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Old National Bancorp
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Welcome to the Old National Bancorp fourth quarter and full year 2018 earnings conference call. This call is being recorded and has been made accessible to the public in accordance with the SEC’s Regulation FD. Corresponding presentation slides can be found on the Investor Relations page at oldnational.com and will be archived there for 12 months.
Before turning the call over, management would like to remind everyone that, as noted on slide two, certain statements on today’s call may be forward-looking in nature and are subject to certain risks, uncertainties and other factors that could cause actual results to differ from those discussed. The company’s risk factors are fully disclosed and discussed within its SEC filings.
In addition, certain slides contain non-GAAP measures which management believes provide more appropriate comparisons. These non-GAAP measures are intended to assist investors’ understanding of the performance trends. Reconciliation for these numbers are contained within the appendix of the presentation.
I’d now like to turn the call over to Bob Jones for opening remarks. Mr. Jones?
Great. Thank you, Dorothy. And nice job. Thank you so much.
Good morning and thank you all for joining us for Old National’s fourth quarter earnings call. I’m going to cover the highlights of the quarter and for the full year and let Jim Ryan provide more detail.
Jim and I are joined this morning by Jim Sandgren, Brendon Falconer, Daryl Moore, and John Moran.
Upfront, I would characterize the year as a highly successful with our adjusted net income of over $200 million, a record for the company. Likewise, I would characterize the quarter as one consistent with both prior quarters and our stated strategy.
We saw some anticipated noise in the quarter associated with Klein closing and the sale of the 10 branches in Wisconsin, but our fundamentals continue to look solid.
Klein represented the continuation of our measured growth strategy and, as Jim will cover later, our enthusiasm for the Twin Cities continues to build.
The sale of the 10 Wisconsin branches is consistent with our desire to constantly focus on improving operating leverage and our focus on increasing the average deposits per branch.
As a reminder, since 2010, we have consolidated or closed 201 branches and increased our average branch size from $34 million to $74 million. We do view average deposits per branch as a proxy for revenue per branch.
Our performance for the quarter was highlighted by strong deposit growth with a low deposit beta of less than 15% through the cycle as we continue to take advantage of our strong deposit market share and our great customer focus. We were particularly pleased with the impact it's had on our net interest margin expansion, but much like last quarter, the trend of loan paydowns continued this quarter. We saw over 300 million in paydowns for the quarter.
Let me add some color to those paydowns. 33% were because of businesses or real estate projects that were sold, 23% were the result of CRE loans going to the secondary market, and 21% were loans that were exited for credit reasons.
Loan competition does remain strong, but, while there are pockets of silliness, for the most part, structure and pricing is logical. Credit remains benign and any issues are one-off credits. We do not see any sector weaknesses .We do, however, remain cautious towards certain subsectors in CRE in, much like we spoke about last quarter, senior housing, retail and certain segments of multifamily.
Business optimism remains high as evidenced by our second best quarter of commercial loan production in the history of the company. While this optimism is high, there is a sense it is beginning to feel the effects of the noise coming out of Washington.
Some portions of our clients are directly impacted by the tariff wars such as agriculture, as well as some areas of manufacturing and housing that has shown some softness at the margin.
The impact of the government shutdown has been minimal in our markets to date. We do not have a large employee base that is affected. But while it's minimal, it is real for some of our clients, and we’ve responded in kind by developing a 0% interest rate loan for those impacted, as well as waivers of payments, et cetera.
We do not believe this will have any financial impact on ONB and, more importantly, it is just the right thing to do.
I must admit I've been very pleased with the most recent comments coming from the Federal Reserve. There appeared to be a possible disconnect between the data points the Fed was using in their analysis and the realities of the markets we serve.
Their recent comments regarding full employment and reduced concerns about inflation are more consistent with the feedback we get from our clients.
Obviously, with the potential for slower increase in the short end of the curve, we do hope that the long end begins to move. I don't need to tell you the challenges of managing a balance sheet in the current flat yield curve environment.
Overall, I'm very pleased with our performance for the full year and the fourth quarter. We remain very committed towards our basic bank strategy, which Jim Ryan was the architect.
Our view of M&A has also not changed. We will remain an active looker in our target markets and a highly selective buyer. And allow me to do my one Moranism for the day, we will not break the discipline box.
In closing, I appreciate the kind emails that I received from many of you. Please accept my apologies for not returning them. I must admit I was slightly overwhelmed with the reaction to my announcement that I could not respond to the multitude of communication.
A common theme throughout each communication that, while people were happy that I was moving into the next phase of my life, there were more than happy that Jim Ryan was selected as my successor by the ONB board.
I absolutely share that excitement. Jim is the perfect person to fill my very small shoes. His intellect and his strong leadership skills would take our company to the next level. I'm thrilled for him and for our company.
And finally, to each of you, let me say thank you. You've made me a better CEO by your questions, your challenges and your input. I've been the beneficiary of your collective knowledge and our relationship, and I truly appreciate all that you've taught me. Thank you very much.
Now, it’s my pleasure to turn the call over to Jim Ryan.
Thank you, Bob. And for the record, those are not small shoes to fill. More like Lebron James size shoes.
I'm honored to have been selected as Old National’s next leader and extremely humbled to follow Bob. I know I speak for all of us when I say we are very excited to continue to build upon the momentum we've established under your leadership.
Turning to the quarter on slide five, GAAP earnings per share were $0.28 and our adjusted earnings per share were $0.32. While adjusted earnings per share excludes the items noted on the slide, it does include $7.6 million pretax and incentive compensation true-ups and medical benefit accruals that were well above our normal quarterly run rate.
Those adjustments [trimmed] [ph] approximately $0.04 per share from the quarter. As you build your models and think about expense run rates into 2019, these accruals are worth bearing in mind. We would suggest that the quarter would have been closer to $0.36 without these higher than run rate accruals.
Moving to slide six, adjusted pretax, pre-provision net revenue was 16% higher year-over-year and 18% higher on a full-year basis. This result was driven by increased [sales] [ph] from our recent partnerships, maintaining our strong low-cost deposit base and a continued focus on expense management.
We also improved operating leverage by 215 basis points year-over-year. Further adjusting for the $7.6 million in incentive comp and medical benefit true-ups, adjusted pretax pre-provision would have increased almost 30% year-over-year, while operating leverage would have improved 400 basis points.
Next, on slide seven, as Bob already referenced, we had the second best quarterly production in the company's history this quarter. Our overall balance sheet growth was muted by a large number of payoffs and commercial real estate loans being refinanced in the secondary market, we remain very pleased with both the production and pipelines.
The commercial engine is alive and well here and we’re seeing good activity across the footprint. We’re especially enthusiastic with what we’re seeing in the Twin Cities as we bring Anchor and Klein together and are now several quarters past the Anchor conversion.
Our loan yields improved from higher interest rates and higher accretion income from Klein, which was partially offset by lower-than-normal levels of interest collected in non-accruals.
Slide eight demonstrates our year-over-year change in earning assets. Again, this is very consistent with our stated strategy of ongoing balance sheet remix objectives. As a percentage of total earning assets, commercial loans are up almost 4%. Less productive earning assets, including indirect loans, continued to decline as a percentage of the total balance sheet.
After three years of hard work, we are approaching a more optimal mix and, at the same time, Chris Wolking, our former CFO, has done a great job of improving the profitability of the indirect portfolio.
We've added earning asset yield information to the slide. Excluding accretion income, overall asset yields were up 11 basis points in the quarter. We have seen our asset yield increase nicely over the last several quarters.
Moving to slide nine, we continue to believe that stable, low-cost core funding creates a sustainable competitive advantage. This is the hallmark of our franchise. Our deposit beta is now just under 15% current cycle to date, while our cost of total deposits is just 40 basis points.
Next, on slide 10, our net interest margin exceeded our expectations. Excluding accretion, it was 3.37%. Asset repricing positively impacted our margin as did well-controlled deposit costs.
Accretion increased 8 basis points from the third quarter, mostly due to the Klein partnership, but it remains less than 6% of total revenue. We have provided the normal schedule for accretion in the appendix, which now includes the Klein partnership.
Slide 11 shows adjusted non-interest income. Klein contributed $2.8 million for the two months of operation. Mortgage followed normal seasonal softness in the fourth quarter, while capital markets revenue declined from an exceptionally strong third quarter. Other fees were stable.
We have included the purchase versus refi percentage for the mortgage business. And as you would expect, refis were only 19% of our volume. The posted rates reached 4.25%. We may see a modestly lift in refi activity.
Next, slide 12 shows the trend in adjusted non-interest expenses. Klein contributed $7.4 million for the two months of operation. It’s also important to note that these adjusted numbers include the $7.6 million in incentive compensation and benefit true-ups previously mentioned. Again, we would suggest you exclude this as you build your 2019 estimates as we do not expect these levels going forward.
Our adjusted efficiency ratio for the third-quarter was 63.31%, a 27 basis point improvement from the fourth quarter of 2017. Again, this result was clouded by the incentive and healthcare true-ups that would've been well under 60% on a run rate basis.
As Bob said, expense control is an important part of our culture and we remain committed to generating positive operating leverage.
Slide 13 has our credit metrics. We recorded $3.4 million of provision expense during the fourth quarter, while posting net charge-offs of just $0.6 million. For the full year, we reported $7 million in provision, while posting net charge-offs of just $1.9 million.
The 52 basis points against organic loans and 349 basis points on loan marked against the acquired loans, we believe we have adequate reserve coverage.
Slide 14 provides some key takeaways from our 2018 performance. We are very pleased with the results for the year, driven by good execution against our strategic objectives. We maintained our strong, low-cost deposit base with a low 14.7% deposit beta through the cycle.
We continued to have a disciplined approach to credit risk management, resulting in net charge-offs of just 2 basis points for the year. We had the highest production year in the company's history and we continue to have a strong pipeline.
Lastly, we're driving positive operating leverage, improving our efficiency ratio and increasing profitability metrics.
Turning to slide 15, we have provided some thoughts around our outlook for 2019 and fourth quarter starting points.
We expect strong production to continue. Commercial activity was skewed towards C&I versus commercial real estate, but we remain open for business in both asset classes.
Net interest margin, excluding accretion income, is expected to continue benefiting from low-cost deposits and improving asset yields, while the yield curve presents a challenge.
We remain modestly asset sensitive, but are very thoughtful around the possibility of lower rates. As you all know and appreciate, we managed the balance sheet relatively neutral most of the time.
As the slide suggests, fees and expenses should follow normal seasonal pattern and we remain very focused on increasing total revenue faster than total expense, thereby continuing to drive positive operating leverage.
Our full-year tax is expected to be approximately 24% on an FTE basis and approximately 21% on a GAAP basis. Tax credit amortization is expected to be de minimis in 2019.
Lastly, we remain very optimistic about our opportunities in Minnesota. Our cost saves remain on track with the Klein integration plan for the second quarter and employee retention has been strong.
With that, we’re happy to answer any questions that you might have. And as Bob already mentioned, we do have the rest of the team with us.
Dorothy, you can go ahead and open the lines for questions.
[Operator Instructions]. Your first question comes from the line of Scott Siefers from Sandler O'Neill.
You are as predictable as the sun coming up in the morning, Scott.
I try. I try. Thank you. Well, hey, first of all, Bob and Jim, congratulations to both of you. Very well-deserved. Bob, calls will be different without you. So, it won’t be the same.
Well, Moran has put a damper on most everything we do. So, it’s just not – isn’t as fun anymore.
I know that’s not the case. But, I guess, a few questions. So, just on the level of payoffs, so just as you look at net growth anticipations into 2019, what kind of levels of payoffs are you anticipating? I noted in the outlook, you talk about production, but not necessarily overall growth. So, just curious as to your thoughts on how it will all fall to net growth?
So, hard to predict, Scott, paydowns, because, obviously, some of them are driven by the rate environment and other things. But I would just say that early indicators of 2019 are positive. Pipeline continues to build. Our pull-through has been good. We have not experienced the paydowns we’ve had in the past, but sometimes you get surprised. But all things being equal, I don't think we’ll be that far off what we’ve historically talked about in terms of growth. But I think, again, the unknown is just a weird environment, particularly in the secondary market in some of these other things.
But I think part of it is I have talked to Klein since they’ve got such a buildup of cash that they're really starting to do some things differently, but we’ll see over time.
Okay. All right. Thank you. And then, just on the true-ups, I get that they typically come in end of year, but just curious as to why that level ended up hitting in the fourth quarter as opposed to being something that you might have accrued a bit more meaningfully for throughout the course of the year?
Yeah, great question. Same ones that I asked. A lot of it is medical related. Some of that, you just can’t predict. When you have certain large claims that come through, they come through as they come through. The incentives is a traditional true-up for us and we’re pleased that we had to do it. But the unknown is the medical true-ups, and those just happen when they happen. So…
Okay, perfect. And then, if I can sneak one final one in, the tax rate in the fourth quarter the 11.7%, I guess – I know you guys have given full-year guidance previously, but, I guess, I felt like it implied a higher tax rate in the fourth quarter. Did that number come in lower than you guys thought as well or did I just sort of miss something along the way?
I think it came in, as we expected, Scott.
Oh, okay. All right. Perfect. All right, I guess that does it for me. So, thank you, guys, very much.
Great. Thanks, Scott.
Your next question comes from the line of Chris McGratty from KBW.
Hello, Mr. McGratty.
Hey, Bob. Good morning. Good morning, everyone. First off, congrats to both of you on the exciting news. If I could follow Scott’s question on the expenses, understanding the volatility and the accrual in the quarter, and you have two months of Klein, as we look into 2019, I know you have a guidance slide – it was little bit light on specifics; I’m not sure if it was intentional – but if we take the 127 or 128 in this quarter and take out the 7.5 and then fully give the Klein in for further fourth quarter, is it fair kind of growing the expense base at kind of inflation, 2% to 3%, and kind of maybe any help on the trajectory of the cost saves? That was a pretty big variance this quarter.
I would say at the high-end inflation. Obviously, we’re going to continue to look for ways to improve operating leverage. But I would just say, if you look at the guidance we gave for the back half of 2018, we were right on that number and there's no reason we would be off as we go forward. The anomalies of the medical claims, you’ve got early [births] [ph], et cetera, that we just can't control.
As you know, Chris, the first and second quarter is always a little bit higher than the third and fourth quarters because of FICO true-ups and the raises in merits that happen in the second quarter for us.
Okay. So, there’s no change in messaging for the outlook for expenses?
No, not at all.
Okay. Maybe we could go to the credit just for a moment. You called out two specific, I think, credits in the quarter. Two specific reserves. I wonder if you could, number one, speak to those. And number two, I assume most of the migration in classified is just bringing on Klein, but I wanted to make sure that was just the fact.
Chris, Daryl. The two credits, actually the one that we made in the quarter to bridge us over with Klein, we have every expectation that that credit will be paid in full probably in the first quarter. The second is one that we’ve been working with for quite a while. The Klein is in the process of hopefully getting some capital infusions. If so, that will take care of it. But that one is a little – probably more in question than the first one. So, truly, those two credits are just one-offs in the quarter.
With respect to the Klein, yeah, a good share of those increases were associated with Klein, although we did have some increases in substandard and special mention in the quarter as well. But a good share of most of that came through the Klein.
Okay. And just, Daryl, if I have you, the size of those two credits and any kind of industry you can talk to?
Yeah. The one that will probably get resolved, there was a million-dollar credit and it is really kind of commercial real estate related. It will get paid off through the sale of the property.
The other one was a more technical kind of pharmaceutical client, about $9.3 million.
Okay, great. Thank you.
Your next question comes from the line of Nathan Race with Piper Jaffray.
Good morning, Nate.
Congratulations, both Bob and Jim, on the news. Well-deserved. Just going back to Klein for a second, it looks like if we look at June 30 balances versus what you guys brought on on November 1, Klein was down about 2%. I know the credit mark is in there as well. So, just curious to get an update on retention and any attrition that you’ve seen across the Klein team at this point?
Yeah. We’ve actually seen very little attrition. We had a mark and maybe a couple exit credits, but we've retained the full team. Feel very, very good about where we are with the book of business as well. And as Jim said in his comments, every day we get more excited about the opportunities up in the Twin Cities.
Okay, got it. And then, kind of the expense guidance for 2019, does that include any hires that you could effect in the Twin Cities or is that kind of just natural inflationary pressures that you expect to see?
Well, I would just stick to the inflationary. Any hires we have, we would reallocate reductions from other areas. One of the things that Jim Ryan is really good at is, if you want to hire somebody, you've got to find it somewhere else. So, we will – I think the word reallocate, some of our slower growth markets, as we have opportunities to reallocate costs, I think would make sense. So, I wouldn't change your guidance from kind of an inflationary number for expenses.
Okay, got it. And then, if I can just ask one last one on capital, obviously, with Klein coming onboard, you guys are going to be accreting capital at pretty healthy clips through the back half of 2019. So, just curious, with some of the volatility that we’ve seen in the space, if that kind of causes you guys to kind of reorganize or reprioritize kind of your capital return priorities between buybacks, dividends and so forth?
We’ve obviously seen a lot of banks take a different look at that here in the fourth quarter. And, certainly, we will continue to examine that opportunity as well, but organic growth remains our priority for us. And if we think about capital return, maybe second or third relative to partnerships. We didn’t really talk that much about partnerships, but they've become more challenging in this kind of environment as we think forward. But we think that organic growth is our first priority.
Okay, got it. I appreciate all the color. And congrats again, guys.
Thanks, Nate.
Your next question comes from the line of Suffer slowly thank you thank you thank you next question comes from the line at Terry McAvoy with Stephens.
Hey, T Mc.
Hi. Good morning. And like Scott said, these calls are going to be different without you, Bob. And congrats to both of you.
You guys have got to blame Moran for that. He is the one who puts a damper on the damn calls. If he hadn’t done that, I might’ve stuck around five more years.
Maybe start with just the stock market volatility. Your stock is $19 to $14, back to $16 or $17. Could you just talk about how the movement in your stock prices maybe impacted potential M&A transactions and whether we need to see some stability and/or a higher stock price to get something done in 2019?
Obviously, you get the volatility. It changes both sellers’ and buyers’ expectations. And I think you’ve seen some pause potentially, Terry. I think as you – who knows where the market is going to go, but we’re always going to do what's right for the investors. It goes back to the discipline box. We've been pretty forthright about where our earn-back needs to be, the markets we need to serve. If we can get there in this volatile market, we will get there. If not, there’s other uses of capital.
Thank you. And then, the 21% of the paydowns were kind of credit reasons. So, that $60 million, any consistency in terms of industries, markets where you're kind of finding a new home for these borrowers?
No. I would say there is no specific industry or geographic. It's just – when you get this late in the cycle, you've got a lot of people chasing the bus. And every so often, we’re lucky that somebody catches that bus, and we can exit at 6 or 7 or a 9 credit and we’re going to do it. And Jim has done a nice job. We are working with this team to do that.
And then, just maybe as a last question. If I look at the last few years, fee income has been a little bit soft. Maybe not every year, every quarter, but there seems to be a downward trend in certain items. I guess my question is, are you fully optimizing all of your fee businesses? And if not, what is the kind of the plan for maybe some improvement in terms of the underlying growth trends within fee income?
Yeah. Great question. And we would share your analysis that we have opportunity to get better. I think as I look across those, I think wealth management is an area we’re putting a lot of focus on. I think, Terry, we’ve got to move from a traditional fiduciary shop to being a full breadth – well, mortgage is volatile, but I think our investments in treasury management and capital markets could clearly have some upside. We’re getting very close to blowing out a new treasury management system. And with the ability going to the Twin Cities, Madison and Milwaukee with that, I think there is some great upside. So, I think you're absolutely right.
Service charges, I don’t want to say they are what they are, I wouldn’t see a lot of growth in those. Just to bring up one of my clips from years back, service charge is a little like crack cocaine. As an industry, we got addicted to it. We need to get off of those, look for other ways to drive fee income.
Great. Thanks again. Take care.
Thanks, Terry.
Your next question comes from the line of David Long with Raymond James.
Hey, David.
Good morning, everyone. And just to echo everyone else's comments, Bob, you will be missed. And, Jim, congratulations. And we are looking forward to seeing you put your stamp on these calls, to the extent that John Moran will allow.
Just a couple of things. Following up on the fee income, wealth management revenue was up a bit in the quarter. And given what we saw in the markets, just curious, how that was up given the decline we saw on the equity markets. And maybe if you could talk about how that market gets priced and how the revenue is generated?
We had a trust mature. It’s really the fee that came in in the wealth side. Whenever you have a trust mature, unfortunately, on the death of one of your clients, you get a large estate fee. So, that's really the issue.
They are priced much like you would any book of business. It’s a fee based on the value of the book. Unlike a lot of shops, we have a little more propensity to fixed income versus equity. So, you get a little bit of steadiness there. But the volatility of that business will come from whenever we have estates mature.
Got it. And then, as a follow-up, Bob, you mentioned some pockets of silliness in the marketplace. Can you give a little bit more color on where you think competition may be getting a little bit out of whack?
Yeah. I’d say Northern Indiana is an area that we continue to see it. Obviously, parts of Michigan, we’re seeing some of that silliness. Unlike the last pre-crisis challenges, it’s really the smaller guys that are playing that silliness versus the larger guys or gals. And you see pockets of it. But, really, the most of it has been Michigan and Northern Indiana.
Got it. Thank you, guys.
Thanks.
[Operator Instructions]. Your next question comes from the line of Jon Arfstrom with RBC Capital Markets.
Hello, Arf.
Hey, good morning. Congrats to both of you. A question on the margin. In terms of just the starting point, would you say there's anything unique in the margin this quarter other than maybe some elevated accretion? And would you say there's maybe natural momentum in the margins where it can increase from here.
Yeah, this is Brendon, Jon. Yeah, we think we had some opportunity for asset yield accretion, really our investment book. New business opportunities in the investment book are well above the run-up yield. We think we have some room to grow with the last rate hike. So, we’ll get some continued benefit from that. As far as the rest of the noise, other than interest collected [indiscernible] being down, I think that’s pretty much it.
Okay. So, that’s the 364 number. I guess, what I'm trying to get at, do you feel that elevated a bit for the quarter or do you feel that's a decent run rate for you guys?
I think that’s – maybe that's pretty much a decent run rate, including accretion.
Yeah. I think, Jon, the only variable would be accretion which is never predictable, but I think the number you've guided is a good starting point. Accretions become a little more predictable, if that's the right word. But you can always get nuances if Daryl does a really good job in the quarter.
Yeah. Okay, good.
Jon, just one last comment [indiscernible], if you always look back at our net interest income sensitivity, the year two is where we benefit the most versus year one. So, I think we’re starting to get kind of that point – Brendon’s point was about our assets are being repriced and take advantage of some of those higher interest rates.
Okay, good. Thank you for that. And then, loan balance outlook. Your guidance on slide 15, I think it points to some optimism. But I'm just curious, you might have a little bit of run-off on Klein maybe. Maybe not. And that feels like commercial is strong, but maybe running off some other categories as well. Just bigger picture, what you guys think is possible in terms of organic loan growth for 2019?
Jon, we’re optimistic, to be honest with you. Given the granularity of the Klein book and the fact that Jim's been able to retain the producers and just kind of the feel up there, I feel very good about the Twin Cities. We’re starting to see former anchors pipeline-build. They're kind of fully engaged now. The unpredictable is the paydowns, but the activity level is very, very good. The pipeline continues to build. As Jim is talking to his troops, they feel very good about it.
The damper could potentially be, if the shutdown or tariffs or – but for the most part, our clients just kind of move forward. We feel pretty good.
Okay. Okay, good. Then one last one, a bigger picture on the efficiency ratio. Jim, I think you talked about how, excluding the noise, it could be or was below 60%. Did I hear that right?
Yeah. Just slightly below 60%.
Okay. Got it. And then, in terms of longer-term opportunities, I know you have some costs take-outs from Klein, but kind of the same bigger picture question as loan growth. What do you think is possible for your efficiency ratio longer term?
Well, I’m going to stop short of giving you specific guidance, but now that it’s a focus of bars, it remains a focus. It’s a part of how we think about running the company. It’s about how we get paid. It’s something I spend an awful lot of time on each and every day.
Okay. All right. Thanks, guys.
And you have a follow-up question from the line of Chris McGratty with KBW.
Hey, Chris.
Hey, thanks. Just want to come back to the expenses for a minute. If we go through the quarter again and adjust for the accruals, you're kind of starting from a kind of low 120s number. Then I'm assuming you need to add another month for Klein. So, that would, if my math is right, get you to kind of that mid-120s. And then, you talked to, I think, Jim, about the Q1 seasonality. So, I guess, the question is from these levels at 128 roughly in the quarter, we should assume some level of build in Q1. And then, as the synergies get realized and the seasonality works in your favor, kind of declining towards that low to mid 120s, do I capture that about right?
I see a lot of heads nodding in the room, Chris. I think you did it very well.
Okay. So, a little bit up. And then, synergies over the balance of the year?
Absolutely. And continued focus as well. So…
Okay. Thanks for the clarification.
Thanks, Chris.
And there are no further questions at this time. I'll turn it back over for closing remarks.
Well, thank you all so much. Again, appreciate all your kind comments, but I can assure everybody that my optimism for the company is extraordinary right now, with Jim’s leadership and the tools that we've got in place. So, I appreciate all your support. Thank you.
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