SouthState Corp

F:FJ5

Earnings Call Analysis

SouthState's Q2 2024 Key Highlights and Strategic Moves

In Q2 2024, SouthState's net interest margin improved, driving a 15% rise in earnings per share. Despite deposit challenges, loans exceeded forecasts with strong asset quality. Revenue hit $425 million, surpassing expectations with net interest income of $350 million and noninterest income of $75 million. Key future plans include a strategic merger with Independent Financial, promising 27% EPS accretion and a $17 billion interest rate swap on earning assets, set to enhance capital management. Looking ahead, SouthState expects NIM to remain flat in Q3, with potential rate cuts to further boost margins in Q4 and beyond .

Strong Performance in Q2 2024

SouthState Corporation had a robust second quarter in 2024, with earnings per share increasing by 15% from the previous quarter. The net interest margin (NIM) saw a favorable inflection, rising to 3.44%, which was in line with their expectations. This was largely due to a slowdown in deposit cost increases and a growth in loan yields. Noninterest income rose by $4 million, indicating better-than-expected performance in that area .

Strategic Acquisition of Independent Financial

One of the most significant events in Q2 was the announcement of the acquisition of Independent Financial. This deal is expected to result in a 27% earnings per share accretion. The acquisition is strategically advantageous as it expands SouthState's presence into rapidly growing markets like Dallas, Denver, Austin, and Houston, which match the demographic profiles of their existing markets. The integration process is well underway with regulatory filings and a scheduled shareholder vote .

Loan and Deposit Trends

Loan growth was impressive at an annualized rate of 7%, bringing the year-to-date growth to 5%. This was driven by broad-based growth, particularly in middle market companies in the Carolinas. While deposits remained flat compared to Q1, there was a slight increase of 1% in average deposits. However, the deposit environment is still challenging, and costs are anticipated to peak in the mid-1.80s percentage-wise .

Asset Quality and Reserve Levels

Asset quality remains strong with charge-offs at only 5 basis points. Non-performing loans (NPLs) saw an increase of $21 million, but this was primarily due to a single loan with strong guarantor backing, making significant losses unlikely. The reserve levels are stable, with the total reserve to loans ratio slightly declining to 1.57%. The company's credit culture is conservative, focusing on quick downgrades and slow upgrades while maintaining solid guarantor backing throughout its loan portfolio .

Future Outlook and Guidance

Looking ahead, SouthState has provided guidance that its net interest margin (NIM) will likely remain flat in Q3 but could see a slight improvement of 3 to 5 basis points in Q4 if the market follows the anticipated rate cuts. The integration of Independent Financial is expected to add a 10 to 15 basis point increase to the NIM once the deal closes in Q1 2025. By the end of 2025, SouthState expects to have about $50 billion in loans and $55 billion in deposits, with an NIM ranging between 3.75% to 3.85%. The bank is well-positioned for future interest rate cuts, which could further improve margins into 2026 .

Earnings Call Transcript 2024-Q2

[Operator]

Thank you for standing by. My name is Kathleen, and I will be your conference operator today. At this time, I would like to welcome everyone to the SouthState Corporation Second Quarter 2024 Earnings Conference Call. [Operator Instructions]. I would now like to turn the call over to Mr. Will Matthews, Chief Financial Officer.

[William Matthews, executive]

Good morning, and welcome to SouthState's Second Quarter 2024 Earnings Call. This is Will Matthews, and I'm here with John Corbett, Steve Young and Jeremy Lucas. As always, John and I will make some brief remarks and then move into questions. We understand you can all read our earnings release and investor presentation, copies of which are on our Investor Relations website. We thus won't regurgitate all the information, but try to make a few comments and point out a few highlights on items of interest before moving to Q&A.

Before we begin our remarks, I want to remind you that the comments we make may include forward-looking statements within the meaning of the federal securities laws and regulations. Any such forward-looking statements we may make are subject to the safe harbor rules. Please review the forward-looking disclaimer and safe harbor language in the press release and presentation for more information about our forward-looking statements and risks and uncertainties which may affect us.

Now I'll turn the call over to John Corbett, our CEO.

[John Corbett, executive]

Thank you, Will. Good morning, everybody. Thanks for joining us. It felt like SouthState was firing on nearly all cylinders in the second quarter. We saw the long anticipated inflection of our net interest margin. Noninterest income was up. Expenses were well controlled and earnings per share were up 15% from last quarter. On the balance sheet, deposits are still a challenge, but loans grew better than forecast and asset quality is in good shape with only 5 basis points in charge-offs. . The most impactful event of the second quarter was obviously the announcement of the independent financial transaction. We spent the month of June in town hall meetings with employees in Dallas, Denver, Austin and Houston. And David and his team are incredibly welcoming and hospitable. They're all terrific. With no branch overlap and no change to the geographic leadership structure, it makes this much easier to integrate and for our bankers to keep their focus on serving their clients and building the bank. We've already filed the proxy, and we've scheduled for the shareholder vote for next month. We also filed the regulatory applications on July 1. So things are progressing on schedule.

We walked through the strategic rationale when we announced the deal in May. We're expanding into great markets. In fact, there's some of the only markets in the country that match the demographic growth profile of our current markets, both from people migration and income migration. We also talked about the financial power, with 27% earnings per share accretion.

But I want to take a minute and drill down on how we're thinking about the deal from a capital management perspective. As an industry, we're on the back end of the fastest increase of interest rates in decades. Our industry currently suffers from loans and investments that are under-earning their potential because they're not yielding current market rates. That's a negative overhang that will last for years. But the positive is the industry enjoys the benefit of strong capital ratios.

So the question for every bank management team is how to utilize surplus capital to reposition the balance sheet and unlock the earnings potential of these assets rather than waiting years. Many of our peers have chosen to execute a bond swap, and that's fine, but a bond swap never got us particularly excited as a capital management strategy. We looked at it as a dollar-for-dollar trade. You invest $1 of capital and you get $1 of earnings, but you accelerate the timing of the cash flows. Again, that's fine from a financial engineering perspective, but it feels to us like a dollar-for-dollar trade.

What we're doing with independent is a more powerful use of capital. Just like the bond swap, we're unlocking the earnings power of the bonds at Independent Financial, but it's not just the bonds. We're unlocking the earnings potential of their entire loan portfolio. So including both loans and investments, it's about a $17 billion interest rate swap on all earning assets. But here's the key. Rather than a dollar-for-dollar trade, the thing that makes this different is that we're utilizing the SouthState valuation and currency advantage simultaneously with the investment of capital, which makes the swap much more powerful as a capital management approach.

Layer in both the normal economies of scale we gain in a transaction plus the currency advantage and we see this as a far, far better use of capital than a vanilla bond swap. All $17 billion of earning assets moved to market rates and the rates are instantly locked in. Independents net interest margin opens wide and the only rate movement going forward will be deposit rates.

As we move into a period of likely lower rates, SouthState should benefit as a more liability-sensitive balance sheet with independent. I want to thank David and Dan Brooks, Dan Strodel and the entire independent team for making us feel so welcome and for their enthusiasm of what we're building together.

I'll turn it back over to Will to provide more color on the quarter.

[William Matthews, executive]

Thanks, John. Total revenue of $425 million for the quarter was a bit better than forecasted with net interest income of $350 million and noninterest income of $75 million. That total revenue number was up $10 million from Q1 on an equal day count. Our NIM of 3.44% rose 3 basis points and was in line with our expectations. As deposit cost increases slowed to 6 basis points at the lower end of our 5 to 10 basis point guidance for a cost of total deposits of 180 basis points for the quarter. And as loan yield increased 9 basis points from the prior quarter, also within our guidance of 7 to 10 basis points. . I'll note what appears to be something of an inflection point. This is the first quarter since Q4 of '22, where our improvement in loan yields exceeded our increase in cost of deposits. That brings our total cumulative deposit beta to 34% and our cumulative loan beta to 39%.

Confirming our expectations, our deposit mix shift appears to have slowed. In fact, for the quarter, average DDA balances were up slightly versus Q1 and the average mix of DDA to total deposits was unchanged from Q1's 28.5%. Steve will give some color on our future margin guidance in the Q&A. Noninterest income was up $4 million from Q1, a bit better than we expected. NIE, excluding nonrecurring items of $242 million was up $1 million from Q1 and moderately above Q2 of '23 levels.

Looking ahead to the remainder of the year, we have merit increases for most of the bank that were effective July 1, so compensation expense will increase. There are also some project and related expenses we expect to hit in the second half of the year. So NIE in Q3 and Q4 is still likely to be in the $250 million range. As always, NIE is somewhat dependent on expense items that vary with revenue. Our $4 million and provision expense essentially matched the quarter's net charge-offs, leaving the total reserve levels flat. And when combined with loan growth, caused the total reserve to loans to decline 3 basis points to 1.57%.

NPLs were up $21 million centered in one loan where we have guarantors with substantial liquid capacity and where we expect to resolve this credit favorably. Past dues and payment performance improved and are as strong as we've seen in recent memory. And we continue to expect that we will not see significant losses in the loan portfolio based upon current forecasts.

Lastly, on the balance sheet front, loan growth of 7% annualized brought year-to-date growth to a 5% annualized rate. and deposits were flat with Q1 levels with ending deposits down slightly and average deposits up approximately 1%. Capital improved with our TCE ratio growing to 8.4%, our CET1 to 12.1% and our TBV per share ending at $47.90.

Operator, we'll now take questions.

[Operator]

[Operator Instructions] Your first question comes from the line of Michael Rose of Raymond James.

[Michael Rose, analyst]

I just wanted to get a sense on just the loan growth expectations. I know you guys had previously talked about kind of mid-single digits. I think this quarter was a little bit better than what I was looking for. Just any sort of thoughts that you guys have and if you can just talk about kind of from the business perspective, what your customers are telling you. Would you expect to see assuming everything works out with the election deregulatory side, maybe is there any pent-up demand? I'm just trying to get a sense for kind of what customer activity looks like.

[John Corbett, executive]

It's John. Yes, you're right. We referenced about mid-single-digit loan growth guidance early in the year. And really, that's what we're tracking. We've done about 5% loan growth a little stronger in the second quarter. I think last quarter, Michael, we mentioned that our pipelines have grown significantly starting in November of last year, and that pipeline growth translated into loan production growth in the second quarter. Our loan production grew from $1.3 billion in the first to about $2 billion in the second quarter. So it's about a 50% increase in loan production. The growth is really broad-based. The biggest contributor we're seeing is C&I credits are largely middle market companies, and we're seeing the strongest growth out of the Carolinas. And in the last year, we benefited from the funding of construction loans that were made earlier in '21 and '22. That tailwind probably abates here in the coming quarters, so we may lose some of that benefit. But pipelines are currently stable, so we think our current guidance is still appropriate. But as always, it can be lumpy from quarter-to-quarter, but the payoffs of the wildcard they've been historically low the last few quarters, but we're starting to see some multifamily sales activities, so payoffs might increase.

[Michael Rose, analyst]

Very helpful. And then just switching to credit. You guys for a bunch of quarters built the reserves pretty meaningfully. You did have some modest upward migration, understanding it's off of very low levels. But the reserve did come down. The provision was, I think, much less than me and others were looking for. Can you just discuss some of the puts and takes and maybe what drove the increase in the earlier stage special mention and substandard categories?

[John Corbett, executive]

Yes, Michael, it's John. So I think we talked about a few quarters ago as the yield curve increases and rates rise, we'll probably see a migration and a more of a normalization in particularly commercial real estate loans, and that's kind of manifested itself, although it's slowing down the last quarter or two. But it's primarily a rising rate story. I think our culture, as you know it to be, is one that's quick to downgrade and slower to upgrade.

But as we talk to the credit team that are analyzing these loans, they don't see a material loss content, and we're not having really any significant payment performance issues. I think, Will mentioned it in his opening remarks, past dues are only 21 basis points, and we're all focused on office, but the office past dues are only 22 basis points. And if you take a step back, past dues in all commercial real estates, loans are only 6 basis points. So I think as we move through this rate cycle, we got lots of equity strong guarantors. We'll upgrade loans accordingly as debt service coverages improve, but we don't see loss content or our credit folks aren't particularly concerned at this point.

[William Matthews, executive]

Yes. Michael, it's Will. I'll maybe comment on provisioning. CECL is always a difficult and dangerous thing to predict. But the theory behind it, of course, is that you provision and advance recognized losses in advance. And if you look at our build over the last 8 quarters, it's up about $171 million provision expense net of charge-offs. And so if it's possible moving ahead, if you start to see improvements in economic forecasts, we and the industry if others fall the same practice would potentially see reserve levels continue to come down even as -- in some cases, you might see some folks charge-offs tick up at the same time.

So CECL's a forward-looking model, it does incorporate some other qualitative factors associated with things in your portfolio. But if economic forecasts improve from here, I wouldn't necessarily see our reserve moving up at all from where it is today.

[Michael Rose, analyst]

Makes a lot of sense. And maybe just one last one for me. I saw that you guys filed a fixed income presentation and looks like IBTX to the extent that you can comment, has some sub debt that's maturing in '24. Can you just talk about why this presentation was filed? And then any sort of comments as to what the sub debt do they expect that to just pay that down or just any comments you can give.

[William Matthews, executive]

Yes. All I'd say on that, Michael, is that IBTX as a stand-alone entity that has debt maturing shortly and they may or may not be opportunistic in the market to refinance it.

[Operator]

Your next question comes from the line of Catherine Mealor of KBW.

[Catherine Mealor, analyst]

It was great to see the margin come right in line with your guidance. I wanted to see what you're thinking about the back half of the year, particularly as we push the likelihood of cuts back to the likely to December?

[Stephen Young, executive]

Sure, Catherine. This is Steve. It's probably a longer answer than you're ready for, but I thought maybe I would spend a little time on this because, in April, I guess the headline is there's really no real changes to our guidance. But we did have, as we said, a material announcement in May that we're thinking about the transaction with IBTX, and it's 27% accretive. So it is a bit of a game changer as we kind of think about post the end of this year. So I guess the first point is, there's really no change to our guidance. I think we said $340 million to $350 million for the full year, and that's sort of where we are.

Let me kind of try to build a bridge from where we are and kind of where we're modeling, we're headed. And it's really the three assumptions around interest earning assets at $41 billion for 2024. That's no change. There's -- nothing has changed there. Our rate forecast that we talked about in April is the same. It is the Moody's baseline. It was 2 cuts in 2024 and 4 cuts in 2025. So that has not changed.

And then the third big assumption is around deposit beta. We're 34% on the way up. And we're modeling on a stand-alone company, has 20% on the way down. And then as a pro forma company with IBTX 25% on the way down. So for the stand-alone company, for us, we would expect NIM to be flat in the third quarter with the loan yields and funding costs offsetting each other. And if we get a rate set in September, the market seems to indicate, we would expect a 3 to 5 basis point improvement in the fourth quarter. And then for each rate cut thereafter, what we talked about before, we would expect a 3 to 5 basis point NIM increase for each of those rate cuts.

As we think about adding IBTX into the company, when IBTX closes, which we still expect that to happen in the first quarter, I'm not sure early or late. But we would expect a 10 to 15 basis point increase in the margin run rate for us as we mark-to-market the fixed rate loans and fixed rate securities of IBTX.

So to just kind of conclude as we kind of think forward from the bridge from here to the end of 2025. So by the fourth quarter of 2025, with these rate assumptions and our modeling assumptions that we announced during the merger, that we would have approximately have about $50 billion in loans. We'd have about $55 billion in deposits and our exiting fourth quarter NIM would be in the $3.75 to $3.85 range.

And then as we think about 2026, if Moody's baseline is correct, there's 3 more rate cuts in 2026. Which would add to our margins, that same 3 to 5 basis points. So, in theory, we’d be in 2026 get in the 3.90s potentially. If we don't get -- if we get fewer cuts than 6 that we're expecting, we would expect margin continue to expand, but it would be lower by 2 to 4 basis points for each rate cut that we have -- that we don't get, if it's lower -- if it's less than 6 rate cuts.

So hopefully, that kind of helps your modeling as you think about us on a stand-alone through the end of the year. and then us together with IBTX through 2025. Just two other comments on that. As we think about liability sensitivity in a low rate environment, our pre floating rate loans percentage of 30%. Post, it will be 27%, so a little less floating in a post-IBTX world. And then our deposits, as we mentioned, our beta is 20% in a pre-IBTX, and post-IBTX would be 25%. So that all kind of adds up to all of those assumptions to get to that guidance. So I hope that's helpful.

[Catherine Mealor, analyst]

Yes. That was awesome, Steve, as always. And one thing on the -- you mentioned last quarter that you still thought that before we get to cuts that your deposit cost would probably peak somewhere in the mid-1.80s. It feels like we're 1.78% now, so we're nearing that. Is that still how you're thinking about the deposit cost peak?

[Stephen Young, executive]

Yes. No change since the interest rate forecast didn't change. This quarter, we were 1.80%. I think is what's in our press release with our deposit costs. We still expect that to peak in the mid-1.80s. Probably in the third quarter, in the fourth quarter or late in the third quarter, excuse me.

[Catherine Mealor, analyst]

Great. Okay. And then your 3 -- the guidance you gave for next year ending at 3.75% to 3.85% that you mentioned, that, of course, includes accretable yield, correct? .

[Stephen Young, executive]

I wouldn't call it accretable yield. I would call it, market rate on interest rate swap. That's correct. That would be a...

[Catherine Mealor, analyst]

We will back it at a core....

[Stephen Young, executive]

Please don't.

[Catherine Mealor, analyst]

Yes. But still, but that includes the impact of the marks.

[Stephen Young, executive]

Yes. That's right.

[Operator]

Your next question comes from the line of Brandon King of Truist Securities.

[Brandon King, analyst]

So fees came in stronger this quarter as well. So just wanted to get an update on what you're thinking about fees going forward, I believe the range is kind of at 55 to 65 basis points, but I wonder if that's 55 to 60 basis points, but has that changed at all given the strength we've seen so far?

[Stephen Young, executive]

Sure. Thanks, Brandon. This is Steve. Yes, we showed you a slide on Page 29. But our fee income, it shows sort of a trend line on our fee income of $75 million or 67 basis points on assets, which was higher than our 55 to 60 basis point guide. We did have interest on an IRS tax refund payment that added about $5 million to the second quarter totals.

So if you kind of -- I would say that basically, there's not a lot of change to this guidance based on the interest rate forecast and the first cut to happen late in the third quarter. We would sort of expect that NII average assets to be maybe in that 55 to 65 basis point range. Before it starts climbing, as they start cutting rates and the capital markets businesses start coming back mortgage maybe in that 60 to 70 basis point range, maybe towards the first of next year. And then as we look at the pre look and as we -- a run rate perspective, when we add IBTX, which has a little less noninterest income, we would expect NII to average assets to be somewhere in that 50 to 55 basis points combined range as we get a full run rate after close.

[Brandon King, analyst]

All right. That's very helpful. And then, John, you mentioned in your prepared remarks that deposit environment is still challenging, deposits decline on a spot basis quarter-over-quarter. So could you just further elaborate on kind of what you're seeing in the deposit environment, any kind of expectations for growth going forward?

[Stephen Young, executive]

Sure, Brandon. This is Steve. I think where we are in the cycle is kind of right at the end of a rate pausing cycle. And I remember this from other cycles that liquidity is kind of hard until the rate cutting cycle goes into place. And we're trying to manage, obviously, deposit costs with growth. And right now, we're having the ability to fund our loans with our deposits and our securities balances. So I would expect that, I'll call it, in a rate-cutting environment, that liquidity typically comes back in money market funds, there's alternatives and other things as people are in the treasury. They typically go back in the bank deposits or some portion of it.

So in this environment, we've been really focused on managing our own capital and trying to remix the balance sheet without growing the overall balance sheet and the overall funding structure and trying to remix within it. So I would expect the team certainly focused on it, but we're also focused on PPNR, and so we're trying to balance those two things.

[Brandon King, analyst]

Okay. And just lastly, a clarification point on NIM guidance. What is your embedded mix, deposit mix expectations or assumptions within that with -- especially for noninterest bearing?

[Stephen Young, executive]

Yes. So we're non-interest-bearing this quarter is around 28%. I think it was, I think, it rounded to 28% last quarter. So I think we're seeing sort of a flattening off on a stand-alone basis. IBTX is a little less than that. But I think they saw a nice moderation there, too. So I wouldn't expect there to be a huge mix shift from here absent rate change or something like that. But right now, we've seen the sort of the trends, and I think maybe it was down 40 or 30 basis points. But hardly sitting around at all.

[William Matthews, executive]

This is around where we were pre-COVID. So it's hard to predict when the environment we went through is different, but this is pretty close to where pre-COVID, Brandon.

[Operator]

Your next question comes from the line of Gary Tenner of D.A. Davidson.

[Gary Tenner, analyst]

Well, you made some comments, I think, regarding construction projects. Obviously, they [ fumbled ] up and you're going to maybe see that moderate or decline a little bit. I'm curious, as it relates to completed projects, are you seeing any extension in terms of dwell times on your balance sheet before maybe there's a sale transaction or before the projects move to the secondary market or the permanent market?

[John Corbett, executive]

Yes. In some segments, we're seeing them to be a little slower to lease up self-storage, particularly. We're seeing a little slowness there. But on the flip side, Gary, we are seeing the capital markets start to fall and seeing more transactions in multifamily. We -- just, the last month, we saw a multifamily project trade at -- I think it was a 5.25% cap rate. So that tells you that there is activity out there and the ability to transact business and get these projects off the books.

[Gary Tenner, analyst]

I appreciate the color there. And then just I was just curious about the intra-quarter volatility on the DDA balance. It seemed particularly the largest quarter, the average balance, almost $2 billion above the March 31 over 630 balance. So just curious about that intra-quarter volatility. And how to think about it?

[William Matthews, executive]

Yes. Mary, our DDAs as a percent of overall deposits really flat on an average basis Q1 to Q2. I'm not sure I may have misunderstood your question.

[Gary Tenner, analyst]

I guess I'm just querying the delta between -- I've got your average DDA for the quarter at over $12 billion versus about [ $10.3 billion ] at period end and about [ $10.5 billion ] as of March 31. So I'm just curious if that inter-quarter volatility of average versus the period end? .

[William Matthews, executive]

Yes. I think you may have a blip in your model. We got average for Q1 was [ 11.957 ] and Q2 was [ 12.171 ]. So yes, a year ago June [ 13.333 ] for average noninterest year ago quarter 2. Maybe an input error in the spreadsheet.

[Stephen Young, executive]

That's on Page 5 of the earnings release.

[Gary Tenner, analyst]

No, I've got those numbers. Again, I was just trying -- the -- we -- I can talk to you offline about it. It's not a major out there.

[Operator]

Your next question comes from the line of David Bishop of Hovde Group.

[David Bishop, analyst]

There's obviously been a lot of argument around the commercial real estate space within the markets here. Into the deal, any sub segments or areas where you're consciously pulling back from and saying, hey, we're going to avoid this landmine, just not looking to grow this business and any areas where you might see some opportunities?

[John Corbett, executive]

David, really, I don't think there's any difference in philosophy of IBTX and SouthState. I think we are wanting to manage our total CRE ratio well below the 300% and see that decline over time. You were all cautious naturally on office, cautious on assisted living. IBTX has got a really good solid retail granular retail CRE book, and we're pretty bullish on that. So I don't anticipate a change in their lending practices or our lending practices, but I do anticipate with the way we're going to accrete capital that our CRE concentration ratio will drift down.

[David Bishop, analyst]

Got it. Appreciate it. But a housekeeping item. I know obviously, the profitability will escalate in the 2025 with the merger. How should we think about a go-forward tax rate once the merger is complete?

[William Matthews, executive]

Not forecasting a big change from where we are today, Dave. I'll probably have some more refined estimates as we move closer to closing and maybe better update you guys the next couple of quarters. But this standpoint, I don't have anything -- any major changes to project.

[David Bishop, analyst]

Got it. Appreciate the color.

[William Matthews, executive]

If there are no further questions, I'm going to add and make one clarifying comment on the non-interest expenses, because I've seen some of you in your notes have noted the cost of the cyber event, which we have in the non-recurring line item. And that year-to-date been about $8 million, about half of that in the first quarter and half in the second quarter. We have coverage for the cyber event. We have not yet filed the insurance claim. We have a retention amount and then there’s some amounts related to some employee payments that weren't technically covered by the policy that will be borne by us. Those two combined total about $2 million. So I know some of you are adding that back as operating expense in some of your models, but I wanted to just make that point. We have yet to file that claim and would expect to be reimbursed for all but about $2 million of the cost of that event. So just FYI.

[Operator]

Okay. So there are no further questions. I will now turn the conference back over to Mr. John Corbett for closing remarks.

[John Corbett, executive]

All right. Thank you guys for joining us this morning. We know you've got a lot of calls to jump on. So if we can provide any other clarity for you don't hesitate to give us a ring. And I hope you have a great day.

[Operator]

Ladies and gentlemen, that concludes the conference. Thank you for joining. You may now disconnect.