Q2 2019 Earnings Call
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Matthew Davis.
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Good day and welcome to the Mercantile Bank.
Corporation's second quarter 2019 conference call and webcast all participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on a touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Mr., Mike Houston Investor Relations Lambert Edwards and Associates. Please go ahead.
Thank you Ben Good morning, everyone and thank you for joining mercantile Bank corporations conference call and webcast to discuss the company's financial results for the second quarter 2019.
Hi, Mike Houston, with Lambert IR, Mercantiles Investor Relations firm and joining me today are members of their management team, including Bob Kaminski, President and Chief Executive Officer, Chuck Christmas Executive Vice President and Chief Financial Officer, Ray Reitsma, President of Mercantile Bank Corporation or Mercantile Bank, Michigan.
And Bob Worthington, Sep, Chief operating Officer, and General Counsel, we will begin the call with managements prepared remarks, and then open up the call. The questions. However, before we begin todays call. It is my responsibility to inform you that this call may involve certain forward looking statements such as projections of revenue earnings and capital structure as well as statements on the plans and objectives of the Companys business.
The company's actual results could differ materially from any forward looking statements made today due to the factors described in the company's latest Securities and Exchange Commission filings.
The company assumes no obligation to update any forward looking statements made during the call.
If anyone does not already have a copy of the press release issued by mercantile today, you can access it at the company's website Www Dot Merck Bank dotcom.
At this time I'd like to turn the call over to Mercantiles, President and Chief Executive Officer, Bob Kaminski Bob.
Thank you Mike and good morning, everyone. Thank you all for joining us today.
On the call we will provide an update on our overall performance and financial results along with our key areas of strategic focus.
At the conclusion of our kind of as we open the call for a question and answer session.
We were very pleased to deliver strong operating results for the second quarter and first half of 2019.
Our sound financial condition sustained strength in commercial and residential mortgage loan originations and loan pipelines give us confidence that the store results achieved during the first six months of the year will provide the foundation for solid performance throughout the balance of 2019.
The second quarter operating performance includes growth in net interest income, resulting from a higher level of earning assets.
Our net interest margin remained strong, reflecting our ongoing emphasis on loan pricing discipline and sound underwriting.
Increased noninterest income and well managed overhead costs were also strengths for the quarters results.
Our team's emphasis on building and cultivating value added relationships continues to successfully attract new customers as well as retain existing clients.
We remain pleased with the growth in fee income.
The increase in mortgage banking activity income reflects the success of continuing strategic initiatives designed to increase market penetration almost jump in refinance activity spurred by the recent decline in residential mortgage loan interest rates.
Growth of mortgage banking activity income through expanded market share remains a priority for the company.
Our strong team of mortgage bankers, coupled with our wide range of products and services allows us to continue to build deep Klein real client relationships.
Great and Chuck will provide more detail in all these areas momentarily.
Turning to the Michigan economy trends remain steady as employment in our primary markets continues to improve and real estate conditions remain healthy.
We will continue to watch these indicators closely for any longer term slowing or inflection point.
The ongoing cash dividend program, including the announcement of an increased third quarter regular dividend earlier today exhibits our commitment to enhancing total shareholder return.
We remain confident in our ability to optimize future growth opportunities.
Merck hotels robust core profitability strong capital position and healthy commercial and residential mortgage loan pipelines position us well for a solid performance for the balance of the year, despite potentially volatile interest rate environment in which we currently operate.
As always we continue to monitor both micro and macro economic activity and our focus remains on creating and leveraging opportunities whatever the economic climate.
We're excited about our ability to expand in our markets and continually improve results in both the near and long term.
That concludes my remarks ill turn it over to Ray.
Thank you Bob we're pleased with loan growth during the first half and particularly in the second quarter growing at an annualized rate of 9.2%.
Approximately $134 million and $259 million and commercial term loans to new and existing borrowers were originated during the second quarter and in the first six months of 2019, respectively. As our lending teams focused on identifying new customer relationships and meeting the needs of our existing customer base.
Our pipeline remains strong and steady as well with a $129 million of commitments on commercial construction and development loans to be funded over the next 12 to 18 months.
We continue to expand and establish the mercantile culture within our southeast Michigan operations and are pleased with the results in the second quarter, our southeast, Michigan Office grew total loans by $23 million.
Our asset quality continues to improve as nonperforming assets declined to $4 million or 0.11% of total assets at June thirtyth.
We delivered non interest income during the second quarter of 2019 of $6.3 million compared to $4.6 million during the prior year second quarter.
Noninterest income during the second quarter of 2017 included a bank owned life insurance claim of $1.3 million. Excluding this item non interest income still increased a half a million dollars or 10.9% compared to the corresponding 2018 period.
The higher level of noninterest income primarily reflects increased mortgage banking activity and credit and debit card income residential mortgage originations Jones, 29% from the prior year quarter, which reflects the success of our strategic initiatives to increase our market share.
Continuing to enhance mortgage banking income through increased market share remains a priority and we will continue to hire proven mortgage loan originators as we are able.
We expect that the positive trends, we experienced in the first half of the year will continue through the balance of the year as declines in residential mortgage loan rates increase refinancing activities and create opportunities to expand our mortgage banking portfolio.
That concludes my comments I will now turn the call over to Chuck Thanks, Ray good morning to everybody.
This morning, we announced net income of $11.7 million or 71 cents per diluted share for the second quarter of 2019 compared to second quarter of 2018, net income of $9.4 million or 57 cents per diluted share.
Net income during the first six months of 2019 totaled $23.5 million or $1.43 cents per diluted share compared to net income of $20.3 million or $1.22 cents per diluted share during the first six months of 2018.
A bank owned life insurance claim during the second quarter of 2000 and team increased net income by $1.3 million or eight cents per diluted share. Excluding the impact of this transaction diluted earnings per share increased six cents almost 11% during the second quarter of 2019 compared to the second quarter of 2018.
Bank owned life insurance claims and a gain on the sale of a former branch facilities. During the first six months of 2019.
Increased reported net income by $3.1 million or 19 cents per diluted share while the successful collection of certain nonperforming commercial loan relationships during the respective period in 2018.
Increased reported net income by $1.7 million or 10 cents per diluted share.
Excluding the impact of these specific transactions diluted earnings per share increased 12 cents or nearly 11% during the first six months of 2019 compared to the first six months of 2018.
We remain pleased with our financial condition and earnings performance and believe we are very well positioned to continue to take advantage of lending and market opportunities, while delivering consistent results for our shareholders.
Our net interest margin was 3.79% during the second quarter higher than the range of 3.70% to 3.75%. We provided in April in large part, reflecting strong loan fundings in the beginning of the quarter that resulted in a lower level of excess liquidity as well as higher than expected purchase accounting.
Related interest income.
Our cost of funds as a percentage of average earning assets increased five basis points. During the second quarter of 2019 compared to the 19 basis point increase during the first quarter of 2019.
The increase in our cost of funds during the first three months of 2019, primarily reflected a higher level of wholesale funds and a time deposit campaign, while the cost of funds increased during the second quarter, primarily reflects a full quarter impact of that time deposit campaign that ended in early April .
We had increased our reliance on wholesale funds during the latter part of the fourth quarter and into the first six months into the first month of the first quarter due to strong commercial loan fundings and seasonal business checking account withdrawals for tax and bonus payments as expected. We continue to see a replenishment of fund balances and business checking accounts.
Based on our current liquidity position and funding projections. It appears that we will be able to slightly reduce our wholesale funding reliance during the remainder of 2019.
We recorded zero point $6 million in purchase loan accretion and payment received on CRB pooled loans during the second quarter of 2019.
Based on our most recent valuations and cash flow forecasts on purchase loans, we expect to record additional quarterly interest income totaling zero point $2 million throughout the remainder of 2019.
Also we expect to receive in aggregate about $1.6 million in principle payments on purchase impaired Siri pooled loans over the next several years, which will be recorded as interest income upon receipt.
Assuming the FOMC it reduces the federal funds rate by 25 basis points on July 31, as is widely expected by market participants, we expect our net interest margin to be in a range of 3.70% to 3.75% during the remainder of 2019.
The overall quality of our loan portfolio remains very strong with continued low levels of nonperforming loans and loan charge offs.
Nonperforming assets as a percent of total assets equaled only 11 basis points at the end of the second quarter.
Loan charge offs totaled less than zero point $1 million during the second quarter and totaled less than zero point $3 million. During the first six months of 2019.
We recorded a small net recovery during the second quarter with year to date net loan charge offs equaling less than zero point $1 million.
Provision expense for the second quarter total of zero point $9 million in large part, reflecting commercial loan growth, we expect to record quarterly provision expense in a range of 0.5 million to $1.0 million throughout the remainder of 2019, assuming a steady economic environment.
Our loan loss reserve totaled $24.1 million at the end of the second quarter or 0.0, 0.89% of total originated loans.
This coverage ratio has remained steady for many quarters and no significant changes are expected during the remainder of 2019.
With regards to see so we have now completed our initial framework and we will be working to fine tune that framework and assumptions during the remainder of 2019.
Based on initial results, we believe the impact of adopting Cecil at the beginning of 2020 will not have a merit Tyrol impact on the balance of our loan loss reserve or our operating results.
Ray previously provided color on our fee income performance for the second quarter and first six months of 2019, I will add that we expect quarterly noninterest income to be in a range of $4.8 million to $5.2 million during the remainder of 2019.
We recorded non interest expense of $22.1 million or in the second quarter of 2019 up about 3% when compared to the second quarter of 2018, the higher level expense, primarily resulted from increased salary costs, mainly reflecting the employee merit pay increases and higher stock based compensation expense.
Currently we expect quarterly non interest expense to total in a range of $22.7 million to $23.2 million during the remainder of 2019 with our effective tax rate remaining near 19%.
Total deposits increased $156 million or in the first six months of 2019 comprised of $99 million growth in local deposit and a $56 million increase in broker deposits.
We experienced typical seasonal reductions and business checking account balances primarily in January for taxes, and bonuses, where we're seeing the replenishment as expected as well as with account growth associated with new Cnf lending relationships.
We discontinued our time deposits special in early April and plan to maintain our traditional time deposit pricing strategies for at least the near term.
At the end of the second quarter wholesale funds comprised 17% of total funds up from 16% at year end 2018.
The increase reflects an influx of broker deposit and federal home loan bank advances to fund strong commercial loan growth and the seasonal business checking account withdrawals.
Currently we expect to reduce the level of wholesale funds throughout the remainder of the year and in 2018 around 16%.
We remain a well capitalized banking organization.
As of June Thirtyth 2019, our bank's total risk based capital ratio was 12.4% and in dollars was approximately $78 million higher than the 10% minimum required to be categorized as well capitalized.
We were not active in buying back our stock during the second quarter, but do have $20 million available in our current buyback plan.
Those are my prepared remarks, I'll now turn the call back over to Bob. Thank you.
Thank you Chuck of that now concludes managements prepared comments I will now open the call for and for the Q and a.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
If you are using a 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. Please press Star then too.
At this time, we will pause momentarily to assemble our roster.
The first question comes from Brendan Nosal Sandler O'neill <unk> partners. Please go ahead.
Hey, good morning, guys how are you.
Hey, Brandon how are you.
Good. Thanks, just wanted to start off on the margin here I definitely appreciate the clarity on kind of what the the first fed rate cut would would mean for the NIM I mean, as we look out you know past July it looks like there is the potential for a couple of more rate cuts going forward. I mean is it fair to assume that kind of the 10 basis point reduction in the margin outlook for the rest of this year for one rate would kind of meeting the same thing for each incremental rate cut or is the is the first one a little more painful than the the later ones.
Yeah. This is John that's obviously, a pretty difficult to answer a question to answer only because of the timing and what we can do with deposit rates, but was 50% of our commercial loans are floating and looking at the structure of our deposit base I would say that you know a reduction of seven to nine basis points in general what would make sense. Each time, the fed lowers rates 25 basis points at least in the near term.
As we go out further we certainly have Cds and some federal home loan bank advances.
That were taken out over the years that would reprice to a lower level. So timing is everything.
But I would say a seven to nine basis point reduction at least in the front end.
It would be logical.
Okay, great. Thanks, and then moving on to I guess, just the general health of the economy feels like every article I read and everybody I talk to fill your ones on recession watch, but every bank that I speak with just says they don't really see anything in their markets. It indicates a turn in the economy.
And based on your prepared remarks, it seems that you guys kind of feel the same way I mean is there anything you're seeing that indicates.
A slowdown at large.
You know we.
As we look across our client base and the economy in general I think we are seeing generally the strength that we've seen or for the last several quarters.
From time to time, there are pockets of slowness on a one off basis from a client or two.
Nothing that appears to be systemic or anything on a long term basis.
But if it is as you indicated we are on the recession, what recession watch making sure that we.
On the early end of any signs that were presented some red flags, but we just aren't seeing those right now.
Okay, Great and then last one from me.
Just help us understand the the fine tuning of the expense guidance is this a function of adding more mortgage lenders.
Then you would have expected previously or is there anything else going on in the expense base.
No I think that most of it.
Embedded lenders and vast majority of our lenders mortgage lenders are on commission.
So as we see the increased activity we did have to.
Increased commissions.
Surrounding that.
But overall.
Yes, it's pretty steady.
All right. Thanks for taking my questions.
Thank you.
Our next question is from Kevin Reevey.
D.A. Davidson. Please go ahead.
Good morning.
Morning, Kevin.
So right.
Alright, Chuck I was wondering if you could give us some color as far as what kind of yields are you getting on the new promotional ones that you're booking versus kind of what's what's on portfolio and if you can kind of talk give us some color what you talked about loan pricing discipline. This is an independent flying but if we could get some color on that that'd be great. Thank you.
Sure. This is ray.
I'd say that in general the new.
That that we put on reflects pretty closely what is already on the books and.
It's a competitive world out there and.
We do.
From time to time increase.
Or have to face increasing pressures as we price loans, but we take a lot of care to make sure that.
In each relationship that we enter into that the total packages mutually beneficial to the client and the bank and really get the whole relationship and make sure that.
When you take the mix of deposits and fee income and spread that the whole package makes sense relative to return on capital and and as a result, we end up with.
A fairly consistent yield.
Between the new business that we put on in the existing business that continues to be there.
So as you go from client decline as Ray said, there are some pressures from time to time from a competitive standpoint.
Bulk customers understand from our standpoint.
Well were looking for and if they are particularly particularly rate sensitive than we see as an opportunity to look and see if there are more deposits that can be brought over from the relationship or other services that we could engage them in to generate some additional fee income and other ways to keep our our overall customer profitability, where it needs to be but but still remain competitive from a pure rate standpoint on the on the credit.
And then you had some pretty strong growth on the non owner occupied loan category can you talk about what type of non owner occupied loans we're booking.
And kind of the structures there.
Well.
The portfolio is generally kept the same proportions that it's had in the past.
And.
Owner occupied non owner occupied the terms remained consistent with what we've done in the past.
Our commercial borrowers are trying to be as in commercial industrial borrowers are trying to be as efficient as possible with their space and when they expand.
It's because they really need to and.
So the efficiency and use of the space is really.
Excellent and as a result, it's a it's a pretty strong portfolio, we have a pretty strong clients that are expanding.
Great. Thank you.
Thanks, Kevin.
Our next question is from Daniel Cardenas with Raymond James Go ahead.
Good morning, guys.
Barnett.
Let me, maybe if you could talk a little bit about.
Your loan growth outlook for the second half of the year just kind of given.
Strong growth in this quarter do you think that tempers down a little bit.
And then in conjunction with that looking at loan to deposit ratio of about 110% does that factor in.
How does that factor into your loan growth outlook in terms of maybe slowing it down a bit.
Our loan growth opportunities, we expect to continue to fund loans at a similar pace to what we've done in the past.
We've been very consistent over a fairly large number of quarters and what weve fun as well.
Always the payoffs and Paydowns that we receive in the normal course of business.
Our unpredictable, but will occur and so it's very hard to predict those but we feel very confident in the backlogs that we have and the outlook that we have that we will continue to fund at a pace very similar to what we funded in the past.
And in regards to the loan to deposit ratio it's.
I know, it's a race has looked at a lot and we certainly pay attention to it we look more at our wholesale funding program on an overall basis.
Which obviously takes into account federal home loan bank advances.
And as we've talked before.
We made it a significant principal and practice on our part is that over the last few years as we were.
Occasionally booking a regularly booking.
Five year fixed rate balloons on the commercial loan side, we wanted to make sure that we were from a portfolio basis match funding that.
As we look at the cost of federal home bank advances versus broker deposits.
In that four to seven year category, which is where we generally go.
It was probably on average 20 to even 40 basis points cheaper.
So take down FHLB advances versus broker deposits.
So that obviously helps our margin we're doing the right thing from a longer term perspective and doing some matched funding.
But when you do calculate things like the loan to deposit ratio. Obviously it has a negative effect. If you will our results that ratio being relatively high versus if we would've gone more to the broker deposits. So I think I think that 110%, we've always been and Dan you know, we've always been a bank thats probably been between 95 and 105%. So we're comfortable with that I think any deviation from that general range is more reflection of how were managing our wholesale funding program.
More than anything else on an overall basis the structure of our balance sheet has stayed quite consistent overtime.
Okay got it got it thank you.
And then.
Just jumping over to credit quality I mean, it doesn't look like things can get too much better than than where they stand right. Now is there any sector of the loan portfolio, that's causing you any concern or you're beginning to pay maybe beginning to pay a little bit closer attention to.
No.
As we've said on prior calls this year and last year, we will continue to diligently monitor the portfolio the numbers really speak for themselves as far as the strength in our assessment of we feel the quality of the portfolio.
It doesn't mean that we're not looking for issues and making sure. We're staying plugged in very closely to our borrowers looking for signs of stress and strain, but I think.
The quality of the portfolio reflects.
Management team and our lenders diligently administer in the portfolio and the overall strength of the economy, which continues to.
To be to be quite high.
Great and then last question for me in terms of just capital utilization.
I noticed you guys didn't buy back any shares this quarter is that was that just purely a mathematical decision based decision.
Yes. This is Dan when things will remain when we look at our capital ratios, we know that it's probably a little bit on the high side.
Obviously, we want to have some powder for our growth.
I want to make sure that we've got sufficient capital if the economy is slowing down.
Just want to make sure we got sufficient capital for any of those types of periods.
Weve talk about M&A before were not very.
We definitely look at any books that are provided to us.
But don't have very strong interest in doing M&A, but if we did.
It would be helpful to have a little bit excess capital on our balance sheet to help that potential transaction.
But I think we realize we're a little bit on the high side.
As a reminder, we were relatively aggressively buying back our stock in the fourth quarter of last year into the first couple of weeks of this year and at the same time, we did the special dividend in the fourth quarter. So.
We have paid attention and we continue to pay attention to our capital ratios.
We sure all of you saw we did replace our existing stock buyback plan with a new one and the reason why we did that was that the old one or the existing one at the time was only down to about $6 million and availability. So we went ahead and did a new plan.
Now for $20 million that we terminated the existing plan. So we have the ability to buy back stock.
Obviously, we're taking a look at our at our price.
The one thing. We also look at is you know, we do lots of calculations internally.
For example, the one that we keep a close eye on is the level of our commercial real estate portfolio as a percent of our risk based capital.
Obviously, you get over 300% and there is a whole new layer of scrutiny that is put on by regulators and various investors as well, we're right around 250% on a book balance basis, and we stay there consistently we kind of like that spot.
No a little bit higher, but we really don't want to go above 300% and when you look at our pipeline we still have.
Some additional opportunities on non owner occupied commercial real estate, we always will obviously, we need to be diligent in who we partner with and the pricing in the structure that we do.
So when we look at capital and we're looking at our regulatory capital ratios looking at tangible that's very very important of course, but also some of these other measurements that we do we want to make sure that we maintain in good stead, what the expectations that are out there as well.
On a regular basis, we continue to.
Two dividend about 40% of our net income.
Which is right now producing a yield of over 3%. So we think of that.
Relatively attractive to existing and potential new shareholders.
As we go forward, we're always talking with our corporate board in regards to our capital levels and what we should do with our dividend. Obviously, we got to talk about the dividend level at least every quarter, but also look at the potential for the using the buyback plan doing a special cash dividend. Those are part of the mix part of the recipe as well and they will continue and will continue to take a look at that and again in relation to some of the other internal measurements that we use capital.
So as Chuck kind of summarize as there are a lot of things that go into the soup regarding capital management is something that we.
We are constantly watching and the conversation with our board to make sure that capital and all the other levels are at levels that.
We want them to be at and at the current time and into the future as well.
Alright, great. Thanks, guys.
Thank you.
As a reminder, if you have a question. Please press Star then one on your keypad.
Our next question comes from Damon Delmonte.
With KBW. Please go ahead.
Hey, good morning, guys.
A lot of good color a lot of good questions asked and answered on the call. So just a couple of quick follow ups on Chuck on the margin guidance. I think you said 370 375, that's for the full year.
From from where we are after that first half of the year.
That would be for the third quarter and for the fourth quarter.
Of this year.
And that assumes the one rate cut here at the end of July .
Okay. So you are right.
Yes, let me I should ask you since you asked the question, Dave Let me add a little color one of the things that is going to be helping our margin as we continue to see replenishment of our business checking accounts that is helping to for the rest of this year until we go through the whole cycle again that is helping to mitigate the negative impact of a lower interest rate environment for the remainder of this year.
Okay. So all out if nothing else happened the margin could be impacted by seven to nine basis points off of this quarter's three seven.
This quarter's 379, but you had some benefit from that offset to that I guess from the inflow of lower cost deposits.
Yes, which obviously are free deposits and then also as I mentioned in my prepared remarks that will help us have some reduction in our wholesale funding program as well.
Got it right Okay, great and then just kind of looking at the loan portfolio I know, it's a it's a small percentage, it's only 12%, but it is taking higher im talking about residential mortgage is here.
What are your thoughts on continuing to grow that segment are you trying to kind of leverage the investments you've made in the mortgage area and keep some more of these loans on the books.
Really what we do the eminent is relatively simple.
Is if we're going to make a fixed rate mortgage loan we want to sell it and so we'll structure that we can generally solid to Freddie Mac or federal home loan bank. We do have some other private investors that will buy jumbos and some of those other things.
As as we work with a perspective borrowers new homebuyers are folks that are refinancing and it looks like.
For whatever reason they are not going to be Sellable, well go ahead and put them into the generally a five one or seven one arm and then we'll put those into the onto the balance sheet. So it's quite rare if we put a long term fixed rate mortgage onto our balance sheet.
It's kind of more of the catch basin. If you will of those that can't be sold and we go ahead and put them into an arm product.
And usually why we can't sell them is generally not a because of the borrowers financial health, it's usually something to do with the property or some other.
Metrics that Fannie or Freddie or federal home loan bank doesn't like.
So on an overall basis.
We saw a nice pickup in the percentage of loans that were originated during the second quarter that were Sellable I think were over 70% we had been running more recently in the last couple of years around 45%.
So it's good to see that we would rather be able to sell every mortgage loan that we make.
But we know that that's not possible, but if it's not possible we have the arm products that we can put our folks into.
And put those on the balance sheet for that five or seven year period, when they will probably look to refinance or look otherwise and maybe at that point in time.
There will be sellable loans.
Got it Okay thats helpful. Thats, all that I had thank you very much.
Thanks, David.
Our next question is from John Rogers of Janney.
Go ahead please.
Good morning, guys.
Hey, John Good morning.
Just a.
Quick question I guess, just loan floors what percent of your loans have floors on them and then I guess, how far down the rates have to go before they sort of kick cans in general.
Yeah, I don't think we've gotten occasionally we've gotten some floors I think rates would have to go down a ways before some of them started to kick in.
That was something that you know we were trying to get into loans as we saw rates going up knowing that at some point rates are going to go down.
But that makes for a little bit of a difficult task discussion with the borrowers while rates are going up.
Why you're asking the floors on so we do have some I don't have the actual mathematics in front of me.
But my guess just from looking at the loans the way that I do John is that it's not a high percentage and that it would take some cuts before we start hitting those for us.
Okay, So probably was less than 20% Chuck or.
Yes, I would say is probably a pretty good number and it would probably take three or four rate cuts before we started seeing the impacts of those.
Yes, so down 75 or 100 or something.
Yes, when we start seeing the impact.
Okay.
Okay. Thanks, guys.
Thanks, Thank you.
This now concludes our question and answer session.
I would like to turn the conference back over to Bob Kaminski for any closing remarks.
Thank you very much for joining us on the call today and for your interest in our company. We look forward to speaking with you again in October . So the call is now concluded. Thank you.
Conference is now concluded. Thank you for attending today's presentation you may now disconnect.