Good day, ladies and gentlemen. Welcome to the Amerant second quarter 2019 earnings conference call. At this time, all participants are on a listen only mode. Later, we'll conduct a question and answer session, and instructions will be given at that time. If anyone should require assistance during the call, please press star and zero on your touchtone telephone. As a reminder, this conference call is being recorded. I want to introduce your host for today's call, Mrs. Laura Rossi, Investor Relations Officer. You may begin.
Thank you, operator. Good morning to everyone on the call, and thank you for joining us to review Amerant Bancorp's second quarter results. With me this morning are Millar Wilson, Vice Chairman and Chief Executive Officer, Al Peraza, Co-President and Chief Financial Officer, and Miguel Palacios, Executive Vice President and Chief Business Officer. Before we begin, note that the company's press release, comments made on today's call, and responses to your questions contain forward-looking statements. The company's business and operations are subject to a variety of risks and uncertainties, many of which are beyond its control, and consequently, actual results may differ materially from those expressed or implied. Please refer to the cautionary notices regarding forward-looking statements in the company's press release.
For a more complete description of these and other possible risks, please refer to the company's annual report on Form 10-K for the year ended December 31st, 2018, as well as to subsequent filings with the SEC. You can access these filings on the SEC's website. Please note that Amerant has no obligation and makes no commitment to update or publicly release any revisions to forward-looking statements in order to reflect new information or subsequent events, circumstances, or changes in expectations. You should also note that the company's press release, earnings presentation, and today's call include references to certain adjusted financial measures, also known as non-GAAP disclosures financial measures. Please refer to the back of the company's recent earnings presentation to see the reconciliation of each non-GAAP financial measure to its most comparable GAAP financial measure. I will now turn the call over to Mr. Wilson.
Good morning, and thank you for joining Amerant's second quarter 2019 earnings call, our second earnings call since the IPO. On today's call, we'll discuss Amerant's results for the first half of the year and then touch upon our business strategies and what we're looking forward to in the second half of 2019. I'll begin with our second quarter 2019 highlights, and then I will review our financial performance in greater detail. After our prepared remarks, Al, Miguel, and I will address any questions. Starting on slide three and four, we have a summary of our performance for the quarter. We made significant progress this quarter on our new strategy as a standalone company. We continued our efforts to drive shareholder value, reporting a 23.4% increase in net income over the second quarter of 2018.
This quarter, we continued executing on our relationship-focused strategy, remixing our loan portfolio towards higher yielding, lower risk domestic loans while maintaining asset quality and increasing our domestic funding from core deposits. We will continue to execute on these strategies with the goal of obtaining a greater share of wallet from new and existing customers by delivering the high touch service that we want our customers to associate with the Amerant brand. Speaking of our brand, in April, after many months of hard work and preparation, we successfully launched Amerant as our new brand across all our markets. Our buildings and branches, as well as digital platforms now bear Amerant's new vibrant logo and customer centric "Meant for You" tagline. We will continue to build brand awareness in the coming quarters. Most notably, we achieved a number of operational efficiencies that will drive profitability in the coming months.
After many months of streamlining our operations and shifting away from non-core businesses, we will migrate to a single segment in our financial reporting, which will be reflected in our quarterly report on Form 10-Q. This is a direct result of our efforts to simplify how we manage our business. On the profitability front, earlier this month, we announced the redemption of $25 million of our two most expensive tranches of trust-preferred securities, which is expected to occur during the third quarter. These redemptions will reduce our annual interest expense by approximately $2.6 million and improve net interest margin by approximately three basis points in the months following the redemption. Our remaining $26.8 million of the 8.9% fixed rate trust-preferred securities is callable in whole or in part, which may be an opportunity for capital deployment.
Furthermore, Amerant was added to the Russell 2000 Index in June, which will bolster our recognition in the capital markets and among investors, including those tracking this index. On slide four, our net income for the quarter was relatively flat from the first quarter, but 23.4% over the same quarter last year. On an adjusted basis, excluding the spin-off costs incurred in the second quarter of last year and the restructuring costs incurred this quarter, the improvement over the same quarter last year was 6.4%, and from the prior quarter was 8.7%. Our return on assets reached 0.66%, or 0.77% on an adjusted basis, and our earnings per share of $0.30, or $0.35 on an adjusted basis, outperforming market expectations. Al will explain the non-GAAP adjustments and provide more detail on the results shortly.
Our credit and asset quality remained strong this quarter, leading to a release from the allowance for loan losses of $1.4 million, primarily due to improving quantitative factors in our portfolio. Non-performing assets as a percentage of total assets remained consistent year-over-year, but increased by 15 basis points from the first quarter due to one relationship totaling $11.6 million being placed in non-accrual status in June of 2019. Now I will turn the call over to Al, who will go over the quarter in more detail.
Thank you, Millar. Good morning, everyone. Before we move on to the loan portfolio slide four, I would like to discuss the highlights in our balance sheet this quarter. On the asset side, total loans this quarter grew by $71.3 million, or 1.3%, partially funded by the investment portfolio reduction of $50.7 million, or 3%. This resulted in asset growth of $24.5 million, or just 0.3%. As far as our funding, we were able to grow domestic deposits by $51 million this quarter. This was offset by the decline in international deposits of $120 million, with the remainder being funded by the increase in Federal Home Loan Bank advances of $55 million, or 5.1% increase. Our stockholders' equity increased by $27.6 million, or 3.5%. Net income contributed $12.9 million of this increase, with the balance attributed to comprehensive income stemming from higher market valuations in our available-for-sale investment portfolio.
If we now move on to slide five, we can see some of the movements above in greater detail. In the second quarter, loans grew $78.3 million, or 1.4%, to close at $5.8 billion. We experienced net growth this quarter in the Texas and New York markets of $67 million and $37 million, respectively. In Florida, we experienced a net decline of $36 million, primarily due to the planned runoff of our non-relationship Shared National Credits, or SNCs, and Latin American Financial Institutions loans, FIs. Total loan production this quarter was approximately $600 million. Compared to the second quarter of 2018, our loan portfolio decreased 6.5%. This decline was caused by the above-mentioned planned reductions. Since June 30th, 2018, we have reduced the non-relationship SNCs and foreign FI loans by $420 million and $347 million, respectively.
The lower interest rates this year allowed us to sell many of these loans at favorable market prices as demand was strong for assets tied to three-month LIBOR. In this line, I am pleased to announce that presently, Amerant does not have a meaningful exposure in foreign FI or non-relationship SNCs, with only $5 million and $64 million, respectively. On the other hand, as part of our strategy to focus on domestic loans, excluding non-relationship SNCs, grew 8% over the last 12 months. As we discussed last quarter, these reductions and runoffs align with our broader strategy to prioritize profitability from core relationships. From a product standpoint, the reductions were partially offset with higher yielding, lower risk domestic loans. Owner-occupied commercial and multifamily residential commercial real estate loans saw a year-over-year growth of $182 million, or 28%, and $110 million, or 13%, respectively.
Domestic loans now comprise 96% of Amerant's current total loan portfolio. As we continue to execute on the relationship-driven business model, our teams are also working to capture a greater share of our borrowing customers' deposits and wealth management businesses. Moving on to slide six, we continue to experience strong credit quality, and the company was able to release $1.4 million from its allowance for loan losses this quarter. This release was largely driven by continued improvements in the quantitative factors of our commercial real estate and commercial loan portfolios, which were partially offset by additional reserve requirements from one relationship, additional provisions associated with the sunset of the company's credit card product, and loan growth. Non-performing assets increased $12 million in the latest quarter and totaled $33 million at June 30th of this year.
Non-performing assets to total assets were 41 basis points, up from 26 basis points at March 31st, and flat year-over-year. This resulted primarily from the downgrade to substandard and non-accrual of $11.6 million of mostly special mention loans to a South Florida borrower. These loans are current underpayments and secured by residential, owner-occupied commercial property, and CRE in South Florida and business receivables. Management proactively placed these in non-accrual as the customer's business cash flows from sales in Puerto Rico continued to be adversely affected by the effects of hurricanes Maria and Irma in 2017. Despite this downgrade, the ratio of non-performing assets to total assets remained flat year-over-year. Furthermore, several unrelated loans consisting of two commercial loans totaling $3.1 million and two owner-occupied commercial real estate loans totaling $2.2 million were added to special mention as part of our regular credit reviews in June.
As a result, special mention credits declined by a net of $4 million in the second quarter and stand at $21 million. Turning to slide seven. You can see that our loan yield expansion continued into this quarter, driven by the replacement of the previously mentioned non-relationship mix and foreign FI loans with higher-yielding domestic loans. The average yield also increased notably year-on-year due to the loan mix and higher market rates during 2018. While our loan yields have improved considerably over the past year, we will continue to build on this momentum. Our investment securities yield declined by 13 basis points from the previous quarter, primarily as a result of increased paydowns in the SBA portfolio.
Investments were slightly down from $1.7 billion at the end of the first quarter to $1.65 billion in the second quarter, primarily due to the sale of $91 million of municipal securities and the aforementioned SBA paydowns. Moving on to slide eight. Total deposits at the end of this quarter were $5.8 billion, down 1.2% compared to the prior quarter, and down 8.5% compared to the end of the second quarter of 2018. This year-over-year decline was driven by the decrease in international core deposits, which dropped 4.1% and 13.7% respectively compared to March 31st this year and June 30th of 2018. As living conditions in Venezuela remain difficult, our Venezuelan resident customers continue to rely on their savings to fund daily living expenses. Our annualized international deposit runoff rate was 15% this quarter.
As we expect this runoff to continue into the next few quarters, we are actively working to increase our share of wallet of select high-net-worth international customers with whom we maintain strong long-term relationships. We continue to shift our focus to lower cost funding and more precisely to growing Amerant's domestic relationship accounts and core deposits. While domestic demand deposits are more expensive than international demand deposits, these domestic customers have higher growth potential and present better opportunities for growth for cross-selling Amerant's other products and services, especially wealth management. At the end of this quarter, 52% of our deposits consisted of domestic accounts, up from 49% a year ago. One of our main focuses in our efforts to increase core deposits is our commercial customer base. Year-over-year, the total deposits from our real estate and commercial businesses increased by $88 million or 22.5%.
This quarter's decrease in customer CDs and our relatively flat domestic deposits resulted from our strategic decision to decrease the promotional interest rates we pay. We continue to focus our efforts to retain customers with higher probabilities of renewal at lower than market rates. As a result, we were able to renew approximately $34 million, about 27% of our total renewals in the second quarter at rates that were lower than the highest rates paid in our markets. Turning to slide nine. Net interest income was $54 million in the second quarter, down 3% from the last quarter and down 0.4% from the year ago period. This quarter's lower net interest income was primarily due to the lower average loan balances resulting from the reduction in non-relationship mix, as well as higher domestic deposit costs.
The international deposit runoff caused our cost of funding to increase as we replaced those funds with domestic relationship money market deposits at rates competitive with peers. In the second quarter of 2019, $234 million of our relationship money market deposits, as well as $121 million of time deposits, which were booked in 2018 or earlier at lower rates, repriced at a higher cost. Second quarter NIM declined by four basis points compared to the first quarter, primarily driven by higher funding costs. We have been taking steps to control NIM compression in the coming quarters by establishing floors on term sheets on new loan originations. Decreasing rates on time deposits and increasingly relying on pricing intelligence, focusing on relationship accounts to stabilize cost of funds, rationalizing special rates paid to top customers, and shifting towards shorter-term professional funding.
Earlier this month, we took an important step towards improving our NIM when we announced the redemption of the coming weeks of the $25 million of our two most expensive trusts, with an average cost of 10.4%. When completed, the redemptions will reduce our annual interest expense by approximately $2.6 million and improve our NIM by approximately three basis points. From a longer-term view, our second quarter net interest margin has improved significantly from the year-ago quarter, up 15 basis points, primarily due to our continued efforts to shift towards higher-yielding domestic loans. While we are pleased with the steady progress we've made to drive net interest income and margin improvement over the past year, market pricing pressure and compression will remain a headwind if interest rates continue to decline. Turning to Slide 10. Net interest income of $14 million was up nearly 7% from the prior quarter.
However, it was down almost 6% from the prior year's second quarter. The second quarter increase was driven by a $979,000 gain on the sale of municipal bonds in the quarter, as well as a $255,000 increase in deposit and service fees due to higher wire transfer and treasury management fees. This quarter, as a result of the spin-off, we also recognized significantly higher debit card interchange fees, as we are no longer subject to the Durbin Amendment limit. We now expect an annualized increase in debit card fees of approximately $870,000. Fees for services provided to our former parent and its subsidiaries declined by approximately $600,000 in the first half of the year, and the services have been largely terminated. Our foreign customers trading in certain Venezuelan securities were halted by U.S. government sanctions imposed in February 2019.
This contributed to the year-over-year decrease in non-interest income, as brokerage and management fees of $3.7 million were down almost $690,000 from the second quarter of 2018. Additionally, the second quarter of 2018 benefited from a gain of $882,000 from the early termination of Federal Home Loan Bank advances. Amerant's total assets under management increased to $1.8 billion in the second quarter, up from $1.7 billion at the end of the first quarter, primarily on improved market values. We also continue to focus on leveraging our wealth management platform to grow this side of our domestic business. On Slide 11, second quarter non-interest expense was $53 million, a slight increase over the prior quarter and flat year-over-year.
Second quarter 2019 non-interest expense included $2.7 million of restructuring expenses, which consisted of $1.8 million in costs associated with the rebranding to Amerant and $900,000 of severance costs associated with workforce reduction during the quarter in connection with our transformation efforts. As we have discussed in previous quarters, we continue to focus on rationalizing our personnel expenses, as reflected in the reduction of 50 FTEs this quarter. For a total reduction of 101 FTEs or 11% in the last 12 months. Each of the first two quarters of 2019 included amortization costs of the restricted stock granted to select management and staff in December 2018 in connection with our IPO. The total amortization for 2019 is approximately $6 million or $1.5 million per quarter through 2019. Declining to an estimated cost of $2.7 million in 2020 and $1.1 million in 2021.
This amortization cost largely offset the personnel cost savings we have achieved this year resulting from the workforce reductions announced in December 2018, and additional reductions during the first and second quarter. Moreover, the cost savings from the reduction of 50 FTEs in the second quarter is not yet reflected in the results as most of the terminations took place later in the quarter. On the rebranding, we expect to incur approximately $1.8 million in additional rebranding expenses in the remainder of 2019. In addition, we spent approximately $1.2 million in rebranding CapEx, which will be amortized in future periods. On Slide 12, we see that non-interest expense adjusted for the 2018 spin-off and 2019 transformation costs was $50.2 million, down almost $1.6 from the prior quarter and up $1.6 from the second quarter of 2018.
Again, the first and second quarters of this year include the aforementioned IPO grant amortization costs. Turning to Slide 13. While we continue to be asset sensitive, our asset sensitivity will be reduced by the decrease in long-term brokered CD fundings as well as from our strategic exit from non-relationship SNCs and our focus on increasing core deposits. We have modeled that a rate drop of 25 basis points, which management believes is likely to take place during the third quarter, will impact our net interest income by approximately $5 million or 2% over the following one-year period. Now I hand it over back to Millar to conclude our prepared remarks.
Thank you, Al. Moving on to our last slide. Our goals for 2019 are largely unchanged from what we shared last quarter. We remain totally committed to executing our strategy, strengthening our relationship-driven business model, building on our rebranding to Amerant, and an unwavering focus on improving profitability and capital returns. With that, we'd be happy to take any of your questions. Operator, please open the line for Q&A.
Thank you. Ladies and gentlemen, if you have a question at this time, please press star one on your touch-tone telephone. If your question has been answered and you wish to remove yourself from the queue, please press the pound key. One moment, please. First question comes from Michael Rose from Raymond James. Your line is open.
Hey, good morning, everyone. How are you?
Morning, Michael.
Good morning.
Maybe we could start on expenses. I know the 50 FTEs kind of came off towards the end of the quarter. How should we think about the savings from the net reduction there that related to the retirement programs? Outside of that, what other levers do you have to pull on the cost side to offset some of the expected margin pressure from rate cuts? Thanks.
Well, I think as we explained, Michael, the full effect of our expense reductions is not clearly evident yet because of some of the expenses, the restructuring costs. In the case of the personnel costs, if we excluded the severance costs and we can see a savings of $500,000 even though we have that IPO amortization of $1.5. You can already see essentially a $2 million savings if you compared this quarter versus the fourth quarter of last year when we embarked in the reduction. As you rightly pointed, the reductions, the 50 FTEs took place basically in the month of June. That's not baked into the numbers yet. We expect that the full effect of staffing reductions in this calendar year from basically the 101 that we've already mentioned have taken place already. We expect that savings to be roughly $10 million.
Then again, the $6 million of the amortization is going to eat into that. We have to a certain extent, even though we kind of reduced our cost of living adjustments that we made to our staff. That's going to eat into it a little bit. Insurance costs are always something that can also eat into it somewhat. What we expect is that really that full amount of savings, especially when you see the amortization of the IPO grant going down to less than half of what it is this year. We expect to then start seeing a significant reduction in personnel cost next year, net personnel cost, as well as a total of other operating expenses. We don't really expect a significant change in the operating expense run rate.
There are some things that we're looking at, but we don't expect a significant reduction this year, but we'll start seeing that in Q1 of next year as the effect of the amortization and the full effect of the reductions takes place in that year.
Michael.
Okay. Go ahead.
I'd like to add that the staff reductions that we show are 50 in this quarter. Looking forward, we are still in the process of reviewing our operations, the activities that we do and trying to simplify as we do this transformation of the bank. We expect the number of FTEs to continue to decrease. We don't know the final number because we're still working through these processes. We're not done yet in the transformation of our operations process.
Yeah. For instance, in the fourth quarter, and we've said this before many times, there's going to be bumpiness along this road in terms of being able to see the savings materialize. We will have four new branches coming in line. We've said that before at the end of the year. We will have some staffing increases associated with those branches. Probably largely that the effect of those additional staffing for the branches will probably be offset by some of the additional reductions that we're working on presently. The branches will also start helping us with the domestic core deposit attraction.
That's great color. I guess to sum it all up, maybe we should think about expenses as kind of flattish in the back half of the year from second quarter run rate, maybe down a little bit. We'll really see the net reduction start to come in next year. Is that a good way to sum it up?
That's fair.
Okay. Maybe just moving to the balance sheet. Understanding that the foreign loans are essentially down to nothing at this point, you produced SNCs, non-relationship SNCs, pretty significantly. Could we actually begin to start to see net loan growth at some point over the next couple quarters?
Hi, Michael, it's Miguel. How are you?
Good.
Well, as you can see, the production has been there between core loans. We have a fairly modest second quarter. We believe we're going to still see some payoff on third and fourth quarter, and also we're seeing the pipeline to start to increase. As is typical on this time of year, we will see the core more pronounced out to the fourth quarter. The trend should be similar to what we have done on the first semester, with a slight increase to the end of the year. Next year, we have cleaned out the house with those foreign and SNCs. Our main focus on developing the relationship will help us increase the loan production and the net growth during the first semester of 2020.
Okay, that's very helpful. Maybe just finally for me, the forward curve is obviously pricing in more than the 25 basis points. I see in the slides the sensitivity for 50 basis points, if we get more than that, what does the sensitivity curve look like? Maybe if you can give some color on what you're assuming for deposit attrition costs, et cetera. Thanks.
Yeah. There's no doubt that the new rate outlook is going to be a headwind. We've made a lot of improvement in our NIM the last three or four quarters, and we had originally set our target to reach the three. This quarter, we saw a reduction in the NIM of four basis points from 296 to 292. Most of that was really from having to replace our foreign deposits with more expensive domestic deposits. I think it's still early. We probably see the rate decline this month. We're still unsure if something else happens this year. Some people think it's going to happen perhaps at the end of the year. In any event, what we modeled, and it's in one of the slides, what we modeled is roughly a $5 million reduction in net interest income for every 25 bps of reduction.
As we mentioned before, there's some bright sides in our balance sheet, with the TruPS redemption we're going to do shortly. We also have the opportunity for the other TruPS redemption sometime in the future. Again, if we're not growing significantly, and we continue to have strong results and we continue to accrete capital, we're going to have some currency to pay that off. We're not throwing in the towel yet in terms of the NIM. We're doing a lot of things to try to combat that compression.
Okay. Thanks for all the color.
Ladies and gentlemen, if you have a question at this time, please press *1 on your touch-tone telephone. Our next question comes from Michael Young from SunTrust. Your line is open.
Hey, good morning, everyone.
Morning, Michael.
I wanted to ask maybe another question just on the deposit side and deposit pricing. It looks like the CD book's at about 2.2% now in terms of effective cost. When do you think that that will start to repricing lower? I would just think that the market rates would be there or lower at this point, so there may be some leverage there. Is that being offset by something else, maybe money markets or something else moving higher?
Yeah. A lot of that, the increase in the cost of the CDs this quarter is really the renewals of longer-term CDs that were maturing this quarter. Remember, we've always said we were somewhat asset sensitive, and a lot of that came from the fact that we were attracting some longer-term money. As some of that longer-term money, which was put on before, several years ago at lower rates, is repricing. We have actually decreased the rates that we're paying. We're trying to no longer be the price leader in terms of our CD rates. Nonetheless, some of what we're dragging from several years ago may be repricing at a higher rate. We're using also, as we mentioned, we're using a lot of pricing intelligence. We got a crew of people looking at the customer behavior, the probability of renewal.
We're calling the right customers, the customers that we think will renew at less than the prevailing rates, which is very important. We're also making a lot of headway in attracting some of our deposits from our commercial customers. I think we cited some figures, and I think that's a huge success. I almost want to say that that's low-hanging fruit that we're seizing on at the moment. The same customer that we're trying to get more deposits from, hey, we're also trying to get his wealth management. It's really in line with that relationship banking that we're focusing on today.
Okay. Is there a specific maybe quarter or timeline to when you think you'll start to sort of lap some of the upward pressure on the CD book and would start to see some kind of pricing benefits, I guess? Whether that be in 2019 or 2020.
Yeah. It's probably towards the latter part of the year, and I think it'll be next year. As we also have more core deposits, I think that's the key. A lot of our focus is on trying to increase the core deposits. We're also trying to increase market share from our higher net worth Venezuelan customers, which we know many of them have relationships in other financial institutions. We think that's also another low-hanging fruit that we're working on. We can't probably stem that steady decline in our average mass market foreign account. I think we can make some inroads in increasing core deposits from the higher net worth individuals. There's a lot of moving parts to it, for sure.
Certainly. Yeah, I understand that. It sounds like generally on the foreign deposits, you kind of expect the same sort of maybe high single-digit pace of decline there.
I mean, mid-teens is what we've been experiencing.
Okay. No real change based on anything in the macro environment there?
No. In terms of the macro environment in the country, not really. If anything, we had always thought that it would be in the high single digits, the decay, and it's a little bit higher because since its situation has become protracted down there, the country is increasingly becoming dollarized. A lot more food services, living expenses are being incurred in $. Before there was exchanges that needed to take place, now individuals are transacting in $. Many of them are doing it through virtual channels. A lot of customers are using products such as Zelle and things like that.
Venmo.
Venmo. Yeah.
Got you. Maybe just lastly on kind of the credit card exit. I know that's pretty small, but you just had a little bit of an increase in the provision related to reserving for that. Do you feel like that's kind of fully captured what you expect in terms of potential shortfalls and kind of payoffs on that book of business?
Yeah. I'd have to say we're micromanaging that exit. We're not just looking at it on a quarterly basis. We're probably looking at it on a weekly, daily basis, practically. Because you're sunsetting a product and you're asking for repayments. We're being very cautious, and I think we're being very conservative, and that's why we increased the reserve for it by $1 million this quarter, and we continue to monitor it.
Also adding some color to what Al's saying, I think that we have seen good results by offering of our alternative product to those wealth management group. We have seen some deposits growing on the segment that we want to deepen our relationship.
Yeah, we kind of told customers that we would be able to provide them an alternative credit card with a partnership if they had a certain $ balance in deposits. What Miguel was alluding to is a lot of customers were actually going up to that minimum amount so that they could then avail themselves of that alternative credit card. The credit card is, again, as I mentioned before, the country is becoming dollarized. They're using plastic in many cases as well to live in Venezuela from their U.S. savings. It's very important for them to have a credit card. We see where they're taking steps and actually increasing their deposits.
Okay, thanks. That's all for me.
Ladies and gentlemen, if you have a question at this time, please press star one on your touchtone telephone. One moment, please. I'm showing no further questions at this time. I would now like to turn the call over to Millar Wilson, CEO, for closing remarks.
Thank you, operator. As you know, this is our second earnings call after the IPO. More importantly, it is only the second quarter in our journey to becoming a highly profitable, customer centric, high touch community bank. All of us at Amerant look forward to a bright future ahead. Thank you all for your time this morning, and have a nice day. Operator?
Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may disconnect and have a wonderful day.