Earnings Call: Q3 2018

Oct 23, 2018

Good morning, and welcome to the South State Corporation Quarterly Earnings Conference Call. Today's call is being recorded and all participants will be in listen only mode for the first part of the call. Later, we will open the line for questions I will now turn the call over to Jim Mabry, South State Corporation Executive Vice President in charge of Investor Relations and M and A. Thank you for calling in today to the South State Corporation earnings conference call. Before beginning, I want to remind listeners that the discussion contains forward looking statements regarding our financial condition and results. Please refer to Slide number 2 for cautions regarding forward looking statements, discussion regarding the use of non GAAP measures. I would now like to introduce Robert Hill, our Chief Executive Officer, who will begin the call. Good morning and thank you for joining. The 3rd quarter results reflect strong asset quality, modest net loan growth and continued tangible book value growth. Profit levels were impacted by lower fee income, sound expense control and net interest margin contraction. Net income for the 3rd quarter was $47,100,000 or $1.28 per share. This represents a return on average assets of 1.28 percent and a return on average tangible equity of 15.29%. Adjusted for merger related expenses, earnings were $49,100,000 or $1.33 per share. This represents a return on average assets of 1.33% and a return on average tangible equity of 15.9%. This has been a year of transition for South State and I am pleased with the progress made in the Q3. The merger with Park Sterling has gone well and is largely behind us. The loan and balance sheet repositioning we have undergone is mostly complete. Our North Carolina markets led the bank this quarter with double digit loan growth and we have added 200 customers onto our new treasury platform. While net loan growth is muted, underlying loan production remains strong and loan pipelines are solid. We have experienced loan growth in both consumer and commercial owner occupied loans, while CRE loans were flat for the quarter and also year to date. We have hired a number of experienced producers this year that are contributing to production. You see the opportunity to continue making additions to the team going into 2019. The ability to hire top talent reflects our growing brand recognition and the proposition to work in a more entrepreneurial environment. We do face headwinds in the near term with lower fee income due to the impact of the Durbin amendment, higher levels of interest expense and slower net loan growth. While overall revenue and balance sheet growth are below historical performance levels, we have taken steps in 2018 to position South State for the long term with a strong and liquid balance sheet and great optionality as we move forward. Hurricane Florence has a significant impact on parts of our North and South Carolina communities. I'm proud of the response of our team to help customers and each other. For many, the effects of this storm will require considerable resources and time to rebuild. We have made additional contributions to the South State Emergency Relief Fund and we'll be partnering with organizations in the communities most impacted. Our Board has declared a quarterly cash dividend of $0.36 per share, $0.01 higher than last quarter to shareholders of record as of November 9, 2018. I'll now turn the call over to John Pollock for more detail on the financial performance for the quarter. Thank you, Robert. Beginning with Slide number 4, we'll give you an update on the Park Sterling merger. Integration complete, we have hired additional talent and achieved our merger goals. Balance sheet repositioning, which is standard for us in post merger periods is mostly behind us. While this remixing has a short term impact on earnings, it has proven over the years to be beneficial in the long run. The end result is a core funded balance sheet with low concentration levels. We have also had a nice build in capital through earnings lower CRE to risk based capital levels, down from 2 27% at year end to 2 12% at quarter end. CLD to risk based capital from 91% to 76% for these same periods. On Slide number 5, you can see that our net interest margin decreased 10 basis points linked quarter and our net interest income declined $1,300,000 Total interest income increased by $1,800,000 but interest expense increased by $3,100,000 Our total loan yield was flat linked quarter, although the legacy and acquired loan yields increased 6 8 basis points, respectively. This is a result of the change in mix shown on Slide number 6. The higher yielding acquired book represented 30% of interest earning assets in the 2nd quarter compared to 27% in the 3rd. Slide number 7 shows you the impact that loan accretion has on our loan yields. Excluding loan accretion from both quarters, our total loan yield increased 5 basis points as competition for quality loan growth had a limiting impact on loan yield expansion in our markets. Of course, we had significant competition for deposits as well. Our cost of funds increased linked quarter by 10 basis points to 50 basis points as money market and certificate of deposit rates have expanded in our markets. Our low cost of funds has benefited in this rising rate environment by our very limited use of wholesale funding, strong non interest bearing deposits, the average of which increased by $35,000,000 this quarter. Our period ending deposits declined this quarter by $24,000,000 $21,000,000 of which was a reduction of brokered deposits. While we expect deposit costs across our footprint to continue to be under pressure during the Fed tightening cycle, we like the optionality that is available to us due to our strong core funded balance sheet. Slide number 8 shows a 6 point income linked quarter, dollars 4,800,000 or $0.10 in EPS due to the Durbin amendment. The remainder of this reduction is $1,000,000 in lower acquired loan recoveries and $500,000 in lower mortgage banking income. Like much of the industry, we are seeing less secondary market activity with higher mortgage rates and are also continuing to portfolio some adjustable rate mortgages. Wealth Management had another good quarter with $7,500,000 in revenues. Slide number 9 shows the increase in our adjusted efficiency ratio from 57.3 percent to 59.5 percent, mostly due to lower bank card income due to turbine. Non interest expense totaled $100,000,000 this quarter, down $10,000,000 due mostly to lower merger and consolidation costs. Excluding these costs, adjusted non interest expenses totaled $95,800,000 down $600,000 quarter. The main variances this quarter were higher salaries and employee benefits expense more than offset by lower information services expense, FDIC and OREO expense. Slide number 10 shows our adjusted earnings per share of $1.33 for this quarter bringing the year to date total to $4.15 This year to date adjusted EPS represents a 17% increase from the 1st 9 months of 2017. Slide number 11 shows a $0.73 increase in tangible book value to $35.37 I will now turn the call over to Robert for some summary comments. Thank you, John. This is the first time in 2 years that we do not have an acquisition or system conversion pending. We are using this opportunity to focus more intently on investments in systems and people to position the company for additional growth. I'm excited about the next few years and look forward to sharing our vision in more detail at our upcoming Investor Day in New York. This concludes our prepared remarks. So I would like to ask the operator to open the call for questions. Our first question comes from Catherine Mealor of KBW. Please go ahead. Thanks. Good morning. Good morning, Catherine. Think about the revenue headwinds that we've had the past couple of quarters with the margin and the repositioning of the balance sheet and then the fees? And in light of that, is there anything on the expense side that you think where you still got levers on the expense side where we can try to offset some of those revenue headwinds? And then at the end of your remarks, Robert, you mentioned that there are investments in systems and people that you're making right now because you're not in the middle of an acquisition. And so then how would that offset some potential cost savings you could see on the expense side? Thanks. Hey, Catherine, this is Robert. I'll start off. I think if you look at our overhead kind of ex accretable yield, our efficiency levels are not where they could be. So I think there's a lot to do on the expense side that we look at every year. There are a lot of various projects in place just to look at our processes, the technology behind them and how do we improve that. And I think that's where I think that's overarching where we are and you'll see a lot of those things begin to be implemented in 2019. But I think if you look at kind of the expense and the revenue side overall, the number of revenue headwinds we've had and we've been talking about now for a while have been meaningful. We've had the remixing on the balance sheet. We've had the Durbin Amendment. We've had higher cost on our funds. And all those things have given us some short term revenue headwinds, but they're starting to subside. We're not they're not totally behind us, but we certainly see where at least the balance for revenue growth as we move into 2019 2020 begins to kind of turn the other way. As we move past accretable yield, we do believe that at some point in time, not in the near term, but at some point in time, the cost on deposits will begin to stabilize a little bit as the Fed stabilizes. So I do think there are expense opportunities. I think the efficiency ratio shows you it's probably the best number to look at ex accretable yield at the opportunity there. But I really believe kind of what is going to end up building value for our shareholders is really the revenue growth. And this year, we felt like the priority was getting our balance sheet well positioned. We've seen a lot of balance sheets that we felt were very full, and we wanted to make sure that our core funding was protected, that we got this loan remix behind us, that our credit continued to be diverse, and that our capital level was strong. And so there's some years that we put expenses or revenues ahead. I'd say this year was a year to make sure that our balance sheet was in pretty good shape. So with that said, I would say as we move into 2019, the balance sheet remix comes to an end. The expense and revenue opportunities are better than they have been in the past and there's more of an ability and time for management to focus on those and that's very much where we are today. Okay, that's super helpful. Thank you, Robert. And then one other thing on just the acquired runoff, it feels like we're, to your point, in an inflection to where that's mostly complete. What should we think about a normal pace of acquired runoff to be moving forward? Catherine, this is John. I think it will be easier to tell after we get past next quarter, we've got one more quarter to complete the remix. But I think ultimately, it's going to get back to net loan growth. So I think if you look at our track record in the past, we've always done is we've retrenched, gotten the balance sheet where we've wanted to and then kind of said, all right, now we got to kind of get back to a mid single digit net loan growth pace, kind of get to that hurdle and then we've kind of gotten to mid single digit. So I think ultimately, it's going to get down to that net loan growth. Our production levels are very strong, very, very strong on the production side. So it's not a production issue, but I think that we really believe, as we've done in the past, is retrench your balance sheet, get the assets that you want, get rid of the ones that you don't want. I think as I said in the call last year, we grew 60 percent in 2017. So get through this last part of the retrenching, then I think it's really all going to come out in the net loan growth number. Great. Thank you. Our next question comes from Stephen Scouten of Sandler O'Neill. Please go ahead. Hey guys, good morning. Good morning, Stephen. I was curious, maybe following up on those last comments you just made, if you could put any sort of color or kind of numerical representation on the loan production, kind of what you're seeing origination wise quarter over quarter or year over year to kind of focus that in a little bit? Yes, Stephen, it's Robert. So if you look overall, Q3 was our best loan production quarter this year. We did right at $900,000,000 in loan production So $900,000,000 in Q3, it was approximately $800,000,000 in Q1 and Q2. So that kind of you had 7% loan growth in Q2, 3% in Q3, but more production. This speaks to still some of the churn that I think we're in the later stages of for sure, but that we've experienced this year. I think the other insightful thing to share is kind of where we're getting it. So, I mentioned in my remarks, North Carolina was up 10% in Q3. The year over year, North Carolina is up 6%, South Carolina is up 9%. So Virginia had more of the builder financed book and that's been shrinking out of that. So that's been the headwind in Virginia and Georgia has just been a little slower grower. So I think if you look at the overall number, 3%, obviously not where we have been historically or where we want it to be. But if you begin to kind of look in the production and then where we're getting the growth, we feel pretty good about. Same thing with components, I would say. The last kind of comment would be consumer real estate nice growth, commercial under occupied 8% growth. The area that's really muted our loan growth this year is a third of our portfolio approximately is CRE non owner occupied and that's been flat and we did that. There's obviously been some churns, but there's also was a remixing strategy there as well. So I think if you look overall of the production or by market or by segment, overall, we feel pretty good about the loan volume and quality. Okay. And I don't know if you may have said kind of quoted a number out there as we think about 2019, but do you think net loan growth can kind of return to that high single digit kind of pace as we get past this balance sheet remixing? So I think if you look at that volume level, if without the remixing and some of the CRE remixing, I think we would have been on that pace this year. I think that's what has muted it. So I think our production will continue to be strong because our pipeline continues to be strong, our markets continue to be very robust. And so there are a lot of new opportunities. So feel good about that part. The only unknown there I would say, Stephen, is how much more of the kind of CRE remixing do we see. It seems to be logical that it will begin to slow down, but I want to see it first. Yes. That makes sense. And just kind of thinking about the deposit side a little bit and how that impacts the NIM. I mean, you talked about, I think maybe John said pricing pressure will slow down at some point, but obviously not here in the near term. So have you been maybe have you been surprised by the level of increase on funding costs given the strength of your deposit base? And if so, what do you think is causing that? Because just given how core funded you all are and the liquidity from a loan to deposit ratio perspective, I was expecting a little bit less than what we've seen over the last two quarters. And maybe that's just me or I was wondering if you were thinking the same kind of things based on what you've seen. Stephen, this is John. I would make a few comments. I think first, and I made this comment last quarter, we remixed out about $500,000,000 of what I'd call wholesale funding in the company. And so our view was let's see if we can core fund the bank. Let's try to do it without the advances presently. Let's try to get rid of the brokered CDs. So that's kind of been a piece of the strategy. And then I think you begin to see the betas change. There's, I would say, a lot of balance sheets that are full with FHLB advances and broker deposits. And so competition wise, you begin to see rates move. We believe, as we always have, is the most precious resource we have is the core funding of our company. And so we didn't want to get too far behind. And so we feel that it will begin to settle out. But clearly, the last couple of quarters, it's been very, very competitive. Yes. So if I'm hearing you correctly, you would think maybe there could come a point here down the line where you could your deposit base would differentiate itself from peers a little more so just given where you see some of those people being extended like you said on the wholesale borrowings and brokered funds and other things like that. Is that fair to say? They could, but I'm pretty happy with 50 basis points in cost of funds regardless of what the beta is. I mean that's like when you put it out there and look at that, that's a pretty strong cost of funds. Sure, sure. Okay, very helpful guys. Thank you. Our next question comes from Jennifer Demba of SunTrust. Please go ahead. Thank you. I have two questions. First of all, can you quantify how many how much you've exited out of the Park Sterling portfolio since the transaction closed? And then my second question is on hiring and what your plans are, what you did in the Q3, if any, and what your plans are over the next few quarters? Jennifer, this is John. I'll take the first part of that. I'd say on the Park Sterling, I'm not going to give you an exact number, but I feel like this quarter we're going to kind of be getting close to being complete on that on the remixing. That doesn't mean we won't have a credit or 2 as we get further out that will come out of that book. I kind of go back to what Robert said, we had 10% loan growth in North Carolina. So we feel like we're very close to kind of having most of that piece of it done. Jennifer, on the people side, it's been a good year. We've added about 22 FTEs this year. The pipeline continues to be good and the productivity of those new people, it takes a little time for them to ramp up, but overall the production has been nice. Would you envision hiring a similar number in 2019? We tend to focus on the quality of the banker, who they are, time in the market. So we've been in constant recruiting mode for 25 years. So it's just a kind of a part of our DNA. It's not a number that we kind of set out that we got to go higher X number. It's really more just an ongoing focus in all of our markets. And we see what opportunities are there and we tend to take advantage of them. We've always seen that as the best way to create shareholder value and we're having good looks at great people. So we think that will continue. Thanks. Our next question comes from Tyler Stafford of Stephens. Please go ahead. Hi, good morning guys. I just want to start just on the loan growth. Is there a good proxy for us to think about in terms of how much of the acquired loan runoff gets refinanced into the non acquired portfolio? Stephen, last quarter was a little over $100,000,000 Okay. This is Tyler actually. Last quarter, Tyler. It's all right. So all right, got it. On the loan portfolio, can you just remind us how much is floating and adjustable versus fixed and just what the repricing base rates are between LIBOR and Prime? Sure. This is John. So when you look at our loan portfolio, about 55% of it's fixed, that's about 6,000,000,000 dollars 45% is variable, so it's right at $5,000,000,000 When you look at that variable piece, 45% of that are really hybrid arms. And when you kind of break down the indexes, so 2.5 $1,000,000,000 float with an index, and I'm going to talk about that in a second. Dollars 2,000,000,000 are hybrid arms, and then we have a little bit in the, what I'd call, the other adjustable categories. When you look at the variable rate pieces of that, 25% is prime based, 65% of it is LIBOR based and the rest of it is kind of tied to a treasury. If you step back and look at our overall loan portfolio because obviously we have some fixed rate loans that are going to reprice in a fairly short period of time, I would think of it in thirds. So about a third reprice is inside a year, a third reprice is between 1 5 years and then a third over that. Okay. So with the prior deposit cost outlook that you made and then that obviously that benefit that you should get in the Q4 from the loan repricing side, would you expect core margin flattish from here just given a stronger 4Q on the asset side? Yes. I would think we're still going to be under some deposit pressure. I still think we've got when you look out in the market, I still think you're going to kind of see deposit pressure be there. But I think one of the things when you think about our production, we are getting more variable rate production. So today, when you look at it and look at our production is a little over 60% of that is variable rate. Okay. Got it. And then just last one for me on the fees, the deposit fee this quarter. It was unclear to me how much was related to Durban versus the waived fees related to the hurricane. Should there be any of that hurricane fees that bounce back? And if so, how much? There should be. The Durbin piece of that was about $4,800,000 so about $0.10 And the hurricane piece of that on the fee side was a little over $100,000 So it's fairly minimal. Got it. Okay. That's it for me. Thanks. Our next question comes from Christopher Marinac of FIG Partners. Please go ahead. Thanks. Good morning. John, you mentioned about wanting to get ahead of the higher rates with some of the movement in the Q3. To what extent does that mean that you have customers who are just a little sensitive, but not extremely sensitive? And when do you have to revisit those customers if rates continue to rise into 2019? Chris, I think the way I would answer that is our strategy has been, as rates have moved up, is to not get too far behind. And so you have that piece, but then you have kind of the remixing pieces. A lot of people talk about the loan remixing, but clearly, you have deposit remixing when you take think you throw that piece in there. And then ultimately, look at FHLB advances today. I mean, they are over 2,270. So I think our view was let's pass this increase on try to give it back more to our core customers as we thought about rates. And then the last piece I would throw in there, when we think of whether funding betas in general is how are we doing on the non interest DDA growth side? Robert mentioned in his comments that we had over 200 new customers go on the treasury system. Is we see that as a piece that can continue to kind of bring down our cost of funds. So we're very, very focused on that piece to try to get more non interest DDA in low cost funding in the bank. Okay, great. That's helpful. Thanks for that. And just a follow-up, if you look at the progress both in Shumway and Richmond, how would you compare the 2? And is the upside how different is the upside for the 2 markets? And Chris, you broke up a couple of things. You said Richmond and what other market? Richmond and Charlotte, sorry. I think, this is Robert. I'll just start off. But I think both are tremendous markets. I think right now, if you look at Charlotte, Richmond, Raleigh, Greenville, Charleston for us, it's about 60% of our overall production for the company is coming from those 5 markets. So today, it is a meaningful contributor. And today, we're not I think we're just at the kind of the tip of the iceberg in terms of the opportunities in Richmond and Charlotte. Charlotte, obviously, we just have much more market share. It's a much more meaningful part of our company. It's our biggest overall market in terms of our deposit base that we have anywhere. So we've got a meaningful branch presence, a meaningful brand and we've been in that market for 10 years. So there's just we've got a lot of traction building in Charlotte in terms of talent, in terms of brand recognition, in terms of volume. So I think the long term potential for Charlotte for us is significant. I think Richmond, the bank that Park Sterling bought, it was still newly integrated and then obviously integrated with us. They had a more of a builder finance focus and we're converting that to really being focused on wealth, mortgage, retail and commercial. So that takes a little bit time to turn that. But we have a tremendous team up there and really, really strong leadership. So feel good going into 2019 about the opportunities for loan growth in both of those markets. And if you think about this year, obviously, it's been good, but not as good as it can be. And Virginia has just been more of a tread water year to get through conversion and remix the loan book. Got it. That's great, Robert. Thank you very much. Our next question comes from Nancy Bush of NAB Research. Please go ahead. Good morning, guys. Good morning. How are you? Good morning. A couple of questions about the deposit environment. I mean, I've been around for a while and I know you guys have as well. And just how does the competitive nature of this environment compare to what you've seen in the past? Because I think we went into this year kind of thinking that it wasn't going to be as competitive as it has turned out to be. And the second part of that question is, I'm sure you saw the article in The Wall Street Journal yesterday about the loss of non interest bearing deposits throughout the industry. When that's happening to you, how much are you able to recapture? Nancy, I'll start. I think when you look at our company, we're very strong in retail. And so we have net checking account growth. So I think many banks are really struggling on that. So we feel really good on our net checking account growth. Our mobile adoption is really good. We continue to see that piece do very well in our markets. So I feel really, really good about that. I like you, I'm surprised at how rates have moved this year. But I think we got to the inflection point where there were a lot of full balance sheets. And so there's only so many brokered CDs you can do and there's only so much you can take out on FHLB advances. So that has really kind of accelerated some of the pricing. Right. And so I think our view kind of back to that 500 $1,000,000 that we remixed in wholesale funding is I think our view was let's try to get ahead of it a little bit. We do think it's going to begin to level out at some point. And then I think loan pricing will begin to catch up. On the loan side for us, the one thing that we're not going to sacrifice is quality. I think you can look at our credit metrics and that's something that is kind of the foundation of our company. So I think as we get later into next year that loan pricing will begin to catch up a little bit more. But if you're going to get there on the funding side is don't be too far behind because you're going to have to take it up anyway. So we've tried to be fairly aggressive to make sure we don't get too far behind. But at the end of the day, I kind of go back to where we are. And at 50 basis points cost of funds, I feel really good where we are from a funding side. And Andrew, this is Robert. Just to add a couple of points. Think as John mentioned, we've heavy in retail, we've got about over 700,000 retail customers. So a lot of granularity in that portfolio from the deposit side, but we just rolled out our online account opening product and we had 1500 new checking accounts open up. So we feel really good that just our core customer base continues to grow. And typically, when we grow checking accounts, we tend to grow deposits at a pretty nice rate as well. And then on the commercial side, we mentioned the 2 100 new treasury relationships. But if you look at our markets, I'd say 2 things. Overall, we have 7% deposit market share, but we only have 4% I'm taking all the counties we operate in combined, but we only have 4% commercial market share. So if we can just kind of level out our or normalize our commercial share with our total share, then that has a pretty meaningful impact for us. And then the other is kind of back to Chris' question on Richmond and Charlotte. There are more businesses in those in Richmond, Raleigh, Charlotte, there are more business opportunities in those three markets than we have in our rest of our footprint combined. So I think the treasury and commercial opportunities on the funding side there are fairly meaningful. Okay. And if I could just do a segue with that into the Park Sterling. I know Park Sterling is integrated and at some point you don't want to think about Park Sterling versus the rest of the company. But from a color standpoint, what has worked out better than expected about that deal and maybe you care to disclose worse than expected? I think on the better than expected front, how quickly we got just got traction in terms of just business development. We've had the churn in the lines of business that we elected to get out of or relationships that we chose to exit. But outside of that, our retention of customers has been really, really good. I would say the other the upside surprise there has really been Richmond. While we're early there, our executive team has spent time recently on a call day in Richmond. I feel great about that market, great about that team and feel like there's tremendous upside there. And then the last piece is the treasury component. And the treasury component, that's about 10% annualized increase in our treasury number of customers in Q3 and we've really just we have not even fully integrated that treasury platform. So that will be done by Q1 of 2019. That's kind of the last component to fully integrate. So I think those there are others, but I would say those overall would be the things that I would outline that would be the most meaningful. I think capital markets has been a little slower to get traction than I would have thought. I think there's tremendous upside in capital markets, but I think there were some changes that we need to make in terms of just from our discipline of pricing credits and the flow of when we bring capital markets in to make sure we do that the right way, I think that's an area that has potential that we have not fully tapped yet as well. The retail component, while we've had good retention, they were not heavy much of a retail focused company. And I think there's plenty of upside there, but we really hadn't seen a lot of new productivity out of those retail branches yet. Okay, great. Thank you very much. Our next question comes from Blair Brantley of Breen and kind of the flexibility you guys have on the CRE side based on kind of the guidelines and ratios, how are you viewing that market given some of the elevated churn and competition we're seeing out there from other peers and also non bank lenders? Blair, this is John. I would start. I would I think the main thing is we're not full. So our good customer relationships, if they've got an opportunity, we have the ability to do it. So I think that would be the overriding thing, I would say in the CRE market. And it kind of goes back to really everything is one of the things we focus on a lot is to not be too over concentrated in any line of business. So really all the lines of business on the loan side, we have customers we've banked for decades. So they've got an opportunity. We're going to be there to be able to try to do that for them. I would add, Blair, that our focus on the CRE front has been a lot of there are a lot of high network families in our CRE book who have CRE as a portion of their overall kind of investment strategy and that's been a really good place overall for us to be. But some of those families have decided to take chips off the table over the last year. And while we've had competition certainly for some non bank lenders and larger CRE deals, it's really I'd say that's really kind of not been the main reason for our lack of CRE growth. It's really been, A, the remixing that we chose to do and then B, we just had some more of our very astute long term very wealthy CRE investors decide to take money off the CRE table. Okay. And then going to capital, I thought you guys bought back a little bit of stock this quarter. Is there any update on that view there because with your building of capital and Blair, this is John. We have typically, most years gone back and bought a little bit just to kind of really stop the share creep. So that's why we've done it. We still have plenty of authorized shares out there. We've always found a way to kind of deploy our capital, but looking at where the markets are today, clearly looking at our share count as to be something that we will continue to discuss as we do capital planning. But yes, I think our view has always been we found a way to deploy it. But clearly, where the market is today, we clearly have the ability to do it and we have the authorized shares out there. So it is something that we continue to look at. Okay, great. Thank you. There are no further questions. So I will now turn the call back over to John Pollock. Thanks, everyone, for your time today. We will be participating in the Sandler O'Neill Financial Services Conference in Florida beginning on November 6 and hosting an Investor Day in New York on December 12. We look forward to reporting to you again soon. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.