Q3 2022 South Plains Financial Inc Earnings Call
[music].
Good morning, ladies and gentlemen, and welcome to the South Plains financial incorporated third quarter 2022 earnings conference call. During today's presentation, all parties will be in a listen only mode.
Following the presentation. The conference will be opened for questions with instructions to follow at that time.
This conference call is being recorded I would now like to turn the conference over to Mr. Steve Crockett, Chief Financial Officer, and Treasurer of South Plains Financial. Please go ahead Sir.
Thank you operator, and good morning, everyone. We appreciate your participation in our third quarter 2022 earnings conference call with.
With me here today are Curtis Griffith, our chairman and Chief Executive Officer, and Corey News from our President.
A replay of this call will be available on our website within two hours at the conclusion of this call until November four 2022.
The slide deck presentation to complement today's discussion is available on the news and events section of our website.
Before we begin let me remind everyone that this call may contain forward looking statements and are subject to a variety of risks uncertainties and other factors that could cause actual results to differ materially from those anticipated future results.
Please see our safe Harbor statement in our earnings press release that was issued this morning and on slide two of the slide deck presentation available on our website.
All comments made during today's call are subject to those safe Harbor statements.
Any forward looking statements presented herein are made only as of today's date and we do not undertake any duty to update such forward looking statements, except as required by law.
Additionally, during today's call we may discuss certain non-GAAP measures, which we believe are useful in evaluating our performance.
A reconciliation of these non-GAAP measures to the most comparable GAAP measures can also be found in our earnings release and on slide 22 of the slide deck presentation.
At this point I'll turn the call over to Curtis.
Thank you, Steve and good morning.
On today's call I will briefly review the highlights of our third quarter 2022 results, which we believe are a clear validation of our ongoing strategy to grow the Bank Corp.
Cory will discuss our loan growth in more detail as well as reviewed the credit profile of our portfolio, which remains strong Steve will then conclude with a more detailed review of our Q3 results.
So start there were five key points that I hope you will take away from today's call.
First we spoke to our business being at an inflection point on last quarter's call and I'm proud to say that our results this quarter validate that Peter.
Second we delivered 17% annualized loan growth in the third quarter driven by strength in both our community markets and our major markets of Dallas, Houston and El Paso.
Third this strong loan growth is building the earnings power of the bank and we continue to have liquidity to fund further loan growth.
Fourth the credit quality of our portfolio continued to improve through the third quarter and we believe we are well positioned for an uncertain economy.
Lastly, we continue to believe that our shares have been trading below intrinsic value and remained active with our share repurchase program, having bought back approximately 366000 shares in the third quarter.
Looking at our results on slide four of our earnings presentation. We delivered net income of $15 $5 million or <unk> 86 cents per diluted common share for the third quarter of 2020 to.
This compares to net income of $15.9 million or 88 cents per diluted common share in the second quarter of 2022, and $15.2 million or <unk> 82 cents per diluted common share in the year ago third quarter.
It's important to highlight that our results over the last three quarters have included certain items, which are making comparisons difficult as well is obscuring the improving earnings power of the bank.
These items include large recoveries negative provisions for loan losses, and fair value increases in our MSR portfolio.
Looking at this in more detail.
Our second quarter 2022 results benefited from 24 cents per share of these items net of tax.
Which we had discussed on last quarter's call.
Likewise, our third quarter results benefited from approximately 10 cents per share of these items net of tax as a result, our third quarter earnings per share increased by approximately 19% from the second quarter of 2022 when normalizing for these items.
We recorded a negative provision for loan loss of $782000 in the third quarter of 2022, which was triggered by a loan loss recovery in our energy segment of $823000 combined with pay downs of $19.6 million and our hotel portfolio over.
Half of which those pay downs was adversely classified.
The improving credit quality of the portfolio largely offset the reserves required for the new organic loan growth experienced during the quarter.
Looking forward, we remain well reserved for an uncertain economic outlook given that our allowance for loan losses ratio is 34 basis points higher than pre pandemic levels.
Nevertheless concerns regarding forecasted economic conditions continue to increase due to the rising interest rate environment and persistent high inflation levels in the United States and our markets and provisions for loan losses may be necessary in future periods.
While we expect economic growth to moderate as the federal reserve continues to raise their target benchmark interest rate loan demand remained strong through the third quarter as we grew our loan portfolio, a 17% annualized from the second quarter of 2022.
Our loan growth was driven by gains in both our community markets as well as our major metropolitan markets.
Importantly, the scale that we have achieved in our lending portfolio has more than offset the declines in our mortgage business. Our mortgage banking revenues declined to 11% of bank revenues in the third quarter of 2022.
This is significant as the core earnings power of the bank is now readily visible and expect it to continue to grow through year end.
Additionally, we continue to have liquidity to fund future loan growth as our loan to deposit ratio was 77, 7% at September 32022, as compared to 75, 3% at the end of the second quarter of 2022.
We have historically been comfortable running the bank and a loan to deposit ratio in the mid to upper 80% range, which provides significant capacity for future loan growth as we work to redeploy our low cost deposits into higher yielding commercial loans. This liquidity represents significant earnings potential as we continue to.
What are yielding loans over time.
Overall, I'm very proud of our accomplishments as we have grown our lending team increased share across our markets and delivered results above our expectations.
Most notably we have achieved 10.4% loan growth year to date, which is ahead of our mid to high single digit loan growth guidance for the full year 2022.
We have improved the earnings power of the bank through the year our share price has not fully reflected this improvement as we believe our shares have been trading below intrinsic value.
As a result, we accelerated our share repurchases in the third quarter, having bought back 366000 shares as compared to 257000 shares in the second quarter year.
Year to date, we have repurchased approximately 730000 shares under our stock repurchase program.
Returning a steady stream of capital to our shareholders through our stock repurchases and dividend remains a priority for our management team.
Along those lines our board of directors authorized a 12 cents per share dividend as announced earlier this week.
This will be our 15th consecutive quarterly dividend to be paid on November 15, 2022 for shareholders of record on October 31 2022.
To conclude we remain cautiously optimistic as the Texas economy continues to experience healthy economic growth and low unemployment.
While we expect growth to moderate we are not seeing concerning signs in our portfolio nor in our markets.
The credit quality of our loan portfolio is strong and we continue to underwrite the more conservative assumptions, including not sacrificing credit quality for a loan growth.
We believe that we are in an advantageous position and remain excited with the opportunities that lie ahead.
Now, let me turn the call over to Corey.
Thank you Carlos and good morning, everyone. It's hardest touched on loans held for investment increased during the third quarter of 2022 <unk> hundred.
$109 $9 million or 17% annualized compared to the second quarter of 2022 as outlined on slide nine our loan demand remained primarily in the commercial real estate market residential mortgage and consumer auto overall loan demand was strong. Despite the noted pay downs in our hotel segment, which is not a growth sector for us.
Our loan yield in the third quarter of 2022, with 5.12%, which compares to $5 five 7% in the second quarter of 2022 that said it is important to adjust our second quarter loan yield for the $4 $4 million of large recoveries and prepayment penalties that we experienced.
When adjusting for those items, our second quarter 2022 loan yield was $4 eight 8% as Curtis touched on the improving trends in our results over the last three quarters had been obscured and we believe it is important to adjust for these benefits in order to properly model the growing earnings power of the bank.
The rise in our loan yield in the third quarter also reflects our concerted effort to proactively price new loans to account for a higher interest rate environment combined with the rise in funding costs, which we have started to see through the third quarter.
We are working hard to stay ahead of the market, while also maintaining our competitive position, which remain a focus as the federal reserve continues to aggressive interest rate increases and tightening policy.
As we discussed in our second quarter 2022 call. We are a community retail bank and our smaller markets and primarily in commercial banking.
Markets of Dallas, Houston, and El Paso as outlined on slide six our strategy is to redeploy our excess liquidity consisting of low cost deposits from our community oriented markets.
Our major Metro top metropolitan markets to accomplish this we have added experienced commercial lenders, who share our culture values and who focus on developing a long term customer relationships done the right way.
Our expansion and growing scale in our metropolitan markets is a key factor to the accelerating loan growth that we have delivered through the year combined with the share gains that are community bankers continue to deliver it.
As outlined on slide seven we grew loans in our metropolitan markets about $30 million in the third quarter of 2022, representing 14.6 annualized growth as compared to the second quarter of 2022.
Year to date, we've grown our loan portfolio by 15, 2% to $849 million in our major markets, which has strongly contributed to the banks, 10% total loan growth of the three first three quarters of the year, our growing scale and presence in the metro markets provide us with optimism about our ability to sustain mid to high single digit loan growth overall.
Additionally, we have the ability to add space at bankers in our metro markets as growth opportunities present themselves.
As Curtis touched on we have seen loan growth moderate given the rapid rise in rates as borrowers need to put more equity into deals and builders are beginning to offer more incentive to buyers to keep those going.
That said inventory remains constrained and the Texas economy is still very healthy economy transitions to a higher market interest rate environment, we were proactively underwriting to more normal levels and asking for more money down on new loans as we focus on disciplined growth. Likewise, we continue underwriting to lower energy prices in the Permian basin to it.
Sure we avoid potential problems, if an economic downtime at hers.
We are continually stress testing our loan portfolio and remain pleased with the improving credit quality that we have experienced year to date overall, we want to enter the next downturn in an advantageous position and remain pleased with our asset quality liquidity and strong capital position.
Skipping ahead to slide nine our indirect auto loan portfolio increased by $7 million to $289 million in the third quarter of 2022 as compared to the second quarter of 2022.
While there was growth in this sector of the level of increases decline given the rising market interest rate environment.
Importantly, we have maintained a disciplined approach to underwriting is 78% of the indirect auto loan portfolio originated where the credit score of 690 or better.
This strong credit profile positions, the port folio for resilience across a varying economic cycles.
Turning to our mortgage business on slide 10 mortgage loan originations decreased 26, 6% to $152 million in the third quarter of 2022 as compared to the second quarter of 2020 two as a result of rising market interest rates combined with normal seasonality as we discussed last quarter, our strategy with mortgage banking business.
It's been delivering.
We have been aggressively managing this business for profitability as volumes decline, while focusing on growing our commercial lending platform across both community and Metro markets. It's part of as commented. We believe we reached an inflection point in the second quarter of 2022, where a growing loan portfolio would generate improving interest income and return.
The bank to growth despite the decline in our mortgage banking business that can clearly be seen in our results. This quarter. Our mortgage business is now at a level, which may no longer have a material impact on our results positive or negative.
We remain in the business as long as it profitable and drive incremental business in the way of cross sell.
Turning to slide 11, we generated $29 million of noninterest income in the third quarter of 2022 compared to $18 $8 billion in the second quarter of 2022. This increase was primarily the result of $2 $1 billion in legal settlement and seasonal increase of $3.3 million from insurance activities.
In our insurance business.
For the third quarter of 2022 noninterest income was 37% of bank revenues as compared to 34% in the second quarter of 2022.
To conclude our organic growth strategy has been deliberate and focused as we had experienced commercial lenders in our major metro markets, where we had had the infrastructure in place and can quickly scale.
These markets represent large opportunities for commercial loan growth as well as other services and we will continue to selectively add to our team to further build our presence in these markets.
Although demand has remained robust we have experienced a moderation as the federal reserve continues to raise their target benchmark interest rate.
We remain cautious, but optimistic looking to the fourth quarter of the year as cash balances remain healthy for both our business and consumer customers and we continue to see healthy cash levels go into new deals.
I would like to now turn the call over to Steve.
Thank you Corey starting on slide 13, net interest income was $35 $1 million for the third quarter of 2022 as compared to $37 1 million for the second quarter of 2022.
This comparison to the second quarter is skewed by the $4 $4 million of large loan recoveries and prepayment penalties that were recognized during the second quarter. Excluding these one time benefits net interest income increased by $2 $4 million, primarily as a result of the increase of $122 million in average loans outstanding.
<unk> combined with higher interest income received on securities and other interest earning assets in our portfolio as a result of the rising market interest rate environment.
Looking forward, we continue to believe that we're well positioned for our net interest income to benefit as we grow our loan portfolio and benefit from the anticipated rise in interest rates through the fourth quarter and potentially into the year ahead.
Our net interest margin calculated on a tax equivalent basis was three 7% in the third quarter of 2022 as compared to 4.02% in the second quarter of 2022.
Excluding the $4 $4 million of large loan recoveries and prepayment penalties that we recognized in the second quarter. Our net interest margin was $3 five 4%, which is a better comparison to the three 7% in the third quarter of 2022.
The improvement in our net interest margin as compared to the second quarter was driven by our strong organic loan growth combined with the rising market interest rate environment.
Our average cost of deposits was 52 basis points, an increase from 27 basis points in Q2.
During the third quarter, we made the decision to proactively raise our deposit interest rates as we started to see increased competition for deposits in our markets. We are being strategic in how we raise interest rates in order to maintain our deposit relationships in a rising interest rate environment.
Looking forward, we expect our funding cost to continue to gradually rise as the federal reserve continues to raise their target benchmark interest rate.
Turning to slide 14, total deposits increased $34 $7 million in the third quarter at $3 $46 billion as compared to the second quarter of 2022.
As we continue to benefit from our strong customer relationships, which were which are driving organic growth.
Additionally, we continue to experience some positive mix shift in our deposit base as noninterest bearing deposits increased to 36, 5% of total deposits in the third quarter of 2022 as compared to 34, 9% in the second quarter of 2022.
Turning to slide 15, we continue to believe that our loan portfolio remains appropriately reserve as our allowance to total loans was 1.47% at September 32022, as compared to 1.54% at June 32022.
As Curtis touched on we recorded a negative provision for loan loss of $782000 in the third quarter compared to no provision for loan losses in the second quarter of 2022.
Importantly, we believe we remain well reserved for an uncertain economic outlook given that our allowance for loan loss ratio was 34 basis points higher than pre pandemic levels.
Overall, we continue to experience improving credit metrics and our loan portfolio with particular improvements in our hotel portfolio as nonperforming assets to total assets declined slightly to 19 basis points in the third quarter of 2022 from 20 basis points in the second quarter 2022, and 33 base.
This points in the first quarter of 2022.
Nevertheless concerns regarding forecasted.
Economic conditions continue to worsen due to the rising rate environment and persistent high inflation levels in the United States and additional provisions for loan losses may be necessary in future periods.
Skipping ahead to slide 17, our noninterest expense was $37 $4 million in the third quarter of 2022 as compared to $36 $1 million in the second quarter of 2022.
The increase was primarily due to an additional $937000 in insurance Commission expense as a result of the higher revenue from insurance activities.
Partially offset by a decline in variable mortgage related expenses.
In accordance with a reduced demand for mortgage loan originations, which Corey discussed.
Looking to the fourth quarter of 2022, we expect noninterest expense to be slightly better than the third quarter of 2022 is our elevated legal expenses largely behind us given the legal settlements that were reached in the third quarter of 2022.
That said, we expect to continue to experience wage pressure to retain personnel given the current inflationary environment, which may be a headwind in the year ahead.
Moving ahead to slide 19, we remain well capitalized with tangible common equity to tangible assets.
8.00% at the end of the third quarter of 2022, a decline from 860% at the end of the second quarter of 2022.
The decline was mainly driven by a $26 $7 million decrease in the fair value of our available for sale securities and related fair value hedges net of tax.
Especially offset by net income after dividends paid $13 $4 million.
And fair value of our Securities was a result of the increase in market interest rates during the period.
Tangible book value per share decreased by 89 cents $18.61 during the third quarter of 2022.
I will now turn the call back to Curtis for concluding remarks.
Thank you Steve to conclude our third quarter results validate our view that our business has reached an inflection point and the bank is now positioned for additional growth.
Our strategy to expand our lending platform and our metro markets is driving improved loan growth as we quickly build scale in Dallas, Houston, and El Paso, while our community bankers continue to increase our share in those markets.
Importantly, we have liquidity to put to work in higher yielding loans, which will serve to further improve the earnings power of the bank.
As we grow we will see a return to improve which we believe will increase the value of south plains well.
While the economic outlook remains uncertain, the Texas economy remains healthy and we have maintained our disciplined approach to underwriting.
Credit profile of our loan portfolio has continued to improve and we remain in an advantageous position for whatever the future might hold.
I would like to thank our employees for their hard work and commitment to our customers and communities. Once again this quarter, none of our success is possible without them.
See you again for your time today operator, please open the line for any questions.
Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
A confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Our first question comes from Brady Gailey with K B W. Please proceed with your question.
Thank you good morning, guys.
Turning bright morning Brady.
So it's good to hear that expenses will be down a little bit linked quarter in the fourth quarter, but you know I I heard the comment on wage inflation, which I know everybody is saying so how how do you. All think about you know the level of expense creep that we could see into 'twenty or 'twenty three.
I'll have Steve talk about that when he has been running the numbers for us.
Yeah. So.
As far as what what we're showing to Q4.
We definitely expect to see that lower than where we were in.
In Q3, as we get into 'twenty 'twenty. Three are we still think that will be a flat to slightly better than the than the run.
Run rate there that we were showing in Q3.
You know that we'd be able to offset some of that personnel.
Expense due to inflation was with other cost saves that we got and also including the reduced legal that we that we spoke to.
Alright.
And then it was great to see the share repurchases I know year to date to repurchase about 4% of the company.
How do you think about that kind of continuing at this pace of buybacks because you still have excess capital.
We are potentially headed into a recession, how do you think about buybacks into 'twenty two 'twenty three.
Well our board is going to have some good discussion on that at our next meeting.
We will likely re authorized repurchase program, but I also would think that.
Given the potential recessionary fears issues out there and frankly, where our stock prices improved as well.
B b level, the speed of repurchase might be slowing a little bit.
But I think we will still stay in the market as long as we feel like we have.
Slightly undervalued stock.
Alright, and then finally for me you know I know Lubbock can be a fairly competitive market when it comes to deposit rates.
You know how deposit rates moved up in the quarter.
So.
What should we expect on your how much those deposit rates should continue to go up next quarter and into next year.
You mean this is corey so I mean.
There's no question that we're going to see some increase in rates with everything that's going on you know, we're not seeing stuff really crazy locally.
There was a little bit of movement early on but its not getting out of hand, which is a good thing, which kind of makes you feel good about the marketing and the competitors that we've got we know that some of the subs going to increase some I mean, if you look at the expectations that where we kind of thought it was it's Friday line.
And we talked about last quarter, I mean, where we're offering some additional products that we've got in that in other markets that we haven't been active in in the past and we're seeing some results out of that so yeah. We will see some increase but I don't think it's going to get out of hand.
So everything that we're seeing we still think we can hold about data that we've talked about it being 50 or better on it but there's another thing here locally Oh, you're aware of it.
Obviously, we talk about more from the loan side, but the recent M&A activity in our markets here that prosperity is done.
We think that might also tend to lessen some deposit pressure deposit pricing pressure out here as well.
Those transactions moving forward so reduction in the number of competitors fighting over a limited pool of deposits is probably a good thing for us.
Okay.
Yeah that makes sense alright, thank you guys.
Thanks, Brian .
Our next question is from Brad Milsap with Piper Sandler. Please proceed with your question.
Hey, good morning, guys.
Right.
You guys addressed a few of my questions already but just did want to follow up on the deposit beta discussion.
I hear you say correctly that you seek 50% or less it would would that'd be total deposits or interest bearing deposits. How do you. How do you think about that that 50% beta number that you just put out there.
Oh, that's all interest bearing.
Okay.
Okay, and when we do have a nice DDA numbers are but some of ours are somewhat seasonal.
For various reasons, including public funds and others. So that's that's one thing that Oh.
DDA numbers will move up and down for us, but where we're also trying to just add customer relationships Springfield DDA accounts and as we go with that we're still are big believers in what we're doing in Treasury management and by reaching out not only here locally, but also in our metro markets with iOS.
Over time, I think you'll see that the average of the BBA piece continue to grow.
But don't be surprised if you see it bounce up and down a little bit quarter to quarter.
Sure.
The flip side it looked like your loan beta on a core basis was somewhere around 25%. It does look like you're putting a lot of CRE you know whats your with your new lenders. Just curious is that is that a kind of the right number to think about you know as the fed continues to increase you'll see that type of lifting and your loan yield going forward.
Yeah, I mean, we're all set here you know.
Consciously wanting to answer that.
We're getting good yields on the loans that we're putting on that that's the beauty of it I mean from a from a pipeline standpoint, when we look at that to bring it together pipeline is still strong as it's moderating signs I mean, there's no question.
But.
We're we're probably where we're seeing.
Some of the biggest challenges is on our own underwriting, making sure that we're comfortable with what we're bringing in here and it's the way we're stress testing. This stuff. So we're getting we're getting good yield on the stuff that we're putting on.
Okay.
Great and then.
Just finally on <unk>.
So it maybe a couple of days on on insurance revenue I know the third quarter is always a big win for you guys, but you know you're you're tracking for.
For growth over 20% year over year, or which is up which is a pretty big number I know, it's a good you know insurance market and yours is focused on egg.
Anything else that would be driving that or do you think he kind of pull back to some kind of a more typical you know high single digit you know, 910% kind of growth rate.
In 'twenty three or is there something out there that makes this more sustainable.
Well I'll start and then I'll, let like Paradise, Corey jumped in as well I know some of that just had to do with with with the timing there was a little bit of a.
Revenue that might have typically come in in the fourth quarter that came in in the third quarter that pushed that number up a little bit I mean, they did have a overall.
I think they they had better better revenues than last year, but I don't know that that's anything that were projecting to show increases in the in the upcoming year from from from what we've seen now.
Part of that is.
We do a really good job of diversification across a number of states.
So a lot of there's a lot of that growth comes back on how what the year looks like as far as loss rates and things like that we don't take any underwriting risk never have we're not going to but you still from a from a profit sharing position you kind of look back at how the year turned out.
It depends on we got to look back at how the overall year turns out to see if you go to look at that kind of increase next year, but if you look at the footprint of how we're expanding the number of agents and stuff yes. It is.
It's good we're pleased with it it's a good business in place remember that virtually all of that what we report as insurance income is tied to the federal crop insurance program and as Corey was mentioning we do get some nice profit sharing on that but those are that's related to underwriting games at the companies that we write for and.
Well 2021 was a very good year for those companies and therefore, we got a nice.
Check coming at this time.
2022 there hasn't been good in many areas not entirely across the country, but they definitely have some underwriting losses.
Right now our own forecast and it will probably be down at least slightly for 2023 same period whenever there was a profit sharing checks do come in.
That's on the profit side not on the overall base revenue side, we continue to grow that.
Right right, Okay, and then and then maybe final question kind of more housekeeping.
Of course, you mentioned the kind of 10 cents. This quarter of what you might consider you know non run rate items can.
Can you tell me kind of what encompass instead I'm curious.
Was there any type of an MSR write up this quarter I mean, I saw the $2 1 million of litigation proceeds but.
Just making sure I didn't miss anything else that you know should be pulled out either positively or negatively in your mind.
Steve I believe you indicated making it permanent but 400000 in the MSR gains for this quarter, so not a big number.
So yeah, that's that's in there.
Yeah, So Brad Brad we on the legal settlement, we did a net off some of the increased legal expense.
Debt that we had in the core in the quarter related to that so that that that kind of lowered that number just a little bit in the coming up with a 10 set number and we did have a cobalt about glass recoveries not not on the level that we did in Q2 on one wash recoveries, but we did have some in Q3 as well.
Got it got it so but that was as you mentioned in response to Brady's question. Some of those legal expenses are going to come out in the fourth quarter.
Which which are kind of drives your guidance for for lower expenses in the fourth.
Yes, Sir.
Okay, Okay, great. Thanks.
Thanks for the color appreciate it.
Thank you Brian Thank you.
We have reached the end of the question and answer session I'd now like to turn the call back over to Curtis Griffith for closing comments.
Thank you operator, and thanks to all of you on the call today for your time I am proud of our results again this quarter, we are delivering on our strategy to organically grow the bank.
And here with disruptions from M&A in our community markets are really adding some great opportunities for our lenders to increase our market share and as we just discussed probably pick up some deposits as well our lenders in our metro markets are continuing to grow their portfolio was bringing on strong customer relationships to bank.
Our mortgage still profitable, but now down to the level that you won't meaningfully impact results positively or negatively going forward, the earning power of our core business really does continue to grow and so we are optimistic about the future.
Our markets do remain healthy, but I think our activity will moderate as the federal reserve continues to raise rates well remain focused on the credit profile of our loan portfolio, which continues to be very strong. So thanks again.
Everybody for your time and for your interest and South Plains financial.
Okay.
This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.