Heritage Financial Corporation (HFWA) Q1 2019 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to the Heritage Financial earnings call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jeff Deuel, CEO. Please go ahead.

Thank you, Moses. Welcome to all who have called in and those who might listen later. This is Jeff Deuel, President of Heritage Financial and CEO of Heritage Bank. Attending with me are Brian Vance, CEO of Heritage Financial; Donald Hinson, CFO; and Bryan McDonald, COO. Our earnings press release went out this morning pre-market and hopefully, you have had the opportunity to review it prior to this call. Please refer to the forward-looking statements in the press release. It has been a solid quarter for us as we continued to integrate the combined origination teams of three banks and a new team in Portland earlier this year. It’s also good to see the expanded production team working well together and an increase in the loan origination pipeline of 33% since the first year. We are pleased to see the back-office team refocused on several important customer-focused projects following the two conversions as well as the implementation of several automated processes by our expanded technology team. We are also pleased to announce our regular quarterly dividend of $0.18. Don Hinson will now take a few minutes to cover our financial statement results, including color on our core operating metrics.

Thank you, Jeff. I will just start with the earnings overview. As we have stated in the earnings release report, earnings per share for Q1 was $0.45, which is unchanged from Q4 of 2018 and up from $0.27 in Q1 2018. Moving down to the balance sheet, total asset growth was muted in Q1 due mostly to a $39 million decrease in total deposits. Deposits decreased in all maturity deposit categories. Historically, the first quarter usually starts slow for deposit growth and 2019 followed that trend. To offset decreases in non-maturity deposits, we increased brokered CD balances by $50 million to a total of $78 million as of the end of Q1. The CDs purchased in Q1 will mature by the first part of Q3 and were at rates lower than current borrowing rates. We will proactively use brokered CDs as a short-term supplement to other funding sources and as a cost of funds management tool. However, it’s not our plans to use them as a significant long-term funding source. Loans grew at an annualized rate of 4.6% in Q1, and Bryan McDonald will further discuss loan production in a few minutes. Moving on to credit quality, our non-performing asset ratio increased to 36 basis points at March 31 from 30 basis points at December 31. The increase was driven primarily by the further downgrade of two commercial lending relationships totaling $5.1 million which were put on non-accrual status during Q1. However, the ratio of our allowance for loan losses to non-performing loans still stands at a very healthy 207%. In addition, included in the carrying value of the loans are approximately $11 million of purchase accounting fair value net discounts which may reduce the needs of an allowance for loan losses on those related purchased loans. The sum of the discounts and the allowance for loan losses is 1.28% of total loans as of March 31. We continue to have success working through problem credits as evidenced by the net recoveries in Q1 and the decline in potential problem loans. The net interest margin decreased 3 basis points in Q1 compared to Q4 2018. This was actually due to a decrease in accretion income. Pre-accretion net interest margin remained at 4.22% in Q1, unchanged from Q4 2018. Although pre-accretion loan yield increased by 2 basis points and investment portfolio yield increased by 13 basis points in Q1. This was offset by a 4 basis point increase in the cost of total deposits. The cost of total deposits increased due to a combination of an increase in the cost of interest-bearing deposits and an increase in the percentage of CDs to total deposits. Due to the shape of the yield curve, forecasted 2019 rates and competitive pricing pressures, we do expect a challenging margin environment in 2019. Non-interest income for Q1 decreased $1.1 million from Q4 levels due to decreases in service charges, mortgage loan sale gains and interest rate swap fees. Although we expect mortgage loan sale gains to increase as we get further into the year, due to the current mortgage environment, we have recently adjusted the staffing size of the mortgage operations in order to improve the profitability of the department over future periods. Beginning in Q3, we expect cost savings of about $200,000 per quarter related to this staff reduction. The quarter-over-quarter decrease was also due to a $413,000 gain on sale of a building recognized in Q4 of 2018. Non-interest expense for Q1 decreased $749,000 from Q4 levels, due primarily to a $1.2 million decrease in the acquisition-related expenses. The benefit from the decrease in acquisition-related expenses was partially offset by increased marketing expenses and cost related to our new commercial banking team in Portland. Year-over-year adjusting for the combined impact of acquisition-related expenses and the amortization of the intangible assets, non-interest expense to average assets improved to 2.70% in Q1 2019 from 2.77% in Q1 2018. Our effective tax rate for Q1 was 16.3%. The decrease from the 22% effective tax rate in Q4 2018 was due primarily to the $898,000 of tax expense recorded in Q4 related to a change in estimates from low-income housing tax credit projects. And finally on capital, our tangible common equity ratio increased to 10.2% in Q1 from 9.9% at the prior quarter end. The increase was due to a combination of reduction in the unrealized loss on investment securities and our solid earnings for the quarter. Since December 2017, even with the slightly dilutive impact of 2 acquisitions, our tangible book value per common share has increased to 9.6%. We continue to believe our capital position sufficiently supports our balance sheet risk, our internal growth and potential future growth, both organic and M&A. Bryan McDonald will now have an update on loan production.

Thanks, Don. I am going to provide detail on our first quarter production results by area, starting with our commercial lending group. In the first quarter, our commercial teams closed $163 million in new loans which is up from $149 million of new loans closed in the first quarter of 2018 and down from $187 million closed in the fourth quarter of 2018. New production during the first quarter was centered in King County at $57 million, Portland at $24 million and Tacoma at $23 million. We were very pleased to see 65% of the quarter’s new commercial loan production fall within the C&I and owner occupied CRE categories. As we have been reporting since this time last year, our sales force has been placing a higher emphasis on these segments versus investor real estate. Commercial team deposit pipelines ended the first quarter at $59 million, down moderately from $63 million at year end. Commercial team loan pipelines ended the first quarter at $447 million, which is up 33% from $337 million last quarter. Each geography within the footprint saw their loan pipeline increase, with the largest concentrations and changes being in our King County teams, which saw their pipeline increase to $178 million from $157 million at year-end; our Greater Tacoma teams, which saw their pipeline increase to $60 million from $30 million at year end and our greater Portland teams, which saw their pipeline increase to $72 million from $47 million at year end. Gross loans increased by $42 million during the first quarter or a 4.6% annualized rate with loan payoffs and prepayments moderating during the quarter. SBA 7(a) production in the first quarter included 12 loans for $12.4 million, and the pipeline ended the quarter at $25 million. This compares to last quarter where we closed 9 loans for $7 million, and the pipeline ended the quarter at $25 million. Consumer production during the first quarter was $40 million, down from $49 million closed in the fourth quarter of 2018. The decline was due to lower indirect loan production, which was down $9 million quarter-over-quarter due to our pricing levels. Moving on to interest rates, our first quarter interest rate for new commercial loans was 3 basis points higher, increasing to 5.65% versus 5.62% last quarter and rates were up nearly 15% in the last year or 72 basis points from 4.93% in the first quarter of 2018. In addition, the average first quarter rate for all new loans was 5.68%. I will now turn the call back to Jeff.

Thank you, Brian. We continue to be comfortable with the overall Pacific Northwest economy. Valuations are stable for CRE and single family, however, competition continues to be strong. In spite of positive economic environment in the region, we continue to be cautious about all loan segments, relying on our robust concentration management process to provide guidance. Currently, our non-owner occupied CRE concentrations are at 257% of capital, which is down 1 percentage point from last quarter, whereas construction is at 41% of capital compared to 39% last quarter. Operating at these levels provides flexibility and allows the bank to take advantage of high-quality loan opportunities while still being able to maintain discipline and focusing on loan quality and yield. Our overall annualized loan growth in Q1 at 4.6% is again somewhat impacted by pay-offs. However, we did see that phenomenon start moderating in Q1. I think it is important to note that our risk profile overall tends to limit our loan growth to a certain degree also. As Don mentioned, we saw deposit levels decline in Q1, and the strategic decision to bring on short-term brokered CDs to offset this outflow is a tactic we have used in the past. In prior years, we have seen deposit growth pick up in Q2, and we would expect that to occur again this year. Also, now that we are past the distraction of two integrations and two conversions in 2018, we can see the acquired teams and our new team in Portland contributing in a more significant way as the loan production pipeline continues to build. We are well positioned for the balance of 2019 with our largest concentrations of our production teams located in Seattle, Bellevue and Portland, the two markets in our footprint with the most opportunity for growth. We continue to benefit from the flexibility provided by our quality deposit composition. While the cost of deposits is up slightly quarter-over-quarter, the overall costs are still relatively low and the loan-to-deposit ratio is holding steady in the low 80s, which provides us with the flexibility to optimize pricing while managing the balance sheet. After adjusting for acquisition-related expenses, we can see a positive trend in the overhead ratio year-over-year and expect that to continue to trend down. In addition to one-off branch consolidations, we continue to make good progress disposing of unused facilities, as referenced by the gains on sale we have been reporting periodically, and further consolidating facilities to create back office efficiencies. As Don noted, we had two commercial loans moved to non-accrual status in Q1. This move is a natural progression for these loans as we continue to actively manage the portfolio by either managing underperforming loans up or out. We do not anticipate significant losses from these two loans and overall credit quality remains quite good. We continue to manage our capital position to support risk in our balance sheet and planned organic growth as well as positioning the bank so we can respond to M&A opportunities when they present themselves. I will now turn it over to Brian Vance for a few closing comments.

Thanks, Jeff. As Jeff noted, we are comfortable with our moderate loan growth in Q1 considering where we are in our development as a newly combined and integrated entity, and we can see the combined strength of the three banks start to present itself in the growing pipeline numbers. Additionally, we always strive to not sacrifice loan quality for loan growth, especially at this point in the cycle. While we never like to see a quarterly decline in deposits, we are confident we are merely seeing historical seasonal deposit outflows as we expect to see that trend subside and improve as the rest of the year progresses, as it has in the past several years. I continue to believe that our on-balance sheet liquidity, a high quality of granular deposit base along with strong credit quality will separate the stronger performers from the rest of the pack as we head into more challenging interest rate and overall economic environments. I am pleased with our historic performance in these areas. And finally, as a reminder to everyone and this will be my last earnings call as CEO as I will retire effective July 1, I have truly appreciated the relationships I have enjoyed with all of you through the years and also look forward to watching our management team from the sidelines as Board Chair as they take the bank to new levels of success. Jeff, I will turn the call back to you.

Thank you, Brian. I would like to just conclude our update with the overall comment that we feel very good about our future prospects and expect production performance to continue to improve as the year progresses. However, with the current rate environment, it will make for a challenging year for everyone in the industry. So Moses, with that said, we are ready to open up the call and move forward with questions.

[Operator Instructions] And our first question comes from the line of Jeff Rulis with D.A. Davidson. Please go ahead.

Good morning, Jeff.

Yes. Just a couple of questions on the expense side, first, the merger cost, do you anticipate them as being done? I guess you had a small amount this quarter, but any outlook?

Yes, Jeff, it’s Don. Yes, they are pretty much done. I don’t expect much more.

Okay. And you guys talked about the technology platform build-out, wanted to see if there is anything actively in the expense base now in the quarter or what could be coming on that front?

It’s essentially – this is Jeff and that is in the numbers you are seeing. What I was referring to is over the last 18 months, we have been adding a small team of IT oriented folks to help us strengthen our data management platform as well as some software development capabilities, which will contribute to our efforts to create automation in the back office. All told, I think over the last year, we have probably feathered in about $1 million of expense related to those two things.

I guess just to wrap it up, a run-rate thought, I know that maybe last year’s Q2 stepped down by about $1 million sequentially. I don’t know if there is a lot of moving pieces, but do you anticipate any seasonal efficiencies or kind of thoughts on kind of the run-rate relative to Q1’s level?

Jeff, I don’t see a lot of difference going forward. There maybe some. There is always a fuel expenses in Q1 related to just things like payroll taxes and some bonuses, but we also tend to do a lot of officer increases at the beginning of Q2, so those two may offset each other. So I would say overall, there maybe a slight decreased run-rate, but I don’t think it would be significant.

And the other question was just on the margin, Don you mentioned and I think maybe Jeff also that this is sort of the challenging margin environment. If we could put that into context of kind of where that is on the current margin, which you saw this quarter and similar given that maybe you had some higher cost of funds and if you get an inflow of core deposits, where do you see the margin on that fund if that occurs?

Well, again, like you say, some of it will be dependent on if we can get a lot of non-spring deposit growth that obviously helps our overall margin. But I think that it’s going to be challenging to grow the margin much this year if at all. And the cost of deposits can continue to go up like it was last quarter. We may even see downward pressure as we get later in the year. So, I think it’s going to be a pretty flat year overall for the margin.

Jeff, I would add to that, that because of the first quarter historically we see deposit runoff, it automatically feels more challenging to us. And as the year progresses, we tend to recover the deposits and start growing from there. What we are seeing from a competitive standpoint is pretty much what we have seen for the last year or so in terms of competition from some of the smaller banks who may not have the same loan-to-deposit ratio that we do and are scrambling for deposits. But more recently, we have also started to see a couple of the larger banks in our market start to crank up their rates on money market accounts and CDs, which we can manage through, because we do have the flexibility to manage through it. It’s just that it made it a little bit more difficult to make sure that we stay on top of it and we are reacting properly when we do get confronted with one of these high rates. One of the things we didn’t have to deal with up till now is that the main 5 banks or the biggest 5 banks in our market were not really playing with rates as much as they are starting to now, so that’s a little bit different for us this quarter.

And I guess lastly, Brian Vance, congrats on the retirement. I guess we will see you in a couple of weeks, but congrats.

Yes, thanks, Jeff. And I do look forward to your conference in Denver and hope to see a lot of folks at that conference. Thank you.

And we might bring him around for some cameo appearances over the next couple of years, Jeff. So you might see him around.

It sounds good. Appreciate it.

Next question comes from the line of Matthew Clark with Piper Jaffray. Please go ahead.

Good morning, Matt.

Good morning. On the expense to average asset ratio, 270%, what are your updated thoughts there, Don, maybe by the end of this year or for the full year?

Matthew, I think that as I have mentioned previously that we continue to try to work that down throughout the year and year-over-year. So, I think we ended out in the high 260s I think at the end of last year. So, I think that we will continue to work that down still year-over-year, because every quarter is – there is some seasonality to all of this. And actually, we are down – in the adjusted, we are down about 260% at the end of Q4 last year. So we are looking to get back down there again this year by Q4 if not improve upon that, so...

Okay. And on the loan growth outlook just given the step up in the pipeline and the 4.6% annualized growth this quarter, how do – you still feel okay with that 6% to 8% range for the year?

Yes. Matt, this is Jeff. We would lean towards 6% to 8% range unless we see more elevated loan payoffs as we have in the past. If we do, then we would probably moderate that to more like mid single-digits, which is what you have seen.

Okay. And then just the swap fee line was zero this quarter, just any color on activity there and whether or not that’s something that will pick back up through the balance of the year?

Hi, Matt. This is Bryan McDonald. We didn’t see any swap activity in the first quarter, some of the flattening of the curve and some of the just change in dynamics of the market. We continue to pursue it and I do see generating activity during the year. It’s just hard to predict at this time.

Okay, great. Thank you and congrats Brian. We will hope to see you at some nice destinations over the next year or two.

Thanks, Matthew. Appreciate it.

Next question comes from the line of Jackie Bohlen with KBW. Please go ahead.

Hey, Jackie.

Hi, good morning.

Good morning.

I just wanted to talk about the gain on sale of loans, what your expectations are from a mortgage banking perspective? And then also an update on how you are thinking about SBAs, I know you have been adding those to the portfolio, but how you are thinking about that going forward?

So Jackie, at the end of the quarter, the mortgage pipeline was at $29 million versus $23 million at the end of the year. We only closed $17 million in mortgage volume in Q1 versus $28 million in Q4 of last year. So, we do see the volume picking up coming into the second quarter both seasonally and just an overall increase in demand. We are seeing much more custom construction business, more portfolio business than secondary market business in the mix and that’s kind of how we have positioned that area for the last couple of years. So, we do see gain on sale – some improvement in gain on sale in Q2 and probably throughout the year. On the SBA side, we have an analysis that we run where we use that to determine whether or not we sell those loans and they are just more lucrative to keep on the balance sheet, because the rates are relatively high and the gain on sale premiums have remained relatively static versus a year ago. So, we just went through it and Don and I looked at a pool of them, just 3 weeks ago just to kind of retest that thinking and it’s clearly better to leave them on balance sheet versus sell them with that comparison. So, it’s a long way of saying we will have at least – in the current gain on sale environment we would not anticipate selling any of the SBA 7(a) loans.

Okay, that’s helpful. Thanks, Bryan. And then probably a question for you, Don, on taxes and I apologize if this came up in prepared remarks, I have been on a lot of calls this morning, but I don’t think that it did. I know the press release mentions that taxes were impacted by the increased presence in Oregon, which I know is the higher tax state versus Washington. So, just wondering what your forward guidance is and if you expect that to continue to gradually creep up as you continue to develop in Portland?

I think gradually, obviously, the big increase was the Premier merger last year. So, I think that – I think the guidance of mid-16s is still good for this year.

Okay. And then just kind of gradually on a quarterly basis, the 2020 starts to creep up a little bit more?

Correct.

Okay, great. Thank you. And I too echo congratulation, Brian Vance. Best of luck in everything, and I look forward to some cameos from you.

Thanks, Jackie. I do as well.

Next we have Gordon McGuire with Stephens Inc. Please go ahead.

Good morning, Gordon.

So I just wanted to start just trying to figure out the puts and takes on the core NIM flattening from here and get a better sense of what you could see from an asset re-pricing perspective. Your new origination yields are still pretty well ahead of the book, but the core loan yields this quarter were up only 2 basis points. So I am trying to – how do you see the loan book and then additionally the securities book yields kind of inflecting or heading this year?

Hi, Gordon. It’s Don. The loans were at, I think around 5% overall renewal rates. What was – actually happened to come off the books was that much lower than what they came on at. Even though, we again had I think overall a good quarter for new origination rates. Again, we did an analysis of what came off the books and they were again almost that high. So, what’s left behind is pretty much the same rates. We did see the loan yield book pop a little bit, a couple of basis points, but that’s why it didn’t go up more, it’s because it wasn’t the lower stuff that was coming off, it was probably lines that had already been re-priced and were short-term in nature that were coming off. And so that’s more on the loan side. On the investment side, again, I don’t see that increasing much this year due to the current yield curve and what we are currently putting new investments on at and what’s coming off there either. I don’t see a whole lot of – we are not probably going to change our credit quality or our investment portfolio, so without doing that, I doubt we will see much increase in the investment yields throughout the rest of the year.

And your commentary about the roll-off not being far from the new production, is that what you would expect to see for the rest of the year or was it more unusual this quarter?

I think it was a little bit unusual, but again, because of the – we are always going to see somewhat of the short-term nature. A lot of the lower priced loans are maybe at a – maybe their commercial real estate, they had 5-year maturities and so they don’t roll as quickly. So, I think what’s going to come off will always be a little bit higher than what’s on the books.

And then just moving to the deposit side, I think or it looks like you raised some pricing across your products recently. I am wondering how you feel as far as your positioning standpoint now with no more rate increases. Do you feel comfortable with where your pricing is right now just on the rate sheet?

I think in response to that, yes, we think that the strategy that we have in place is the one that we will continue to utilize. We did feel that we needed to move some of the rack rates up a little bit and mostly to help our team in the field avoid dealing with some of the exception pricing that we were facing into. But because their loan-to-deposit ratio is so low, we have the ability to manage it partly on an exception basis. I don’t think we will widely change that strategy as the year goes on. But like I said earlier, we are seeing a little bit more competition than we were maybe end of last year.

And then lastly just on the service charge decline, I mean, it looks like that was a little bit more than you have typically seen in first quarters. Was there anything unusual in there?

Gordon, no, that’s not necessarily unusual. I think most of it has to do with seasonality. And just I think for the quarter, I think it will be interesting to see what happens. Obviously, we went through a convergence with Premier in the Q4 and this is the first full quarter and I think we are still kind of seeing how that plays out as we merge the service charges together.

Okay, thank you.

Thank you.

Next question comes from the line of Tim O’Brien with Sandler O’Neill + Partners.

Good morning, guys. Tim O’Brien: What was the rate that you guys are paying on the brokered CDs you added in the quarter?

Good question, Tim. I think it was about 2 – I think 2.30 to 2.35. Tim O’Brien: 2.30 to 2.35 in there?

Right. And again, they are running off partly early this quarter and partly early next quarter, I believe. Tim O’Brien: Okay, in 2Q and 3Q. Okay, great. And then it looked like advertising expense was up a little bit this quarter, is that some seasonal – was that promotion related to deposit rates or was that a reset hire or what’s going on there?

It’s nothing specific or significant, Tim. Our marketing budget just tends to flow as the quarters go by. We have a budget and it maybe higher one quarter and lower the next and we usually bring it in on budgeted by the end of the year. Tim O’Brien: Out of curiosity, that budget item that gets set every year, so how much does it get – does it increase or decrease on a year-over-year basis? For marketing specifically, how much – do you guys tend to increase that by 3% a year or something, the rate of inflation?

We don’t necessarily increase it significantly every year. We intend to try and hold it to what it was the prior year quite frankly. Embedded in that number is not just marketing and advertising, but also contributions, which is also a fairly static number. Tim O’Brien: And then last question, I thought I caught something about some consolidation plans, office, back office something like that pending later this year. Is that right or did I misconstrue that?

What we were alluding to was we did have a one branch location consolidation in the last quarter. We tend to do those onesies, twosies throughout the year as we have the opportunity to do it, but we are also focused on reducing unoccupied space in the back office. As a result of all the transactions we have done a lot of buildings that we are trying to get rid of. And we did one in the last quarter and we have got a few more on the market that may or may not sell in the next quarter. Tim O’Brien: Alright. Thanks for answering my questions.

Thank you. Tim O’Brien: Good luck, Brian.

Thanks, Tim.

Next question comes from the line of Tim Coffey with FIG Partners. Please go ahead.

Good morning, Tim.

Good morning, gentlemen. Just to follow-up on that last question, the $200,000 that you anticipate in cost saves, that was the right number, right?

That’s for the mortgage – we have talked about the mortgage department for some staff reductions, starting in Q3, we are expecting about $200,000 a quarter in just cost savings.

Okay, great. Is your expectation that, that will actually hit the expense line or it would be netted away against other investments?

Well, I mean, we have always got things going on in the bank, but we will realize that little cost savings for the department.

Okay, alright. And then given that you have made a number of investments in Portland and of course in Seattle and those do seem to be paying off in terms of loan growth. Do you have any other planned investments to make in other markets in the near-term?

Not for now, Tim. As we have said during the call, we still have a focus on growing organically and through M&A activity. So, M&A is always something that’s interesting to us, but separate from M&A, which would likely be on the I-5 Corridor to fill in what we already have in our footprint. Going further afield right now in ‘19 is unlikely unless a particular team presents itself to us, because we think we have enough to work with in Seattle, Bellevue and Portland with not just the new teams there, but the opportunities to grow in those markets is something we can focus on in the meantime.

Okay. And then sticking with the M&A theme, I have heard from other banks this quarter that disconnect between what a seller thinks and what a buyer believes that business is worth as it started to reappear again. Is that any different than what you are seeing right now?

We are not necessarily experiencing that. We oftentimes show the slide in our investor deck that shows the 23 banks along the I-5 Corridor between $2 million and $2 billion that we might be interested in. We are not necessarily facing anything right now, but we are always having ongoing conversations throughout the year and pricing has not been something that’s been thrown out as a roadblock for us.

Okay, good sign. Alright, those are my questions. Brian Vance, it’s been great working with you. Good luck to you in the next chapter.

Thanks, Tim, Appreciate your comments.

Next question comes from the line of Matthew Clark with Piper Jaffray. Please go ahead.

Hi, just wanted to clarify a couple of things. Don, your commentary on the NIM are you speaking to the reported NIM remaining relatively stable or the core?

Yes, obviously, Matthew, the core NIM. Obviously, this kind of accretion is – can be some way fluctuate and unpredictable, but I was talking more to the core NIM.

Okay. And then the expense to average asset ratio if you assume the run-rate of expense, operating expenses that’s comparable to 1Q and you are layering your other commentary, it would suggest getting to that 260% expense to average asset ratio in the second quarter. Just wanted to make sure showing the improvement year-over-year, you are going to get to 260% for the full year, correct?

No. No, what we are trying is year-over-year for the quarter, like this – for this year, it was 277%, the core when you take out merger-related expenses and it was 277% in 2018, it’s 270% this year. For every quarter, year-over-year, we are looking for improvement. So, it was 260% in Q4 of ‘18. We are looking to improve upon that to down in the high 250s or somewhere in the 250s by the end of the year.

Got it. Great, thank you.

And at this time, there are no further questions in queue.

Okay. Well, thank you Moses. If no more questions, then we are ready to wrap up the quarter’s earning call and we thank you all for your time, your support, your interest in our ongoing performance as an organization and we look forward to seeing several of you over the coming weeks. So, thank you and goodbye.

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