Ladies and gentlemen, thank you for standing by. Welcome to the Columbia Banking System's third quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. Instructions will be given at that time. If you are on the telephone and should require assistance during the conference, please press star zero. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Clint Stein, President and Chief Executive Officer of Columbia Banking System.
Thank you, Tanya. Welcome and good morning. Thank you for joining us on today's call as we review our third quarter results. The earnings release and accompanying investor presentation are available at columbiabank.com. Our bankers' relentless focus on meeting our customers' needs is reflected in another quarter of consistent and outstanding performance. Net income of $64.9 million was a new record, eclipsing the prior high set just last quarter. A meaningful increase in top-line revenue was supported by robust loan growth, a stable deposit base, and an expanding margin. During the last rate cycle, the structural advantages of our deposit base, coupled with our wealth management capabilities, allowed us to significantly outperform industry deposit betas. At this point in the current cycle, we are seeing favorable results.
Teams throughout the company have remained focused on meeting the needs of our customers and continuing to scale our existing operations, while at the same time working with their Umpqua counterparts to plan for a seamless close of our merger. By simultaneously focusing on sourcing, cultivating, and preserving long-term relationships, we believe the combined company will best be positioned to respond and scale to future market share growth opportunities. Preparation for our combination with Umpqua Holdings continues to progress as both companies eagerly await regulatory approval. On the call with me today are Aaron Deer, Chris Merrywell, and Andy McDonald. Following our prepared remarks, we'll open the line for questions. Before handing the call over to Aaron, I need to remind you that we may make forward-looking statements during the call. For further information on forward-looking comments, please refer to either our earnings release website or our SEC filings. Aaron?
Thank you, Clint, and good morning, everyone. Pre-tax, pre-provision income of $88.9 million rose by $10.2 million on a linked-quarter basis and represented a new company record. The increase was driven by a combination of rising net interest income and higher non-interest income. Total deposits ended the quarter at $17.9 billion, which was a slight decrease of $16 million from the prior quarter, but the overall mix improved with a higher level of non-interest-bearing balances. Moreover, much of the rate-sensitive deposit outflows during the quarter reflected movement of funds to CB Financial Services. Our total cost of deposits rose by 5 basis points to 10 basis points during the quarter, caused largely by the routine repricing of municipal deposits. Total loans rose by $370 million to $11.7 billion.
This represents a 13% annualized growth rate, with balances propelled by $598 million of new originations and a 1.4-point increase in the line utilization rate. Total investment securities decreased $492 million during the quarter to $6.8 billion, which was split 69% available for sale and 31% held to maturity. The quarterly decrease was driven by scheduled maturities, premium amortization, and pay downs, as well as the fair value mark on our AFS portfolio. The expected yield on the current portfolio is 1.9%, up 1 basis point during the quarter. Our net interest margin increased 31 basis points on a linked quarter basis to 3.47% as we benefited from the repricing of existing floating and variable rate loans as well as strong production of new loans at rates above the portfolio average.
Moreover, our funding costs inched only slightly higher as we benefited from our stable, low-cost funding base with half of our deposits in non-interest-bearing accounts. New loans were brought on at an average tax-adjusted coupon rate of 4.73%, which is up from 3.93% in the second quarter and higher than the overall portfolio yield of 4.53%. We continue to be well-positioned for additional rate hikes as the Fed battles inflationary pressures. Non-interest income increased linked quarter by $1.6 million to $26.6 million. Of note, this included a $3.7 million gain related to the sale-leaseback of a building acquired through a former acquisition. This was offset by a decrease in loan revenue of $1 million due to the cyclical decline in mortgage banking as well as lower prepayment fees on loans.
Non-interest expense increased by $6.1 million linked quarter to $101 million. Adjusting for merger-related expenses of $3.2 million in the third quarter and $3.9 million in the second quarter, non-interest expense increased by $6.7 million- $98.2 million. This increase was largely due to $3.7 million of higher compensation expenses, resulting mostly from higher incentive payouts, a drop in capitalized loan origination costs from lower but still strong production, and a return to normal 401K matching expense after a favorable true-up of approximately $900 thousand in the second quarter. Data processing and software and occupancy expense increased due to project timing and loan expenses increased due to fluctuations in client reimbursement timing. For the current quarter, we project our expense run rate, excluding merger costs, to be in the mid-90s.
The provision for income taxes increased $1.3 million linked quarter to $17.5 million, representing a 21.2% effective rate. We continue to expect our 2022 tax rate to be in the 20%-22% range, perhaps at the higher end of the range given our higher profitability. Lastly, as we've previously discussed, the rise in interest rates results in a negative fair value mark on our investment portfolio, reflected through accumulated other comprehensive income. While this mark does not affect our regulatory capital ratios, it does weigh on our tangible common equity ratio and tangible book value. Excluding AOCI, however, both our TCE ratio and our tangible book value increased during the quarter. With that, I'll turn it over to Chris.
Thank you, Aaron. Loan production was our best third quarter on record and our fourth-best quarter overall. I'm especially proud of what our bankers continue to achieve given an extremely competitive market for loans and competition remaining very aggressive on pricing and structure. To achieve this level of growth while stepping away from loans that didn't adhere to our underwriting and/or pricing disciplines speaks volumes about the quality of our bankers. About 23% of the growth in our loan portfolio was due to increasing line utilization, primarily in the professional services and entertainment sectors. Within the remaining growth, driven by robust production across multiple sectors, but predominantly in real estate leasing, healthcare, and agriculture. Our pipelines continue to remain to our satisfaction. The quarterly production mix was 55% fixed, 36% floating, and 9% variable.
Term loans represented $405 million of the total new production, while new lines accounted for $193 million. The overall portfolio mix is now 54% fixed, 31% floating, and 14% variable. Overall, the composition of the loan portfolio did not change materially during the quarter, even with the increase in line utilization. As a result of higher rates, we continue to see a decline in our residential mortgage production, with sold loans dropping from $39 million linked quarter to $18 million for the third quarter. During the quarter, we saw a marked increase in the transfer of deposits from Columbia Bank to CB Financial Services, rising to $266 million from $95 million in the second quarter. As Aaron mentioned, bank deposit balances remained level, declining by only $16 million during the quarter.
The mix improved slightly, and as of September 30th, deposits were evenly split 50% non-interest bearing and 50% interest bearing. Our overall composition remained consistent with 60% commercial and 40% retail. We continue to expand and recently added an experienced team leader who is building out a loan production office in the Phoenix market. This is on the heels of our expansion into the Salt Lake City market, and we are very pleased with its results. As we continue to strategically invest in our retail network, our newest Financial Hub opened during the quarter in the vibrant Proctor District of Tacoma. Financial Hubs are full-service locations that are uniquely focused on helping our clients achieve their comprehensive financial goals, including investments, trust services, and other financial considerations.
I want to recognize the hard work and commitment of all of our bankers who continue to support each other and our clients as we await regulatory approval for the upcoming combination with Umpqua. They have done an excellent job anticipating and meeting the needs of our existing clients, which I expect to continue once the merger is finalized. Now I'll turn the call over to Andy to review our credit portfolio performance.
Thank you, Chris. With just $314,000 in net charge-offs during the quarter, a $5.3 million provision drove a $5 million increase in the allowance. The additional reserve was primarily driven by loan growth during the quarter and, to a lesser extent, a declining economic forecast. We continue to see softening in the economic outlook evidenced by less favorable forecasts for GDP, unemployment, and other key variables. Offsetting loan growth and a less than favorable economic forecast was a continuation in the trend of improving credit metrics. NPAs to total assets and non-performing loans to period-end loans fell to only 7 basis points and 12 basis points respectively.
There was very minor credit migration during the quarter, with overall watch and problem loans falling from $499 million or 4.4% of total loans to $490 million or 4.2% of total loans as of September 30. Given these metrics, we expect loan growth and the economic forecast to continue to be the primary drivers of changes to our allowance. In summary, while we continue to see solid credit metrics, we will continue to remain vigilant to supply chain impacts from the war in Ukraine, rising energy costs, inflation, and the impact of rising rates on the housing and domestic economy in general. Okay. Clint?
Thanks, Andy. Our regular quarterly dividend of $0.30 was announced earlier this month and will be paid on October 28 to shareholders of record as of the 17th. This concludes our prepared comments. As a reminder, Andy, Chris, and Aaron are with me to answer your questions. Now, Tanya, we'll open the call.
Certainly. As a reminder, to ask a question, you will need to press star one one on your telephone. Please stand by while we compile the Q&A roster.
One moment. Our first question will come from Jeff Rulis of D.A. Davidson. Your line is open.
Thanks. Good morning.
Morning, Jeff.
Just a question about the expenses, maybe for Aaron, as he kind of chased that down. You know, expenses this quarter higher than the mid-90s guide. Wanted to see if there's any pull forward on costs that may help future run rates. I know that you've talked to mid-90s and you're sticking with that in Q4, but were there upfront expenses that may offset going forward? Thanks.
Hey, Jeff. I wouldn't call it upfront expenses per se, but there are timing issues that influence from one quarter to the next. The mid-nineties guide is, you know, it still kind of holds. If you look at where we've been through the year and averaged that out, we're right in that range, and I expect it to stay so. The variability that you kind of see quarter to quarter can bounce around a lot. Remember last quarter there was that $900,000 kind of benefit we had in our 401k true-up . There was also actually a medical accrual benefit that we had in the second quarter as well that was around $500,000.
We had a big swing in the capitalized loan expense between the two quarters. That was actually a variance of like $1.4 million. We also had about $1 million true-up in our for the incentive plans, just given the strong year-to-date performance that we've had. Other items in the quarter that the data processing software expense was up a fair bit. There were a few things there. A big part of that again was kind of timing on just certain expenses and when they hit during the course of the year. We also just had some projects related to continued investments in the business.
There were some just higher contract pricing as some of the tech contracts that we have do have built-in inflation adjusters. Occupancy line was up a little bit, that reflected just some timing of repairs that were getting done during the summer months. As Chris noted, we opened our new Proctor Financial Hub, and there were some expenses related to that. Otherwise, the other line, I think the increase there was largely some timing issues just related to certain fees that we pay on behalf of customers in terms of credit reports, title insurance, UCC filings, that sort of thing. When we collect those fees back from the clients.
I think there were some appraisal fees that were higher in there and just some other one-time stuff as well, not, you know, so just really just timing, nothing that was, you know, a recurring kind of thing that I would draw attention to.
Okay. A lot of pieces there. I guess trying to get a sense for what you have shared on a combination with Umpqua on tangible book value and dilution. Obviously, we can track individually the AOCI pressure, but, you know, updating those marks and getting to a comfortable level, either, you know, have you shared specific figures or some guideposts as to what you think pro forma tangible books could be. Thanks.
You know, we of course are tracking that very closely and, you know, giving a lot of thought to what that's gonna look like in terms of where the marks come in. We haven't given any guidance on that front and have refrained to do so just given the significant volatility that we've had in the rate environment.
Okay. Clint, I wanted to maybe shift gears. I think through the course of the merger announcement, you've expressed very limited. I think you've touched on sort of regrettable losses on a personnel basis as we've extended the close here. Just wanted to get an update on that front if you've seen any other departures that given the delay, if that's impacting you know decision or departures or anything on that side. Obviously, we've tracked a couple hires, but wanted to check in on the other side of that.
Yeah. You know, when I think about, you know, I think the pace or the number of departures in the third quarter were much lower than what we saw in the second quarter. Nothing that I'll say from a customer facing perspective or direct support of our production capacities elevates to the threshold we've put in place of regrettable attrition or turnover. You know, there's an individual in our risk group who had the opportunity to go become a CRO somewhere else. You know, I'd say that we wish that she was still part of our organization.
That's pretty far removed from anything to do with production or anything. It's more administrative. Not really anything that's jumping out at me. I'll let Chris weigh in here in a second, but what I'd just leave you with is if you look at the activities that continue.
It was actually from an operational standpoint a fairly quiet. I believe the term that we used on our last board call was benign quarter. That's all relative given, you know, that we've just managed the company through a global pandemic. When we look at the core operating performance of our company, the third quarter, we hit on everything that we would've hoped to have hit on at the start of the quarter. You know, had great loan growth. I believe that when everybody reports, you'll see that we're one of the better performers on our deposit beta.
We've mentioned that, part of our strategy in that regard, one is just the strength of our deposit base, but also our wealth management capabilities, and that's a tremendous asset in terms of being able to minimize those costs. There's nothing. I guess the reason I'm rehashing all of that is that, if we had any material regrettable turnover or attrition, we wouldn't be able to accomplish those things. Our top-performing bankers are still out there, executing, taking care of their clients, growing their books. You know, that energy and excitement is what's allowing us to attract the new talent that's coming in.
You know, it's throughout our existing footprint. We continue to attract talent. It's also, you know, what we've done in our expansion into the Utah market. Chris glossed over the team leader that we've hired in the Phoenix market, and we'll start building that out as well. I'll step back and see if Chris has anybody that's hit his radar that he would classify as regrettable.
Thanks, Clint. Jeff, you know, the same. I wouldn't classify anything as regrettable, but to give you an idea of some of the movement that takes place, we had an individual that was a team leader for our retail business banking group, located here in the Puget Sound. He had sold his house a year ago, had expressed a strong desire to relocate out of the Puget Sound area. We were working with him on that, as an option. Another bank picked him up, and he relocated to Spokane during the quarter. Now, the team is intact. The team's off and producing. When you look at somebody relocating to a different part of the market, I wouldn't put that into a regrettable standpoint.
You know, good team leader, but it won't affect our production going forward. I can tell you that the teams that have joined us specifically in Utah, they're hitting the ground running. They're off and producing, and that's a really good sign to hit the ground quickly on that aspect of it. The other piece I'd put out there and just to reiterate, you know, Clint and our top producers are staying with us, and they see the vision. I would tell you that our competitors are calling. They're very aggressive on opportunities in all of our markets. To date, again, nothing that I would classify as regrettable or is gonna affect our ability to execute on our strategy.
Okay. Thanks for the update.
Yeah. Thanks, Jeff.
Thank you. One moment. Moving forward, our next question will come from David Feaster of Raymond James. David, your line is open.
Hey. Good morning, everybody.
Morning, David.
Morning.
Just kind of maybe following up on the transaction. Look, I know this deal has taken longer than we all wanted it to, but I'm just curious. As you and Umpqua continue to run down parallel paths, both performing well, extremely well independently, could you talk about maybe how y'all have already begun working together to maybe service some common clients or even servicing larger clients like we've talked about? I mean, obviously, we've already started to see some new hires from, you know, on both sides with new talent being attracted to the combined entity. But just I'm thinking maybe are there any ways that the longer time to close has been beneficial and maybe could even make the integration smoother? Is there anything like that that could come to fruition?
David, you packed a lot into that question.
That's all right.
You know, it's been a few months since you've seen me, but my hair continues to get whiter. I think part of that is the challenge that we have. We're still running two separate companies. We have to go out and compete, as odd as this sounds, against each other within the marketplace, as two separate companies. We have, you know, kind of a firewall in between with the folks that are working on the integration. There's things that we can't do. The first part of the question relative to collaborating on large clients or really any clients.
That is a little bit of awkwardness that we've been placed in for the past year. What we can do is we can plan for the integration, and we've decoupled things that are specific to the systems conversions, product planning for the combined company, all of those things from legal day one. We're still able to make progress on that, and that's why at this point we still believe that the systems conversion pending receipt of, I think all we're waiting on at this point now is the Federal Reserve and the FDIC. The State of Oregon has given their approval. We announced our letter agreement with the Department of Justice.
Assuming that those other two regulatory approvals come in, you know, in the near future, we're on track for that first quarter core systems conversion. Where the extra time has been beneficial, a year ago at this time, there was a lot of questions from people about our cultural compatibility, and we've spent a lot of time in investor meetings talking about the similarities of our cultures and our companies. We've put a little over 1,000 leaders between the two companies through a full day culture launch session. We wouldn't have been able to do that if we'd closed, you know, on a more traditional 6-month timeline.
We had time to clearly identify the combined culture, develop the culture activation content. I'll get points for using those terms from our Chief Marketing Officer. We actually have scheduled starting next month, where we'll put associates across both companies through a condensed version of that. I think those things help accelerate the social integration. The systems integration's tracking just fine, along with, you know, along our original timeline. The delay in the close has enabled us to get the social cultural elements, I think, more defined and in front of folks. I think that's gonna be a huge benefit as we do get to the close.
I think that's why the momentum each company's maintained independently is important, and I think that will carry over, and that momentum will continue, if not accelerate as we come together as one company.
Okay. That's great. Thank you for that. You know, just looking at originations. Originations were really strong in the quarter. I think a testament to what you were talking about retaining your key personnel. I'm just curious what you're seeing on the demand front. Has higher rates started to impact the pulse of your clients? Are you starting to see any shift in demand just given the challenging economic backdrop? Just curious what you're seeing on that front.
Yeah, David Feaster. It's certainly all things considered in that. I think the biggest issue is from a pricing standpoint. I wouldn't say that's truly affected demand outside of for us, you know, our mortgage team, which has never been a huge source. It's very important to what we do, but that's very interest rate sensitive. There's still transactions that are going on. There's plenty of C&I. There's plenty of CRE as well. As I mentioned, you know, we're trying to hold the discipline to pricing. Then certainly I've always followed our discipline with Andy McDonald at the helm of our, you know, conservative underwriting and being prudent on that, knowing that, yeah, the environment could change dramatically on us, and I think we're in a good position there.
You know, that keeps us out of some deals by not being a max proceeds lender, things of that nature. Then just being very selective on the types of deals that we're doing and really trying to target complete relationships and working on that aspect of it. I think demand in general is pulling back. I wouldn't expect numbers to be continued to be put up like this in record quarter after quarter. The teams are finding their way into prospects. Our clients are still actively doing things. Overall, yeah, I would expect it to pull back some.
Okay. That makes sense. Just maybe touching on deposits. It was great to see non-interest-bearing growth in the quarter. I was hoping you could just give us a little color on that. Maybe just touching on the other side, the outflows that you saw outside of that. It sounds like it was mostly moving more rate sensitive clients into the trust in the wealth management side, or are you starting to see more clients work through cash balances? Just curious what you're seeing on that side and expectations for flows near term.
David, if I understand, that sounds like kind of two different things there. The outflows to CB Financial are really a byproduct of finding out what the client is really looking for. Is it truly a rate sensitive bank deposit, or are they looking to increase their yield, and they truly have excess funds that they can deploy outside of the bank? You know, it's no secret that there's more attractive returns in treasuries than there are in bank deposits. We've seen a healthy move into, you know, kind of liquidity type portfolios. We're still seeing people that are moving money and investing, but most of that is truly for liquidity purposes of the number that I mentioned.
Beyond that, we still have our process where we're talking to our clients. Some of them are walking in with specials from CD specials from banks down the street. They might have $100,000 with us, and we ultimately find out. These don't go into those numbers, but then we find out they've got an investment account somewhere, and nobody's talked to them in a long period of time, and we get to make those referrals as well. That helps to attract outside money into the bank deposits as well. It's really. Honestly, it's really full service and getting to know the client, what they're really looking for, and then probably even more importantly, finding out where all of their other deposits and money are housed and really surrounding that relationship. We see that moving.
We also continue to bring in some new relationships. You know, it's not at the same pace and level that we are accustomed to historically, but we're still winning new relationships. I think that's really important and a sign as to how not only our bankers, but our clients are seeing the opportunities of the pending combination and the products and services and the complete set that we'll have going forward, and they're making those moves now. I don't know if Aaron wants to add anything in there or not.
I think you captured it.
All right. Thanks, everybody.
Thank you.
Thanks, David.
One moment. Our next question will come from Matthew Clark of Piper Sandler. Matthew, your line is open.
Thanks. Hey, everyone. Just wanna close the loop on the merger discussion. Can you just remind us, core conversion process, you know, who's moving to what on the commercial side? It sounds like attrition has slowed here, which is great news, but can you just give us a sense for how you're gonna try to defend and limit attrition with that commercial conversion process?
Yeah. The core system is we're going with Umpqua's FIS platform. We've talked with, you know, our existing core platform at Columbia has been benchmarked to about the size of what the combined company would be. It, you know, didn't really wanna test new grounds with that system because, you know, our intent is that we're gonna continue to, on a combined basis, have opportunities to take market share and grow and especially in some of the novel markets that both companies have established a presence in the past year. Back to how that makes some of the other decisions, you know, neither bank...
You know, sometimes in larger deals, it's one bank is forced to do something because they fell behind in an area, you know, maybe in tech or something, and they couldn't make the investments and catch up. That wasn't the case or isn't the case here. Really it came down to, well, how do we limit execution risk? Knowing that we're gonna go with the Umpqua core that's in place today, well, you know, their business online banking platform is already piped in to that system. We're able to reduce the risk of if we were to pipe in a new system or Columbia's system, and it's a very good platform.
There's some capabilities that our bankers are really excited about with that. How do we limit the risk of that? Part of it is the experience. We have a very experienced team from both organizations that have tried and true processes that they're applying those and past learnings with other integrations and conversions. You know, that's an important aspect of it. Just planning, more planning, and that's a follow-up to my response to David's question about the protracted approval timeline has allowed for additional planning and scheduling of mock conversions and things.
Then there are some other things that we can do as we bring on new business. I know our competitors would probably love for me to open the playbook up and tell them what that is. It's just a comprehensive approach to making sure that the clients are taken care of, communication's open and they're supported throughout the entire process, if they're moving from one system to another. On the consumer side, it's much easier. We're on the same platform. We both use Q2 for that. There's some functionality things that have to be mapped out and integrated, but other than that, it's the same platform.
I can see Aaron's itching since he's assigned directly to the integration management office to weigh in here. I'm gonna step back and see if there's anything you wanna clean up on what I said.
No. I think you captured it. All I would say is that there is such a tremendous amount of planning going on. I mean, we're meeting, you know, weekly with the teams, coming together and, you know, evaluating systems and what the conversion on all aspects of that is gonna look like. Both from an employee experience, from a customer experience and making sure that it's going to be as seamless as it possibly can be. In many cases, you know, we expect that to be just an absolute white glove, you know, handoff from one system to the other so that, you know, from the client's perspective, it's just nothing but getting better. We feel very good about how that's shaping up.
Obviously, you know, it's with the delays in the approval there, that's created some timing differences for when we, you know, might be doing things versus other times, but we still feel really good about that March conversion date.
Great. Thanks, guys. Then last one for me. Just looking at the overall balance sheet on a standalone basis, you know, obviously the deal's gonna muddy things here. But at least on a standalone basis, I mean, do you feel like, you know, earning assets continue to shrink modestly and just run down the securities portfolio to help fund loan growth?
Yeah, I mean, it's obviously gonna depend on what we see in terms of you know, loan growth and deposit flows. You know, we continue to take about $60 million a month off the investment securities portfolio in terms of cash flow to fund loan growth. That's you know, that gets a pickup of about 300 basis points on that trade. That continues to expand. Obviously, the you know, the margin trends have been very favorable. You know, we've continued to hold the line on deposit pricing as best we can. I think the team's doing really good on that front.
Looking at the spot rates between June 30th and September 30th, you know, total cost of deposits was only up four basis points between those two. You know, that's leaving us a lot of room to see better expansion on the earning asset yield. Good overall trends.
Do you have the monthly margin for September?
I do. It was 363.
Perfect. Thank you.
One moment. Our next question will come from Chris McGratty of KBW. Chris, your line is open.
Oh, great. Apologies if I missed it. We saw from one of your competitors this morning that, following the integration, they are, you know, tweaking some exposures to some portfolios. Wondering if there's any portfolios or businesses you may de-emphasize, and take advantage of it during the, when you mark the balance sheets and put them together.
I think I caught most of that. Is the question of when we mark the balance sheet, does that give us an opportunity to step away from a certain asset class? Is that what you're-
Yeah. Yeah. If there's any portfolios, big or small that, you know, on a pro forma basis, you may not want the degree of them a little bit larger. Any opportunities to kind of do that at close?
Yeah. I mean, at close, it does present that as an opportunity. In prior transactions, we've done that. Andy's done a masterful job over the years with a dozen or so that he's been a part of. That's something we've said is different about what we do, is similar, you know, I mean, what we do and what Umpqua does is similar enough, but just different enough that it's very complementary.
There isn't anything that either of us are doing on a standalone basis that when we look at putting the balance sheet together, that we don't want to continue to do and continue to maintain the expertise that we have in any particular area and leverage that across our entire combined footprint. While it is something that is part of an opportunity that can present itself, it's not one that we see a need to take advantage of.
Great. Thank you very much.
Thanks, Chris.
I would now like to turn the call back to Clint Stein for closing remarks.
Well, thank you again for joining the call this morning. Have a good day, everyone. Bye.
This concludes today's conference call. Thank you for participating. You may now disconnect.