the quarter, we had a lower amount of loans sold with a different mix of loans that generated slightly lower average premiums. That said, our government guaranteed loan production continues to perform very well, and we remained as the #1 SBA lender in both Illinois and Wisconsin, according to the recently published rankings for fiscal year 2017. Our efficiency ratio increased a bit relative to the second quarter. The rise was driven by lower noninterest revenue and expenses that included a few nonrecurring items, including the asset impairment charge I mentioned earlier. Lastly, on credit performance, NPLs remained flat versus last quarter and NPAs had a slight increase, due to lower dollar OREO resolution activity during the quarter. Our provision expense was $3.9 million, while charge-offs came in at $1.9 million or 34 basis points. This led to a reserve build of 7 basis points, with our allowance to loans ending at 72 basis points. Now I'd like to pass on the call to Lindsay to cover the financials in more detail.

Thank you, Alberto. Good morning, everyone. Our third quarter performance represented further progress on the growth of our franchise and a continuation of several positive trends. On Slide 4, I would like to highlight a few metrics in addition to what Alberto has previously covered. We continued to effectively leverage our balance sheet, which is positively impacting our level of profitability. Our loan and lease to deposit ratio increased to 88% at the end of the third quarter versus 85% last quarter and 77% from year ago. Our capital ratios remained very strong, with our tangible common equity ratio increasing to 11.73% at the end of the quarter. This provides us with ample capital to support our growth strategies. I also want to provide a little more detail on the tax benefit we recorded in the third quarter that positively impacted our earnings. On July 6, the State of Illinois legislature increased the corporate income tax rate from 5.25% to 7%. As a result, the value of our deferred tax asset related to our Illinois net loss deductions has increased, and we reported a $4.6 million tax benefit during the quarter. Going forward and assuming no change in federal tax rate, we expect our effective tax rate to be 40% to 41%. Turning to our balance sheet. We'll start with our loan and lease portfolio on Slide 5. Our total loans and leases were $2.2 billion at September 30, an increase of $67 million from the end of the prior quarter. Our originated loan portfolio increased $119 million, with all of our major lending areas increasing during the quarter. We saw the strongest growth in our commercial real estate portfolio, which was up $56 million or 13.7% from the end of the prior quarter; and our C&I portfolio, which increased $42 million or 12.1%. Moving to Slide 6 to discuss our deposits. As Alberto mentioned, our deposits remained stable at $2.5 billion. We expected our noninterest-bearing demand balances to be lower due to the proceeds of the loan funding last quarter being used by one of our customers to finance a transaction. Outside of that, our noninterest-bearing accounts were relatively unchanged in the quarter, while our money market accounts increased $65 million. This offset the decline in TD balances due to the continued runoff of promotional and other time deposits added to the Ridgestone acquisition. Through this improvement in mix, our core deposit percentage increased to 86.2% in the third quarter. Moving to Slide 7. I'll discuss our net interest income and the expansion of our margin. Our net interest income increased $1.6 million from the prior quarter to $31.4 million, resulting in a net interest margin of 4.18%. Higher average loan yields and loan balances added 23 basis points to the margin, which was offset primarily by lower accretion income of 4 basis points. The expansion is a result of an increase in loan and lease yields and the improvement in our earning asset composition. Loan and lease yields increased 16 basis points during the quarter due to volume and new originations at higher rates than those paying off as well as the full quarter benefit related to the rate increase in June. This was partially offset by a 3 basis point increase in our total funding cost to 70 basis points. This was driven by a slight increase in the cost of our interest-bearing liabilities, offset by a decrease from the payoff of our line of credit. The increase in the deposit cost is attributable to the time deposits and the money market category. As we discussed last quarter, the CDs acquired from Ridgestone resulted in an acquisition accounting benefit on the time deposits. Excluding the impact of these fair value adjustments, our cost of time deposits increased 4 basis points during the quarter. The acquisition accounting benefit on our time deposits has been substantially recognized and will not have a material impact on funding cost going forward. Turning to Slide 8 on our noninterest income. Compared to the prior quarter, our noninterest income decreased by 9.7% to $11.9 million. The decrease was due to a decline in net gains and sales of loans of $946,000 or 11.2%. We sold $71 million of government-guaranteed loans during the quarter, which was 4% lower than the dollar amount sold in the prior quarter. Our mix of loans sold was different than last quarter, which impacted our premiums received. Our originations of government-guaranteed loans for the quarter remained relatively stable at $170 million -- pardon me, $107 million versus $110 million in the previous quarter. Outside of this category of income, our other major fee-generating areas were relatively consistent or slightly increased versus the prior quarter. Moving to Slide 9. Let's look at our noninterest expense. At $31.1 million, our noninterest expense increased by 6.2% from last quarter. Excluding the asset impairment charge, our expenses were up 3%. Within our specific expense items, we had $518,000 increase in professional fees, primarily related to expenses associated with the company becoming a public registrar. We also had $424,000 in additional OREO-related expenses due to lower gain on sales of OREO properties. These increases were partially offset by a $903,000 decrease in salaries and benefit expense, which was primarily due to decreased equipment expense and increased deferred loan origination costs, mainly salary expense, due to loan and lease originations. On a year-over-year basis, you can see the results of our efforts to better leverage our infrastructure. Our efficiency ratio improved to 69.9% versus 84.4% a year ago. Excluding the asset impairment, our adjusted efficiency ratio was 67.7% for the third quarter. Although our efficiency ratio increased slightly from the prior quarter, our long-term trend continues to improve as we add scale and leverage our infrastructure. Turning to Slide 10. We'll take a look at asset quality. We had a modest increase in our nonperforming assets during the quarter. However, as a percentage of total loans and leases, our ratio of nonperforming loans and leases was unchanged from the prior quarter. Our net charge-offs were $1.9 million or 34 basis points of average loans and leases for the quarter. Charge-offs were primarily related to leases and SBA loans. Provision expense for the third quarter was $3.9 million. The increase compared to the previous quarter was primarily driven by the growth in our portfolio. The provision brought our allowance for loan and lease losses up to 72 basis points of the total loans and leases at September 30. In addition to the traditional allowance methodology, we also analyzed the allowance in conjunction with the acquisition accounting adjustments impacting the acquired portfolio. With that, I'd like to pass the call back to Alberto for closing remarks.

Thank you, Lindsay. Last quarter, I mentioned that we had added to our origination capabilities with the addition of several new hires. Those bankers have already started to generate fundings and continue to build their pipelines. This quarter, we continue to add to our origination capacity with the addition of an experienced commercial banker focused on healthcare. We expect and anticipate to see the production coming from this initiative in -- at the start of 2018. With that, I'd like to -- operator, I think we can open up the call for questions.

[Operator Instructions] Our first question comes from Michael Perito of KBW.

I have a couple I want to address here. I guess, first question -- so I mean, it appears that loan origination has kind of been pretty solid here, and looking at the deposit balance, it's been mostly flat here. So I'm just curious kind of how you expect those 2 to trend near-term here? And then, I guess, as a secondary question to that for Lindsay, maybe just how we should expect kind of the investment portfolio to track assuming recent trends kind of persist going forward?

Yes, I think, Mike, in terms of originations and [ deposits ], as you can tell, we've been really, really focused more on the core side and just managing the balance sheet. I guess, holistically, no sense in generating excess liquidity for the sake of doing it and then having to park it in relatively lower-yielding investment securities, while production kind of catches up with that. So I think we'll -- you can continue to anticipate that we'll manage that accordingly. In the past, we have typically -- when fundings -- short-term fundings start outpacing available cash or runoff from the investment portfolio or just natural deposit growth that's coming from the commercial side, we've typically just used our Federal Home Loan Bank facilities to basically fund loans. And then gradually, we backfill with deposits. And I think in the short to medium term, you can expect that to continue. And Lindsay, if you want to take the investment question?

Sure. In terms of the investment portfolio, we're not looking to buy a lot right now. What you've been seeing is going to be consistent going forward. We intend to really monitor the amount of cash and securities that we have. You've seen it come down over time, and I think you'll continue to see that trend going into the future. So not really looking to buy too much at this point in time. Just really kind of watching the market, and we continue to move from securities and cash into loans as Alberto talked.

Just to add further, Mike, and maybe this gives you some additional color. If we do add to the investment portfolio, I think given Lindsay's comments earlier and it's probably very noticeable in terms of what our effective tax rate is today, you're probably going to see us look to do something more on the tax exempt side, because now certainly we can take advantage of that, whereas a year ago, for example, it really wasn't that attractive. But consistent to Lindsay's point, we want to see runoff from the investment portfolio be redeployed into loans.

Got it. That was all very helpful. And just on the tax rate, did that kind of go back to the 40%-ish near term, I guess, unless you guys start to act on some of those tax strategies that you just discussed?

Correct, I think the 40% to 41% is a good assumption, Mike.

Okay. On the margin, I was just hoping, Lindsay, maybe you could help me with the accretable yield or accretion disclosure. I think last quarter on the call, you had mentioned that the accretable yield was about $7 million, which doesn't seem to kind of jive with the basis point disclosure in the second quarter. I'm just wondering what the difference between those 2 numbers is?

So the disclosure that we included in the earnings release is consistent with what was in the 10-Q. So you can refer back to the 10-Q last quarter if you want to see the differences in the comparisons. But it's consistent, Mike, with what we've included in the past. So happy to answer any specific questions, but there's really isn't much of a change there.

So I assume then the $7 million number that was quoted last quarter on the call, I guess, what is that number in comparison to the number -- the little over $2 million number that's in the filings?

So I don't know exactly what $7 million number you're talking about. But our [ growth ] accretion last order was $8.8 million, and our [ growth ] accretion number this quarter came down slightly, as they disclosed. So....

Okay. And in terms of near-term NIM expectations, is this above 4% range, something that you guys think you can kind of maintain with everything you're seeing in the market? Or are there some other things that we should be thinking about?

We don't give exact guidance here, but I do feel that you'll see consistent trends in terms of -- the shift in terms of asset composition. I do think you'll see some slight expansion that we've seen, but I don't anticipate to the level that we did this quarter, obviously, and obviously, will be offset by any increases in rates of deposits, right? So as Alberto commented, it's competitive out there and we will be seeing pressure in the future, especially as rates rise.

Yes, that's obviously, Mike, also dependent on what happens to short-term interest rates, if there is a rise, if the Fed decides to increase rates at the end of the year, obviously certainly that will be a positive. But I think the margin, where it's at, and just the performance so far has been very good. So we're pretty happy about that.

The next question comes from Terry McEvoy of Stephens.

Just a follow-up just on that last theme. What would be the impact of a December rate hike if you think about the first quarter of '18? And you mentioned deposit betas have been coming in below internal expectations. How are you thinking specifically about deposit betas in the fourth quarter and into next year?

Always good questions, Terry. Obviously, for 2017, a hike in the middle of December really would not be very material. The first quarter, certainly if the Fed were to raise rates by, say, 25 basis points, I think we would see definitely some benefit from that. As far as deposits are concerned, I think we've been pretty good at managing the margin. That said, I don't know that -- performance has been good. We've performed better than what we've typically modeled. But I would expect that our betas would be approaching essentially kind of the model beta, so to speak, as opposed to continue to significantly outperform them. And competition is definitely present. I think you probably heard from other local market participants here in their calls that everybody seems to be talking and focusing much more on raising deposits and being very cognizant of the competitive environment. So I think ultimately, that will start putting some pressure in terms of funding cost. So as Lindsay said, I mean, it will -- it's -- economic numbers were strong this morning, credit demand remained strong, and therefore, that's creating demand for funding. So I think in short, I would say, we expect them to revert back to essentially what we typically model on those.

Okay. And then just as a follow-up, a theme this quarter from some other in-market participants, to use your expression, is more a sense of cautiousness on CRE. As I look into your business this year, it's up close to 40% and almost 40% of total loans. And I guess, my question is, where is that growth coming from, what type of projects? And how much of it is out of market as you follow those customers? And then in terms of just concentration risk, are you comfortable continuing to grow that as a percentage of your assets?

I'll add to the concentration risk and Tim Hadro, our Chief Credit Officer, is here. So I'll ask him to answer the first part of your question, Terry. But concentration is something that we monitor, particularly on the CRE concentration side. At the levels right now that we have, we feel very comfortable with where the portfolio is. That said, I mean, I can tell you that you're not going to see us -- any time that you're approaching kind of the 300% regulatory guidance, we want to be certainly inside of that as we manage exposures and particularly on the CRE front. Tim?

I'll address the concern about commercial real estate. We share that concern. We are -- in terms of our approach to the market, we are not looking to grow the retail commercial real estate or the luxury multifamily. We have strengthened our terms with respect to financing that type of real estate, and we have not done much of it recently. We have done in terms of where we are putting our real estate dollars, industrial, some student housing projects. We are doing -- we continue to do some out-of-state real estate, but we do more in market than out of the State of Illinois. Just overall, I mean, we are finding the deals are getting tougher. There is still a lot of competition for each project. We -- and we're going forward cautiously, but we still think the transactions being done are good business. We have lowered our advance rates and increased our debt service requirements in certain markets. And I'll leave it at that unless you have any follow-up questions.

The next question comes from Nate Race from Piper Jaffray.

It's actually Matthew Clark calling for Nate. First question just on the loan pipeline. Wondering if you could quantify it and how it compares to a year ago? And as a follow-on to that, what the pipeline of lender hires looks like as well after this healthcare addition and whether or not there are any other verticals or specialities you might consider as we get into next year?

Yes. On a -- Matt, on a year-on-year basis, the pipeline is obviously stronger, and that's driven by a number of things. A year ago, we really -- Ridgestone had not closed yet. So obviously, we have that business. That business continues to grow and continues to look for ways to grow originations and correspondingly grow their portfolio. So just with the -- with that addition, loan, obviously, it's a significant increase in the pipeline. The other thing impacting, as you just mentioned in the second part of your question, we've obviously added capacity in terms of lenders and bankers that we've added on a year-over-year basis. So certainly in that regard, the pipeline today compared to a year ago is much stronger. As far as commercial banking pipeline or the pipeline for new hires, so we are -- as you know, earlier in the year, we added several bankers to our commercial banking ranks. Those bankers have gained traction. They started building their pipelines, and we're starting to see the fruition of that already with fundings, and I would say, probably ahead of schedule in terms of just seeing the level of activity that we've seen from that. So we're pretty encouraged and happy with that performance. As I mentioned in the remarks, we added a very experienced banker that focuses on the healthcare space. It's a space where we have experience. He was -- has been in the market for a long time, and we felt it would be a really, really good fit to add that capability to our lending staff. So we're really happy, and we expect to see contributions from that effort to begin in earnest in the first half of 2018. We continue to actively look for experienced bankers in the marketplace. We feel that we have a great franchise and a great platform, and we offer opportunities that other banks were -- I think we compare very favorably to other banks in terms of giving experienced bankers an opportunity to bring business and operate in a platform where they really can see the fruits of their labor, so to speak, and the contributions that they make to the organization. And that's exciting, and we think that we'll continue to add bankers in the coming months. Does that answer your question, Matt?

Yes, that's great. And then on the SBA business, curious what your outlook is there for gain on sale margins currently and the related volume?

Yes, I mean, I think -- and I think I mentioned this a bit, so I'm glad you asked the question. There is always some degree of volatility on a business where you're selling loans on a quarterly basis. So you're always going to have some degree of volatility on a given quarter, up or down. In this quarter, we sold a slightly lower amount of loans. Originations remain strong. The pipeline there remains strong. And as far as gain on sale margin are concerned, it was the mix of loans this quarter that was different than the mix of loans we sold the previous quarter. For example, last quarter, we had a single USDA loan, which garners typically very good premiums in the secondary market and where we don't share the premium paid by the investor above a certain level with the government agency. So that loan was there last quarter. We, obviously, are an active originator of USDA loans, but we didn't sell any USDA loans this quarter. So there's always some volatility in terms of volume of loans sold and the gain on sale margin. And what I'd say is, we're not seeing anything really that changes our view in terms of where margins are today and what our outlook is for margins going forward.

Great. And then last one from me just on the status on the 2 problem loans from last quarter. It sounds like the charge-offs this quarter are related more to leases than SBA. But curious where those 2 situations stand?

So as you know, last quarter, we had one uptick in terms of an SBA loan, which is fully guaranteed. That is still in the resolution stage. So that's still obviously impacting the balance there. Those things can take some time to get resolved. That said and as a reminder, there is a 75% or 80% guarantee behind that particular credit.

The next question is from Ebrahim Poonawala of Bank of America Merrill Lynch.

So Matt just asked a couple of my questions. But just one question and I'm sorry if I missed it. I get that you're using securities cash flow towards loans and don't want excess liquidity on the balance sheet. But can we talk about just in terms of your outlook for core deposit growth, like what do you think noninterest-bearing deposits should grow? And what are we doing in terms of bankers' strategy to grow core funding? Like what's your outlook there?

So obviously, raising core deposits, particularly noninterest-bearing is key, as you mentioned. As far as strategy there, primarily obviously from a commercial banking standpoint, we want to -- when we lend money, we expect to get the deposit and treasury management relationship. That comes with it. So first and foremost is that: is continued emphasis in every time we're bringing a new relationship, ensuring that, that relationship has DDA balances and the full deposit relationship comes with that. And that's a day-on-day process on that. As far as the retail side, we incent our -- the incentive programs that we have in place, to give you some perspective, for our retail staff are really geared towards quality core deposit growth, both on the DDA front as well as on the, call it, non-CD front. So we don't -- we're not really looking to add a lot of accounts for the sake of opening accounts. We'd rather have -- grow a lower number of accounts that have a more meaningful level of engagement with us. So that's always first and foremost. And that is not, call it, volume-sensitive to the loan portfolio. So those things are every -- that's obviously -- the hard part of the business is very competitive and you have to have a high degree of consistency in what your efforts are there. To your comment about the investment portfolio and cash flow, I think what we mean there is, to the degree that we are actively going to need to raise deposits, we want to make sure that we have a good use for the funds. We don't want to necessarily go out and aggressively raise funds if we are going to likely going to sit on them. And I think that over time, and I think we added on the presentation and hopefully this gives you guys some perspective as well as -- in terms of where the runoff is coming. But we added a chart that shows the originated loan growth and how that portfolio is behaving in terms of the trend and the growth that you see there. And really where a lot of our runoff ultimately is coming from, which is the acquired impaired and nonimpaired portfolios, which you see declining. So obviously, as time passes and those portfolios continue to decline, the impact of that will certainly cause a shift in our need for funding going forward. So hopefully, that gives you some color and some good perspective in terms of how we think about that.

Well, that's helpful and the slide was helpful too in terms of just breaking out acquired versus legacy loans. And did you quantify how much more runoffs in -- from a deposit perspective, like, to Ridgestone is still remaining?

We did not quantify that, EB, but it's been a year now. So I think you can see that, as I stated, that the accretion and the accounting impact from some of those deposits is gone. There's what I disclosed.

Yes, and that's fully integrated now, EB. So we don't expect anything impacting our results going forward. That's just part of our portfolio, frankly, at this point and going forward.

[Operator Instructions] The next question comes from Brian Martin of FIG Partners.

Just a couple of things. Just one, if you -- Lindsay, could you just reconcile or just give us an idea of how much benefit in the quarter came from that CDs from Ridgestone? Is that something -- it sounds like it's nonrecurring or just kind of it's all completed at this point. But is there a drop-off in the margin next quarter, or is it in the number and just sustainable at this point?

It's in the number and sustainable at this point. So you won't see it going forward, as I...

Okay, got you. And then just 2 things. Maybe if you could just give a little color on the expenses outside of the impairment this quarter. I know you talked a little bit about it being -- some of it being a public company. And I know the OREO seemed a little bit unusual. But the -- just how you're thinking about the expense base as you go into '18. And then, I guess, just as far as the second one, just kind of reconciling -- well, just reconciling the gross accretion to the net accretion. I guess, the $2 million is a net number this quarter. And I guess, if we don't reconcile it, just kind of thinking about that going forward, it seems like it's going to become a sustainable or in a declining trend if that's how we should think about it.

Sure. So in terms of the expenses, Brian, I think looking at it going forward, obviously as a public company, your expenses are higher, right? So we did see that come through. There is some noise in there like you mentioned and that we covered in our earnings release, that was more of a blip on a go-forward basis. But we will see expenses continue, and I don't see anything really different in terms of our outlook there. In terms of your other question around reconciling of the accretion, it's really hard to give a perfect picture in terms of what's going to happen. But we all know, accretion does go down, Brian. And I think what you saw this quarter is a pretty consistent theme of what you'll see going forward. Again, difficult to predict and it's difficult to give you a number, because accretion is something that does tend to have volatility. So -- but I think it was a pretty good run rate this quarter.

There are no other questions at this time. This concludes our question-and-answer session. I would like to turn the conference back over to management for closing remarks.

Great. Thank you, operator. Thank you all for joining us today. We look forward to speaking with you again next quarter or on the road if we see you before then. So thank you.

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