Q1 2025 Simmons First National Corp Earnings Call
All participants will be in listen-only mode.
Should you need assistance? Please signally conference specialist by pressing star, then zero on your telephone keypad.
After today's presentation, there will be an opportunity to ask questions
Speaker Change: To ask a question you may press star than one on your telephone keypad. To withdraw your question, please press star than two. Please note this event is being recorded. I would now like to turn the conference over to Ed Bilek, Director of Investor Relations. Please go ahead.
Speaker Change: Good morning and welcome to Simmons First National Corporation's first quarter 2025 earnings call. Joining me today are several members of our Executive Management team, including Chairman and CEO , George Makris, President J. Brogdon, and CFO , Daniel Hobbs.
Speaker Change: Today's call will begin with opening remarks followed by a Q&A session. Before we begin, I would like to remind you that our first quarter earnings materials, including the earnings release and presentation deck, are available on our website at SimmonsBank.com under the investor relations tab.
Speaker Change: During today's call, we will make forward-looking statements about our future plans, goals, expectations, estimates, projections and outlook, including among others.
our outlook regarding future economic conditions.
Speaker Change: These statements involve risking uncertainties and you should therefore not place undue reliance on any forward-looking statement as the actual results could differ materially from those expressed in or implied by the forward-looking statements due to a variety of factors.
Speaker Change: Additional information concerning some of these factors is contained in our earnings release and investor presentation furnished with our Form 8K yesterday and our Form 10K for the year ended December 31st, 2024, including the risk factors contained in that Form 10K.
Speaker Change: These forward-looking statements speak only as of the date they are made, and Simmons assumes no obligation to update or revise any forward-looking statements or other information.
Speaker Change: Finally, in this presentation we will discuss certain non-GAAP financial metrics we believe provide useful information to investors.
Additional Disclosures Regarding non-GAAP Metrics [inaudible]
Speaker Change: including the reconciliations of those non-GAAP metrics to Gap are contained in our earnings release and investor presentation which are furnished as exhibits to the form 8K we filed yesterday with the SEC and are also available on the investor relations page of our website, SimmonsBank.com
Speaker Change: Before we begin the Q&A, I'd like to turn the call over to our president, Jay Brogdon, for some opening remarks.
Jay Brogdon: Thanks, Ed. I appreciate everyone joining us on the call this morning.
Speaker Change: I know we typically go right into Q&A, but I think it's important to provide clarity regarding certain asset quality actions we undertook in the quarter, as well as to highlight the underlying strength of our top one results.
Jay Brogdon: My comments will be relatively brief, and we'll touch on trends within three broad categories – balance sheet, earnings and credit.
Jay Brogdon: Starting with the balance sheet, total period and loans were up 2% on a linked quarter annualized basis. This level of growth was consistent with our outlook. However, average loans were down for the quarter as most of our funded growth was back in unloaded.
Jay Brogdon: Our commercial loan pop line was up 43% linked quarter and at its highest level since the second quarter of 2022.
Jay Brogdon: We remain cautious about long growth in the current macro backdrop, but we're pleased with the ability of our borrowers to lock in attractive economics and move forward with planned investments throughout Q1.
Jay Brogdon: Shifting to the right hand side of the balance sheet, total deposits were down slightly on a length, quarter basis, due to reductions in brokerage funding.
Jay Brogdon: Customer Deposits grew 183 million during the quarter, roughly 4% linked quarter annualized, as we continued to see a positive remixing into lower cost transaction accounts.
Jay Brogdon: Moving to earnings, from a top-line perspective, total revenue was up 1.1 million linked quarter despite fewer days in the first quarter of 2025.
Jay Brogdon: This was our fourth consecutive quarter delivering top-line adjusted revenue growth and net interest margin expansion.
Jay Brogdon: First quarter met in Prismargin was 2.95% Up 8 Bips, Length Quarter, and Up 29 Bips, Year Over Year, Primarily driven by 19 Bips Declan in Total Funding Cost, Length Quarter.
Jay Brogdon: We continue to benefit from fixed rate loan repricing and expect this to be an ongoing tailwind.
Jay Brogdon: Non-interest income grew 6% 1½. We delivered strong, swap fee income in our Q1 loan production as well as diversified growth from our other fee-based businesses.
Jay Brogdon: Adjusted non-interest expense increased 4.3 million linked quarter, including a customer deposit fraud event that involved entities affiliated with a borrower whose credit relationship was placed on non-accrual this quarter.
Jay Brogdon: Excluding this item, adjusted non-interest expense would have told 139.3 million down slightly from force quarter 2024 levels and reflective of our continued expense management discipline.
Jay Brogdon: For some time now, you've heard us say that our focus is on soundness, profitability and growth, and in that order.
Jay Brogdon: This first quarter reflected our continued commitment to soundness, as well as Simmons' conservative nature when we have historically tackled potential challenge credits early and aggressively.
Jay Brogdon: To that end, and moving the credit, we migrated two specific credit relationships to non-performing in the quarter, and boosted our level of specific reserves associated with each credit. These relationships have been on our classified list for some time.
Jay Brogdon: The first credit was originated pre-pandemic and relates to a hotel property in downtown St. Louis and it represents our only credit in the downtown area.
Jay Brogdon: This is a $27 million loan that has been in our classified total since early 2021, primarily due to the pandemic and subsequent deterioration of business and consumer activity in downtown
Jay Brogdon: The property security of the credit remains open and operating and we believe is entering seasonally stronger occupancy and financial performance with spring and summer months ahead.
Jay Brogdon: We have recourse to the operator and continue discussions on appropriate resolution strategies based on current conditions and market valuations. We believe the level of specific reserves we have in place represents a very conservative mark against any possible exposure.
Jay Brogdon: The borrower is part of a larger franchise operation that involves multiple entities with multiple brands across a broad geography.
Jay Brogdon: Late in the quarter, we discovered activity and deposit accounts of entities affiliated with our borrower that gave us concern. Upon further investigation, we determined there was a fraudulent activity occurring in those accounts. And as a result, we recorded a $4.3 million fraud.
Jay Brogdon: We are exploring our rights and remedies with respect to this situation, including potential opportunities for some level of recovery in future periods.
Jay Brogdon: However, considering the fraud event and the global cash flow challenges experienced by the borrower
Jay Brogdon: We moved the relationship to non-accrual and increased our reserve levels as of 331. We have personal recourse to the principle, and we are in active discussions regarding the best possible outcome for the night.
Jay Brogdon: In prior quarters, we carried roughly 30% specific reserves on each of these two relationships.
Jay Brogdon: Due to recent developments, we increased our specific reserves to approximately 60% for each relationship, which resulted in additional provision expense of 15.6 million in the quarter.
Jay Brogdon: As a result, total provision expense for the quarter was 26.8 million, and our ACL ratio increased to 1.48%.
Jay Brogdon: In both cases, we believe we are exercising a proactive and conservative approach to address these two situations.
Jay Brogdon: Importantly, and not to overlook the serious nature of credit deterioration, we believe these situations are unique to these particular borrowers, and we believe our overall loan portfolio remain healthy.
Jay Brogdon: To illustrate this point further, I will outline a few portfolio statistics. Past due loans were 21 basis points as of $3.31, down from 22 bps at $12.31.
Jay Brogdon: NPLs increased 89 dips in the quarter. However, absent the two specific relationships, non-performing loans to pawn 5 dips linked quarter to 60 basis points.
Jay Brogdon: Net Charge Offs for the Quarter were 23 Bips compared to 27 Bips in Q4 of 2024.
Jay Brogdon: As I reflect on recent weeks, it seems like the word of the day is uncertainty. Amidst this challenging backdrop, I will conclude my remarks this morning with three things we believe about Simmons as we look to the rest of 2025.
Jay Brogdon: Number one, our original 2025 outlook that calls for 3% plus positive operating leverage and employs mid-teens year-over-year growth in PPR remains intact.
Number two.
Jay Brogdon: Our net interest margin could cross 3% sooner than originally anticipated given positive trends and customer deposits and favorable asset repricing. I will also remind you that our 2025 outlook contemplated only one rate cut in Q4 of this year.
Jay Brogdon: Number three, we feel very good about our asset quality outlook for the remainder of the year. We're confident in our level of reserves based on today's circumstances. Thank you very much.
In March, our bank celebrated its 122nd year.
Jay Brogdon: And we believe we are well positioned to navigate even the uncertain times with a high level of confidence in the future of Simmons. I will now turn the call back to the operator and we look forward to answering your questions.
Speaker Change: We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using your speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question.
Jay Brogdon: Please press star then two. At this time we will pause what laterally to assemble our roster.
Speaker Change: The first question comes from David Feaster with Raymond James. Please go ahead.
Hi. Good morning, everybody.
Morning, David.
Speaker Change: Resolution by end of year in the guidance slide, but I'm just kind of curious your expectations for the timeline of potentially resolving these.
Speaker Change: Yeah, David. I'll respond on that at least initially here. So I would say, you know, the fact pattern could be a little different between the two situations on the downtown St. Louis Hotel.
Speaker Change: Again, they're entering as we've indicated in the seasonally stronger months here.
Speaker Change: We'd probably like to see some of that seasonality come into the mix as we evaluate our options there.
Speaker Change: I think in any scenario, we'd like to see that one resolved before the end of the year but again, if it benefits us to be patient around that situation, we'll allow that to happen to get to the best kind of net result in terms of recovery around that or best dollar.
Speaker Change: However, you know, the fraud-related activity, you know, is not something that we anticipated. It happened late in the quarter, so we're still early in, you know, our analysis of that situation, both as it relates to the, you know, the fraud event and potential recovery there as well as, you know, resolution.
Speaker Change: of the credit relationship itself. So again, we're going to be as proactive as possible and we want to move these, you know, out of the bank as quickly as possible.
Speaker Change: But we're going to be thoughtful in how we do that and make sure that we've got the best possible path forward so I think that the short answer to your question is we'd love to get them out this year but they're both going to have some timeline associated with them and in any scenario we think whatever charge off risk is there is adequately covered in our level of specific reserves today.
Raids. I guess the first part of my question is...
Speaker Change: Can you just touch on what's driving that? Where are you seeing opportunities and just the kind of pulse of the client from your perspective and then secondarily? [inaudible]
Speaker Change: How was that pipeline shifted early in the second quarter and your thoughts on pull through and whether you started to see any of that fall out just kind of given to you Jamie Diamond's words of the kerfuffle in the market. I mean, it's just kind of curious your thoughts on that.
Speaker Change: Yeah, so I would say that we're pretty cautious about the kerfuffle in the market ourselves.
Speaker Change: But, you know, when we talk to our borrowers, when we talk to our bankers on the front line, you know, one of the consistent themes is, you know, nothing's, nothing's happened yet. We're all concerned about it. We're seeing, you know, some...
Hey, we're thinking about the laying investment.
is, you know, that maybe David is... is...
Speaker Change: as a pool forward and some of the demand. We saw some of the projects that were closer to the start day, further in their analysis, further in the initiatives to get off the ground, whether it was C&I, CRE or otherwise.
Those situations...
Speaker Change: It's broad-based. When we look deeply into the pipeline, we see it really across the, you know, what I'll call the community and the commercial bank.
It's broad-based within our geography, and even within category, there's...
Speaker Change: C&A, there's CRE, there's agricultural and we do have some seasonal benefits this time of in the year as well in that pipeline and that's...
Speaker Change: That's not the driver of the seasonal piece, but just keep in mind within there, for example, agricultural, mortgage warehouse, etc. are entering more seasonally positive periods here. And I think that's what drove some of the late quarter nature of the funding that we saw.
Speaker Change: Okay, that's helpful. And then, and maybe along the same line on the other side of the balance, she just touching on the positive. I mean, the core to positive trends that you saw were also very encouraging.
Speaker Change: and, again, in a seemingly weaker quarter with tax payments and end of the year payments and all those kinds of things.
I just wanted to get your thoughts on-
you know, the deposit growth strategy.
It is a competitive environment.
Speaker Change: You know, one of the things we've been pleased with both within our own balance sheet and sort of that competitive landscape is is
Speaker Change: It does seem that the banks have done a good job of aggressively moving prices down on the deposit side with the rate moves late last year. So that's been good news, but again, we're still seeing a lot of deposit competition, a lot of protection of existing relationships, et cetera. And I really don't expect that to evade anytime soon.
Speaker Change: You know, keep in mind when you think about our deposits, and this is really reflected in how we talk about the outlook both back in January and still today, you know, we're actively working to remix deposits and to reduce the level of broker funding.
Speaker Change: We were successful with that in the first quarter. That's going to continue to be a focus for us.
Speaker Change: In addition, you'll see that we were successful in the quarter in, you know, remixing out of customer CDs and into intersparing transaction accounts.
Speaker Change: and while NIBs were basically flat or very, very slightly downlinked quarter, that's the best quarter we've had in NIBs in quite some period of time and so we're pretty positive that a lot of those trends are inflecting.
Speaker Change: We have all of the systems on-go really with focus around deposits and we have had for quite some time every lending opportunity that we're looking at has a deposit conversation involved in it and really to hurdle requires that deposit activity and so continue to be pleased with the trends there but again want to reiterate that the competitive environment is still pretty difficult. [inaudible]
Speaker Change: Dingle, you want anything on the deposit, Brian ? Yeah, hey David, you know I think the thing that I would add is if you think James comments around NIB being relatively flat, we were down 5 million but relatively flat, first time in a while that we've been close to that [inaudible]
Speaker Change: If you break that down into our different businesses and you look at the consumer customer, our consumer deposits make up about mid 40% of our total customer deposit base.
Speaker Change: We're actually pleased with what we're seeing there. The last two quarters we've seen positive growth.
Speaker Change: That's kind of the first time in a long time probably since [inaudible]
Speaker Change: The rate rising cycle on the last part of 22 that we've seen.
Speaker Change: Consumer Deposit Growth. So, we're pleased with that. It's getting back to a more...
Speaker Change: Traditional seasonal patterns that's predictable. So you know, we feel good about that. The other thing I would say about consumer is we're actually growing the core customer account. So you think about the core checking account which is the number one driver of revenue.
Speaker Change: and the Consumer Bank. We've grown that year over year one and a half percent and we'll continue to focus on that. We have a number of initiatives that we're working on this year with various campaigns and whatnot that we expect to continue to grow that.
Speaker Change: and then the other piece of that we've seen in this course specifically just some seasonality natures with public funds.
Speaker Change: and then on the commercial side, I would tell you there's still probably some pressure on the commercial side. It's less than it has been. We were down a little bit on the NIB side there, but hopefully over the coming quarters, if we can get that piece.
Speaker Change: Back to Flatish or to Growing, that will provide us a lot of tailwind as we think about just the overall deposit cost going forward.
Speaker Change: Jay talked about time deposits. We are seeing some really positive shifts there into interest bearing.
Speaker Change: CD closures that occurred. We retained about 65 to 70% of those deposits.
Speaker Change: and we're okay with the others that left because they were seeking higher rate. Of that 65% about two-thirds of those stayed in...
CDs, but at a lower cost
Speaker Change: The CDs that matured in the last quarter was in that 14, 415 range.
Speaker Change: and the Renewal Rates is in the 340 range, so we feel good about that piece of it.
Speaker Change: But then that other third of the CDs that close went into DDA accounts which are at a much lower cost so we feel good about that as well. So we're encouraged about the momentum that we got along with the deposits and the cost of those deposits.
Speaker Change: by securities cash flows, and that remixing and reprising at both assets and liabilities is what's driving margin expansion, I'm thinking about that the right way. You wore? Yep, that's exactly right.
Awesome. Thanks, everybody. Thank you. Thank you.
Speaker Change: The next question comes from Woody Lay with KVW. Please go ahead.
Hey, good morning guys.
Morning, Woody.
Speaker Change: At a couple of follow-ups on the credits, I wanted to start with the fast food operator. Just any color you could give on the underlying collateral there, it sounds like it's potentially to a couple of different entities.
Speaker Change: Yeah, I mean, we've got the stores themselves, the real estate collateral, we have again full recourse as we've outlined in the materials.
Speaker Change: So the guarantor reliance is not probably as valuable as we would have otherwise hoped but again we have real estate, we have the stores, we have the equipment in the stores etc.
Speaker Change: Got it, that's helpful. And then maybe shifting over to hospitality. It looks like hotels are about 4% of
Geographic Concentrations Within That Portfolio .
Speaker Change: You think back to the pandemic, this was obviously a major focus across all of that hospitality portfolio.
You flash forward to today.
Speaker Change: You know, but for maybe a small exception or two that I can't even think of, this is the one. I mean this is the one we've been talking about.
Speaker Change: You know, internally since, since kind of the, what you might call the dust settling on the pandemic a couple of years ago and what really happened in this situation, what he is
Speaker Change: We believe is just unique to that to that downtown area. You know, unfortunately the the business climate there has just continued to suffer.
Speaker Change: The only credit of any kind, not just hospitality of any kind, that you would kind of put in the city blocks of downtown that's in our portfolio.
Got it.
Speaker Change: And then last for me, it was helpful that you provide the ACL methodology on slide 26.
Speaker Change: Just two quick questions around that. First, did you adjust the scenario weighting quarter over quarter? And then second, I think if you look at April Moody's baseline, it looks like
Speaker Change: GDP was moved a little lower and unemployment was moved higher. How would y'all expect this to impact for reserve levels?
Speaker Change: Yeah, I think I, you know, we would expect the baseline scenarios based on everything we know today to continue to worsen from what we, and we did update scenarios update baseline from Q4 to Q1. We'll do that every quarter so we do that again in Q2 so.
Significant About Shift
Speaker Change: You know, that would be that you would see a worsening in the baseline scenarios. You could see a worsening in the weightings, a shifting in how we weight the scenarios, but we'll determine that later in the quarter in Q2, but I think...
Speaker Change: It would be our expectation that I'm going to make this comment outside of the specific reserves for these two specific credits. I think it would be our expectation that
Speaker Change: You know, based on trends we see today that reserves for the industry would be building throughout the year this year based on those dynamics.
Speaker Change: Yeah, maybe I'd add one thing to that. You know, we use moody's analytics for our modeling and we have taken a look at the April scenarios and they did worsen as you would expect.
Speaker Change: You know, our management percentages that we put in, fourth quarter versus first quarter, the mix didn't change very much, but as you think about where we land in our range so...
Speaker Change: Our models spit out kind of an estimate. We put ranges on both sides of that. We are currently reserved at the high end of our range. So if you think about the scenarios worsening, you think that range would go up.
Speaker Change: You know, even if we held our reserve where it is, we would still likely be in the middle of that range. So today's point, we will evaluate all the different components of that come June and make decisions accordingly, but I just wanted to make a point that we are already reserved in the high end of our range.
Speaker Change: Good point. All right, thanks for taking my questions. Thank you, Woodley.
Speaker Change: The next question comes from Matt Olney with Sievens. Please go ahead. Thanks, good morning, everybody. Hey, man, morning.
Speaker Change: Speaking with Credit, it sounds like you've got a meaningful, specific reserve on each of these two credits.
Speaker Change: Any color on just the process of how you ended up with a specific reserve allocation, was there an appraisal of the assets? I'm just trying to appreciate the risk of additional impact to the reserve when these two loans do kind of reach, you know, resolution.
Speaker Change: Yeah, I would just say Matt, both of these credit relationships have been, for some period of time now, managed within our special assets group.
Speaker Change: So, we're, you know, we're intimately familiar with the properties, the values around the properties, we've been in active conversations with the borrowers even before this quarter given that treatment.
Speaker Change: We're very conservative in our approach to where we would kind of record net value here and the whole thought process around all of that was to ensure that whatever we're going to build the provision to here would be an area where we would have strong conviction that there wouldn't be incremental loss beyond those reserves today.
Okay.
Speaker Change: Alright, appreciate that, Jay, and then I guess switching over to the expense side.
Speaker Change: If I understand this right, it sounds like you reiterated the full year expense guidance, even though there were some higher fraud expenses in the first quarter. So it sounds like there were some good progress kind of beneath the surface. Any color on kind of the progress you're seeing on the on the expense side?
Speaker Change: Our expenses in the quarter actually came in a little ahead of where we had budgeted and thought they would. We were already seeing and working on some opportunities that we thought could give us some expense tailwinds in the balance of the year. And again, we're seeing pool forwards and some of that, even here in the first quarter. So,
We're...
Speaker Change: We already had a pretty bullish view on the expense outlook.
Speaker Change: for our bank as we were making progress through the quarter. Obviously, the fraud event is we feel very strongly as a one-time item. We also recorded 100% of that expense this quarter given how late in the quarter it came through. Thank you.
Speaker Change: It's difficult for us to estimate yet what we think the recovery on that will be, which would offset that expense to a degree.
Speaker Change: We focus on the things that we can control and the expenses are the one thing that we can control
You know, we talked about continuous improvement and
You know, we continue to have a pipeline of ongoing initiatives.
Speaker Change: All the time that we're looking to be more efficient. We're continuing to get benefit out of our centralized procurement group through contract renegotiations to establishing standards and processes by how to do things.
Speaker Change: You know, every time a position comes open, we evaluate whether we need to refill it.
Speaker Change: We have a lot of conversation and discussion around new positions.
Speaker Change: You know, I'll make a point there. If you look at our head count, we were up three head count, quarter over quarter.
with 12 reductions on the support groups side. And so,
Speaker Change: Everything that we do when we spend a dollar, we're evaluating that and having said that, I will say again that we are making investments in our business and we'll continue to do that. That won't be anything that we stop.
Speaker Change: We do feel good and confident about our expense guide even with the $4.3 million fraud in there and then to the extent that the recovery comes in that would give us even more ground there.
Okay, appreciate that, Daniel. And then...
Speaker Change: I guess going back to previous comment, look a little more colour around broker deposits and, you know, remixing away from those
Speaker Change: Relatively flat. So just looking for any kind of help thinking about kind of what is the plan to you know remix that over next year?
Speaker Change: Yeah, so if you look at it year over year, we're down close to about a hundred million dollars.
Speaker Change: and we've talked about growing customer deposits. So for every NIB dollar that we can grow or every customer deposit, the benefit centrist bearing time, that's a dollar of brokerage that we don't have to have.
Speaker Change: You know, the main focus there is growing core deposits, and that's the arm that's going to let us reduce our reliance on wholesale funding. We've got a number of initiatives going in this year with the addition of Chris Van Steamberg. He's brought a number of...
Matt: ideas and things to the table and so we'll continue to work on that but that's primary mechanism by how we can reduce wholesale funding. And the only other thing I'd add in there
Matt: You know, the other thing that would reduce the reliance on wholesale funding is just ongoing reduction in the securities balances.
Yeah, okay.
All right, guys. Thank you. Thank you.
Speaker Change: The next question comes from Abla Hassan with DA Davidson. Please go ahead.
Ahmad Hassan: Hey, good morning, guys. I've just got one quick one on capital deployment. So you guys had a strong capital with modest loan growth projected for the year, and the cheers just modest to the above tangible book. What would kind of get you off the sidelines on buybacks?
Ahmad Hassan: Was it like the pressure on earnings this quarter from higher provisioning? Was that why you guys did not execute repurchases this quarter?
Ahmad Hassan: Yeah, I appreciate the question. I think generally, and we've said for a number of quarters and continue to fill this way today, that really our priorities around capital start with...
Organic Growth in the Balance Sheet
Ahmad Hassan: have optionality around capital as it relates to securities restructurings, etc. You've seen us do a couple of those over the past several quarters and so we'll continue to be opportunistic in that regard.
Ahmad Hassan: So that's kind of priority one for us, priority two is of course our dividend and then any other kind of capital deployment opportunity is really beneath those first couple of priorities.
Ahmad Hassan: and I think just overall the outlook that's there, we want to, for the macro outlook, you know, we think it's smart right now and the right thing to do is we think about the long game to preserve capital and be smart with our capital. But at the same time, we always want to have the buy back in place.
Ahmad Hassan: If we were to see market dislocation or opportunities where it was very, very attractive for us to leverage some of our excess capital and the buyback regard, we have that tool in the toolkit if and when we need it.
That sounds great. Thanks. Thank you.
Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to George Makris for any closing remarks.
George Makris: Thank you very much and I appreciate everyone's oneness as you can tell from our comments please with our profitability trends and we expect those to continue to improve.
George Makris: We took some very conservative actions on two specific credits which is not a surprise regarding the way Simmons handles our risk management.
George Makris: For the time being, we're going to keep our head down and keep focused on organic growth opportunities, which have some positive momentum right now, and I guess the quote, Jerome Powell and the...
George Makris: In today's session, for the time being we're well positioned to wait for greater clarity.
George Makris: So thanks again for joining our call this morning. We will do this again three months
I have a great day.
Speaker Change: The conference has now concluded. Thanks for attending today's presentation. You may now disconnect.
[music]