Zions Bancorporation, National Association (ZION) Q3 2012 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and thank you for standing by. And welcome to the Zions Bancorporation Third Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference may be recorded. And now, my pleasure to turn the call over to Mr. James Abbott. Sir, the floor is yours.

Thank you, Hewey, and good evening. We welcome you to this conference call to discuss our third quarter 2012 earnings. Our primary participants today will be Harris Simmons, Chairman and Chief Executive Officer; and Doyle Arnold, Vice Chairman and Chief Financial Officer. I would like to remind you that during this call, we will be making forward-looking statements, although actual results may differ materially. We encourage you to review the disclaimer in the press release dealing with forward-looking information, which applies equally to statements made in this call. A copy of the earnings release is available at zionsbancorporation.com. We intend to limit the length of this call to 1 hour, which will include time for you to ask questions. [Operator Instructions] I will now turn the time over to Harris Simmons.

Thank you very much, James, and welcome to all of you. We're reasonably encouraged with the third quarter's results, with many of the metrics improving compared to the prior periods. The most notable accomplishment of the quarter, as you might imagine, was the completion of our repayment of the -- our TARP preferred stock obligation and redemption of that stock, which is encouraging to us. Good to have that chapter behind us. Looking at the fundamentals, at a high level, we saw further strengthening of loan growth during the quarter. Our core net interest income declined, but at a slower rate than in the prior quarter, and our noninterest expenses also declined. Credit quality improved pretty materially in almost all categories and geographies. And finally, our capital improved, with tangible common equity increasing more than $100 million over the past 3 months. Looking at loan growth, we experienced more than $360 million of growth in our C&I portfolio. It's about 14% annualized, up from $225 million last quarter. We also saw strong growth in our 1-4 family loan portfolio, about 16% annualized, and moderate growth at about 6% annualized in terms CRE. There's some offset in our owner-occupied and construction development portfolios. But overall, we certainly are pleased to see some of the major categories strengthening in a way that we're very pleased with. Geographically, Utah and Idaho showed the strongest growth, with solid performances from Texas, Arizona and Colorado. It's difficult to be precise about where our loan growth goes from here. There's much uncertainty about the business landscape as we have today. But we believe we'll continue to see moderate loan growth over the next year. We have construction commitments that have been growing somewhat and the equity going in first, and so we do expect that we'll…

Thanks, Harris. Good afternoon, everyone. As noted in the release, we posted net income applicable to common of $62.3 million or $0.34 per diluted common share for the quarter. As we exclude the noncash expense associated with sub debt amortization from our modified sub debt, revenue from FDIC loan discount accretion and the onetime preferred dividend associated with the accretion and the remaining discount on the TARP preferred stock and earnings available to common was $0.46 a share. To give you an idea of what the run rate would've been for the quarter, if we exclude the regular TARP dividend of about $9 million for the quarter, which will not be present in the fourth and future quarters, earnings available to common would have been $0.51 per share, which translates into a return on financial common equity of approximately 10%. Turning to revenue drivers. As Harris noted earlier, we were reasonably pleased with the amount of loan growth, which was relatively broad-based. Origination volumes for new loans as well as renewals increased about 5% from the prior quarter and increased about 17% from the year-ago period. And the pipelines for our various affiliate banks remain fairly healthy. Turning from volume to rate, if we hold product mix constant, the coupon yield on loan production declined at a relatively similar pace compared to the prior quarter. And our experience was fairly consistent with the national data regarding commercial loan pricing. Lenders are indicating that the competitive environment, that's our lenders, that is, are indicating that the competitive environment for larger and middle-sized loans is beginning to show signs of stability. However, small business price competition has increased somewhat in recent weeks, and there are a relatively small number of customers that are qualified to borrow, making the marketplace a bit of…

[Operator Instructions] Our first question in the phone queue comes from Erika Penala with Bank of America.

My first question, Doyle, is on the trajectory of the core NIM going forward. Could you -- you mentioned that the spread compression this quarter was the same as last quarter, but could you remind us at where you're originating your current loans at today?

I'll let James have a look. He's got some data, I'm going to -- on that. I'm going to let him look for it. It has been relatively stable, just a very slow downward drift over the last 6 or 7 quarters. So we're not seeing the average spread over mass maturity cost of funds compacting very much.

And Erika, it really does depend on the loan products and type for commercial business loans. We're looking at yields that are in the high 3% range. Small business loans are in the -- actually in high 4s, low 5s still. So it depends on the size and the product type and so forth. Commercial real estate is about -- oh, I'm sorry, residential and real estate is about 3.5% or so in that range. On -- throughout the overall mix for the company, we had about a 4% yield on a coupon basis, not including fee income, of new origin -- on absolute new originations, that's correct.

And just my follow-up question is on the other side of the balance sheet. Could you give us a sense, and even if you -- the long-term debt cost is still relatively high, and clearly, we've been threatened with this lower-rate environment for longer. Is there something you can do over the next 12 to 24 months in terms of calling this or taking this down? Because it's -- I mean, based on our conversations with our fixed-income folks, you could issue 5-year senior in the low 4%, which is significantly lower than what your long-term debt is costing you right now.

We're keenly aware of that. And without making any promises, we've highlighted in a number of investor presentations that we have both capital and debt that was issued during the crisis, kind of in the period 2009 to 2010, that was very expensive. We did our best to, and I think successfully, either kept those maturities fairly short or built call options into them. We do have another large series of preferred stock Series C that becomes callable in September of next year. We have 8% trust preferred just on the $300 million of that that's callable at any time. And then we have both senior and subordinated debt maturing in 2014 and some in 2015 that's very expensive. It doesn't mature until then, but we could tender for it. It's not callable, but we get tender for it. The question there would be whether the premium that would have to be paid for a successful tender is worth the yield pickup. But I'd finally also note that the market, as you kind of indicated, seems to be pricing our debt and investment grade these days, even though one of the agencies still doesn't have us there, although they have indicated that they're going to review that rating here in the fairly near future. So I think things are still moving in the right direction for us to be able to address some of those things at lower cost. I just can't, particularly as we get ready to go in the CCAR exercise, give you much guidance on exactly when and in what order we'll begin to address those things. But we will. We do expect to address them.

Our next questioner in queue comes from the line of Jennifer Demba with SunTrust Robinson.

You mentioned in your guidance, Doyle, that you thought expenses would be flattish over the next few quarters. Is that sort of the result of ongoing credit-related expenses and those improving steadily, being sort of offset by just maybe more incentives as things get a little bit better? Can you kind of describe the dynamics that may be going on within the individual categories?

I think you pretty well laid it out, almost. I mean, I -- basically, I do think that all the credit-related costs will continue to slowly decline. I mean, OREO is not likely to be 0 every quarter, unlike it was this quarter. But the general trend should continue to be down, but there probably will be some offset to that in salary kind of expenses. I think we've done a pretty good job of controlling salary and related expenses. But the general trend there should be very slowly upward, I would think. And the 2 -- I think the 2 roughly offsetting.

Next questioner in queue comes from the line of Ken Usdin with Jefferies. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: I just want to ask about the excess cash balance position. Now that we're past TARP, you made the payback. Can you walk us through -- you still have about, depending on the period end versus the average balance, $7 billion to $8 billion of cash on the balance sheet earning 27, 25 basis points or so. How are you guys thinking through starting to use that and to redeploy that into loans? And what's the trigger for finally starting to kind of move that route?

Well, loan demand would be a good trigger. I mean, it's still not great. It's better than it was, but it's not great. And I don't think that -- I think dramatically cutting rates in some attempt to stimulate loan demand is likely just to cut rates, not achieve any broader objective. So -- and we still remain pretty cautious on deploying any significant amount of that cash into securities instruments with the duration extension risk of any meaningful amount. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: So, Doyle, even though average loan balances were up $400 million or so this quarter, but cash was flat, so I'm kind of talking about just the -- even within what you've got already, it seems like you're letting deposit growth just kind of still accrue onto the balance sheet, so you haven't gotten a -- is there some cash that's trapped that you can't move away? Or is it just that your continued caution will just prevent any type of remixing on the balance sheet?

As we look at where the cash is coming from, it's mostly coming from noninterest-bearing commercial DDA accounts. And we've tried to manage down the amount of and cost of just about everything else.

Almost $600 million this quarter, and that's...

So, darn, our customers keep wanting to leave more money with us. And we're basically paying nothing for that money except the FDIC costs. And the earnings at the Fed roughly offset that. So it is a dilemma. I mean, the -- I think we can't figure out a whole lot more to do to keep deposits from continuing to flow in, particularly when it's commercial customers being conservative, sitting on cash and not deploying it, and they are growing their businesses in this uncertain environment. And that makes -- despite what we said about some businesses turning more optimistic and beginning to grow and borrow, there are still others that are generating a lot of cash and that are, for the time being, sitting on it and putting it on our balance sheet, which we, in turn, put on the Fed's balance sheet. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: Yes. And then my -- I'll just make my follow-up on the same topic. Is there a proportion of the balance sheet that you still have to keep in the securities book, because to your point about not wanting to extend in the securities portfolio, couldn't you continue to let that part of the book run down? Or are you already at a level where you need it for liquidity and pledging, et cetera?

Well, we don't -- I mean, cash is more liquid than securities. So I -- the -- David, do you want to comment on that at all?

[indiscernible] I mean, we don't have to have a certain level of securities. I mean, you can see here from the balance sheet that the securities are running down each quarter, that's through maturities or through prepayments. And we've done very little purchasing, because the benefit -- I mean, you all know that a 2-year treasury yields less than 25 basis points, I mean -- which is what the Fed is paying us on our Fed [indiscernible]. There are hardly no interest rate risks. It's a problem we talk about and think about every day, but we're submitted to not getting ourselves caught when the interest rates double, but we're living in [indiscernible].

I think it's also fair to say -- I mean, roughly half of our securities today are also not really a source of liquidity. I mean, the CDOs are -- we absolutely think their money's good in terms of how we have them recurring [ph] values we have on our financial statements. But they're not a source of liquidity in the sense that you can go out and find a buyer immediately. So holding a little more cash in lieu of that is, I think, prudent.

Back on Page 4 of the release, you'll notice just over $2 billion of amortized cost of our securities is in that CDO portfolio. And as Harris said, that remains -- while it's improved a bit, it's -- basically, I would characterize it as still highly illiquid.

Next phone question comes from Joe Morford with RBC Capital.

Just a couple of quick follow-ups. First, I guess, on Erika's question on capital plan and thinking about going into CCAR 2013, is the focus likely to be just on redeeming this higher-cost TruPS and refinancing the Series C? Or is there any chance we might see a dividend increase as well?

They -- the -- I mean, we're -- I guess we are mindful that our shareholders, common shareholders, have been long-suffering. And as the trajectory of earnings continues to improve, I think we do at some point want to deliver modest increases to the dividend. But we do have -- I think our equally high, or if not higher, priority is to increase earnings to common that would be dividend-able in the future by reducing these financing and capital costs. We have a lot of capital and -- capital markets and debt markets actions to do over the next 2 years or so, all with the objection -- objective of cleaning up the capital structure and reducing its costs and the debt structure.

I'd also just add -- I mean, I -- if we did anything, I think it's likely to be modest. And especially, well, depending on the outcome of, not just the presidential elections but the elections generally and what's likely to happen with the taxation of dividends beginning of the year, because you could see, effectively, a trebling of the tax on dividend, that income. And that would probably play into our board's thinking about it.

That certainly makes sense. So I guess the other question was can -- do you have any updated thoughts about potential deposit outflows related to the TAG guarantee going away at the end of the year? Anything about that?

What we're not seeing or hearing is a great hue and cry among our commercial customers about that topic. So I guess our thinking is beginning to drift in the direction of, particularly depending on what a couple of rating agencies do, that the expiry of the TAG Program may not be a particularly big event.

Hard to think that it won't have some impact, but I -- but so far, we're not getting a lot of feedback through the grapevine that that's something that's much talked about.

Next phone question comes from Paul Miller with FBR. Paul J. Miller - FBR Capital Markets & Co., Research Division: Now you talked -- you gave some pretty good color about the different regions and what's doing better, what's not. And I think there's a lot of commentary about both Phoenix and Vegas doing much better in homebuilding. But you kind of listed them as the regions doing the weakest of the 5 that you're in. Can you just add a little more color on that? Because there's been a lot of good commentary media reports about Vegas and Arizona.

Well, I said Arizona was actually pretty strong across the board for us. But you are correct, for us, this quarter, Southern Nevada still remains pretty flat in terms of aggregate -- or the net change in their loan portfolio. I don't -- Harris, do you have any recent color on that?

No. I think across the board in Arizona, we're seeing improvement in growth. But the Las Vegas market is decidedly slower. Paul J. Miller - FBR Capital Markets & Co., Research Division: Is the Vegas market slower? And then -- and the other issue, you said that, and you talked about how the energy loans and a lot of your loan demand that you're seeing is well diversified. Are you bidding a lot of housing-related loans? Are they starting to come through or is that -- they're still being muted?

On the residential side, we are seeing some growth there. Is that's what you mean, Paul? Paul J. Miller - FBR Capital Markets & Co., Research Division: No, I mean the homebuilders. I'm talking about the overall derivative effect of a recovering housing market in those areas. Are you starting to see -- when you guys were picking homebuilding in Vegas, I believe, on the derivatives, are you saying -- are you being -- I'm just wondering how much of this loan demand is related to some of the recoveries of those markets.

I would maybe chime in here. We did see a little bit of -- on the C&I side, businesses would have a construction bent to them. We did see a slight increase in the third month of the quarter. So it's hard to say that 1 month is a trend. It's still down, it's still generally pulling our loan balances down off businesses that have construction-related activities.

Our next questioner comes from Ken Zerbe with Morgan Stanley.

Just a question on NIM here. It's -- I know you guys have been pretty clear in the past about -- I think it was roughly 4 basis points of loan compression from the floors that are resetting, and I know there's a couple other things in the quarter that would have driven it down sequentially. Where are you surprised, in terms of NIM discourse? Let me go out on a limb here and say that the NIM compression was a lot worse than what we were expecting, and I'm trying to figure out what was different such that we either may or may not build in another, say, 12 basis points of compression next quarter, if that makes sense?

Well, I think we pointed out -- we've given you 2 sources that would be ongoing pressures that added up to kind of 8 to 10. And yes, it was a little bit more than that. I mean, the additional cash balances that were there for most of the quarter, that probably accounts for -- on NIM itself...

1 to 2.

Another 1 to 2, so you get close to the total. I don't think there's any other single thing that was a particular driver. And then in terms of net interest income, what we've been saying is that we needed net $400 million to $500 million loan growth on average to sort of offset the known pressures. And we kind of got around the bottom end of that and then almost kept core noninterest income stable. So I don't think we're too far off in our guidance. I mean, I -- when you get down to 1 or 2 basis points, it's kind of hard for us to get it that precise, I'm sorry.

Okay. No, that's fine. Just another question I had, in terms of the CDO portfolio, given some of you expect additional gains, and then I guess I'm thinking like the BankAtlantic in fourth quarter, but also from higher prepayments, you'd have more OTTI. When you think about the net number here -- I mean, is it such that the additional cash principal payment gains might offset the OTTI on a net basis? Or is it just too volatile in Q2 [indiscernible]?

All we said is the effect on income in any given quarter may be either positive or negative from that. They probably won't predictably offset each other in any one direction every quarter. But what we have said is that the net effect on tangible common equity of all this should be positive from those effects, because while you have those 2 somewhat countervailing effects on the income statement, the same phenomenon should be increasing the -- or improving the AOCI mark, as it did this quarter.

Next questioner in queue comes from Steven Alexopoulos with JPMorgan. Steven A. Alexopoulos - JP Morgan Chase & Co, Research Division: I know one of the reasons you haven't shown stronger loan growth over the past few quarters has been an unwillingness to match price competition, particularly in markets like California. Are you now being more competitive with price? Is this what's driving loan growth to improve a bit here?

We're trying not to let good customers go over a modest price difference and -- but also trying not to be the price leader on the way down as well. It's a fine balancing act. But yes, maybe we're, at the margin, more determined to keep good customers and not let them get away. But -- and so that probably has some impact on this. But again, as I say, the net effect of all of that on average spreads over mass maturity cost of funds month-to-month has not been very dramatic. It's been very, very incremental.

There's a slide in our last investor presentation, I think, it shows that -- just to match maturity spreads on new production, it's fairly illustrative. And it's pretty flat. Steven A. Alexopoulos - JP Morgan Chase & Co, Research Division: Okay, maybe just to follow up on that earlier comments, you indicated that customers appear more optimistic. It's very different from what we're hearing from some other banks that are less bullish on the loan growth outlook, citing commercial customers pulling back here a bit, given the fiscal cliff. Are you seeing a change in customer behavior across the different banks related to this?

Well, I think the comments were a bit more specific to small business customers. And yes, I mean, when we started putting the script together, I really challenged James on that comment in particular. And -- but he's getting it from a fairly widespread sample of our loan officers with regard to small business. I don't think it applies necessarily to the upper middle market and commercial. So I -- maybe that helps.

Yes, I would just add that the small business lenders as we talked to them around the company have -- when you ask them the question, are things better today than they were 3 months ago, which is different from the question, are things better today than they were 4 years ago, but, no, their comments are fairly consistently unanimous that things seem to be better for the small business customer. They're probably a little bit more bankable today from a balance sheet and earnings perspective, and they are becoming a little bit more optimistic, at least the ones that we're dealing with.

Next questioner in queue comes from John Pancari with Evercore.

Wondered if you could talk a little bit more about the magnitude of the margin compression you expect? I know you indicated you expect some continued pressure, but I'm more specifically wanting to see how you can kind of talk about the benefit of the excess liquidity you have. And as loan growth improves, I have to assume that, that provides Zions with a bit more resiliency to the margin than a lot of the other banks that may not have that benefit of the liquidity sitting on the balance sheet.

We would agree wholeheartedly with that statement. We -- that's part of the being asset-sensitive that -- what we -- if and when the Fed does start to raise rates, I mean, we would expect a couple of things. We would expect deposit rates to [indiscernible] loan repricing in that environment, and we would expect some outflow of that excess liquidity as companies begin to -- the Fed would only be doing that in an environment where economic activity is picking up. And so we would expect a lot of those commercial DDA deposits to begin to flow back out. But we think there's so much of it that we could fund a lot of loan growth without substantial increases in deposit rates, at least, in the early staging of [indiscernible]. By the same token, the fact that we haven't put our mortgage-backed securities or other securities with duration extension risk means that as rates rise, we're not going to have a large pile of what would then become underwater securities that we would be selling at a loss if we needed to generate liquidity. So that's basically the game plan. If the Fed succeeds at keeping rates very low for longer, then it's going to take a while for that to play out. If we see a quicker return over the next year or 2 to economic -- more substantial economic growth, let's say, we -- I think we're very well positioned for that environment.

Well, I guess, also what I was getting at is, barring any move in short-term rates to the upside, just the -- I guess, I wanted to see how you thought about the asset mix shift, just funding loan growth the excess liquidity [indiscernible] earning asset mix shift could provide some stability there.

Well, yes. I mean, we have -- we're earning 25 basis points on that cash. And on -- every loan we put on earns us 400 basis points, plus or minus. So the pickup is 3 75 for every dollar of cash that converts to a loan. That's the basic math. Maybe you're asking that more subtle question than I'm getting. I'll give you one more try.

No, no, that's essentially it. I guess I was just looking for if you could put that into context of the margin compression that you expect through 2013.

Well, yeah, I mean that's -- what we've said is that if can get $400 million to $500 million of average loan growth at kind of current rates consistently, that offsets the margin compression and keeps net interest income stable.

And I would add -- maybe I would add, too, that it's a little bit harder to predict sometimes on margin because, for example, back in January when we first gave guidance about the margin compression in the 4, 5 "basis point per quarter" range, we didn't incorporate in that view a decline in -- a sharp decline in LIBOR rates. So there are a lot of factors at work, sharp decline in residential mortgage pricing as well. So those are some of the considerations that could cause additional pressure. But back at that point in time, we estimated that as you went into 2013, it was 2, maybe, or so basis points per quarter of margin compression throughout 2013. And recent analysis is not suggesting something significantly different than that. And that's, again, on a static balance sheet. It assumes no growth. So...

By the way, this LIBOR decline down to about 30 basis points or so, that's about as -- that's getting close to its low as it's been in over the last 5 years, going back even pre-crisis. So -- and it's short-term LIBOR, so that repricing effect is not one that continues for a long, long time per se. It's probably worked its way through fairly quickly.

Right, okay. And then there's a different topic. As for now, I'll ask about the loan loss reserve at 253 bps of loans here. I just want to get your thoughts on, long term, where that could normalize out at.

I'll -- I'm going to continue to refer to the regulators, the FASB and the SEC, on that question. I'm aware they're having lots and lots of discussions, and the regulators apparently expressing the point of view that companies should have -- maybe have not been cautious enough about releasing reserves aggressively and that, that can't continue. And -- we don't think they were particularly talking about us when they made those comments. And so we're -- I think we'll continue to just be cautious and follow the trends.

Our next questioner in queue comes from Steve Scinicariello with UBS.

Just given the slightly more optimistic tone on loan growth, I'm just trying to separate how much is really demand-driven from better environmental kind of drivers versus how much is driven by you guys feeling much more comfortable now that TARP is behind you, and you can deploy a lot of this excess liquidity. So just kind of curious maybe how much of this more optimistic tone is demand-driven rather than maybe supply-driven.

None of it's really supply-driven. It's demand-driven. TARP -- having TARP -- having repaid TARP had, I don't think, any impact either way on our willingness to lend. We've for quite some time now been turning over rocks, looking for credit-worthy borrowers who wanted to grow and borrow, and that has not changed. What's changed is a little bit more willingness on the part of the few more borrowers to do so.

Good. No, that's good to hear. And then I was just curious, in that vein, I think you said -- mentioned that total loan commitments were up like $400 million last quarter. Just kind of curious what that might be in the third quarter.

I'm going turn to James, because I don't know.

My [ph] commitments were up a couple hundred million dollars this quarter. Over the last, I think -- year-to-date, I think it's up $1.5 billion. So it's up fairly substantially. Some of the biggest commitment increases came in the prior quarter and the quarter before that. They were in part related to construction loans which, again, we mentioned that we think that will cause some loan growth in that category in the future.

Our next questioner in queue comes from Brian Klock with Keefe, Bruyette & Woods. Brian Klock - Keefe, Bruyette, & Woods, Inc., Research Division: Just real quick, I think the -- what's interesting is you guys have a bunch of levers, right? So the excess liquidity is out there that, really it's demand that from customers that can help deploy that. On the capital side and debt side, it's kind of more at your control. I guess what I'm wondering is when you think about your senior debt and the sub debt, the trust preferreds, do you have to wait to CCAR in order to think about tendering for those? Or is that something you think you could do before the CCAR process takes place?

It's a question -- that's a question we're asking ourselves, Brian, and I don't know the answer. It's a [indiscernible]. I mean, it's a good question. I think it's unequivocally true that actions that on net would reduce capital, particularly core Tier 1 kinds of capital, so it would reduce parent liquidity significantly with the -- probably not entertain-able except in the context of the CCAR process upcoming. Whether you could do some things that were -- like we did with earlier this year, with exchanging one piece of preferred for another piece of preferred that were substantially similar, except for a lower cost. Whether you could do some of that is an open question and one that is of interest. Brian Klock - Keefe, Bruyette, & Woods, Inc., Research Division: And then maybe just a follow-up on that, can you update us on liquidity that's at the parent company now and then what kind of dividend capacity you can upstream from the subs?

I think the parent has very ample liquidity. I know it's well -- it's in excess of $0.5 billion with the parent kind of where it's been and where we're targeting it. And all the banks are profitable, and most are upstreaming dividends and some -- there's probably still some but smaller than our recent quarter's repatriation of capital from some of the subs still yet to come. So I don't think cash at the parent, per se, is constrained on the common dividend. It's one of the other things we talked about earlier in response to a question. Brian Klock - Keefe, Bruyette, & Woods, Inc., Research Division: So it sounds like you've got the ability to access that cash. It's just the matter of working it -- working through the whole CCAR, the regulators.

Right. Cash at the parent is almost $600 million. Actually, it's about $580 million at the end of the third quarter.

And as we -- the net parent cash needs now both for TARP repayment and for TARP dividends are -- they've declined substantially and, as we address some of these other higher-cost things, will continue to decline. So we're feeling pretty good about the parent cash.

And with that, ladies and gentlemen, that does conclude our times for question. I'd like to turn the program back over to Mr. Abbott for any additional or closing remarks.

So again, thank you very much for joining us this afternoon. I'll be happy to take follow-up questions if you have them, and we'll see you at another investor conference or on the next analyst call next quarter. Thanks again.

Thank you, gentlemen. Again, ladies and gentlemen, this does conclude today's conference. Thank you for your participation, and have a wonderful day. Attendees, you may disconnect at this time.