Good day and welcome to the Community Financial System Second Quarter 2024 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Dimitar Karaivanov, President and Chief Executive Officer of Community Financial Systems. Please go ahead.

Thank you, Ashiya. Good morning, everyone, and welcome to our second quarter 2024 earnings call. I would like to first note that during the quarter, we changed our holding company name to Community Financial System as a better reflection of the uniquely diversified nature of our financial services company and also a better reflection of how we run the business, how we interact internally and how we go to market. We are truly unique amongst the industry. We have the highest percentage of non-banking revenues amongst KRX peers and an overall peer revenue percentage of 40% versus KRX peers of 18%. We're now also providing enhanced disclosures in our quarterly filings and investor presentations in line with how we operate our business segments. Now turning to the quarter, this was a productive quarter for us. Our Company recorded a new quarterly record for revenues while expenses remained well controlled, leading to $0.91 of GAAP and $0.95 of operating earnings per share. In our Banking business, both NII and fee income expanded from the first quarter. NII growth was driven by both the strength of our core funding and our strong lending growth. Loans grew by $140 million or 1.4%, which is inclusive of a $25 million seasonal decline in municipal loans. Deposits decreased by $214 million, which included a $278 million seasonal decline in municipal deposits and a $63 million increase in consumer and business deposits. Credit remains a foundational strength of our banking business with 5 basis points of charge offs for the quarter. In our Employee Benefit Services business, we achieved a new quarterly record of $32.1 million in revenue, up 12% over last year. We continue to add participants and assets to the platform and are also benefiting from strong asset values in both our record keeping and fund administration parts of BPaas. Our Insurance Services business also achieved a new quarterly record of $13.3 million in revenue, up 12% over last year. As expected, we're now in positive territory for the year with growth of 4.4%. We continue to remain focused on both organic and inorganic growth and during the quarter executed on two roll up acquisitions. Our Wealth Management Services business remains strong with revenues of $8.7 million, up 10.6% over the comparable period last year. Assets under management and administration reached a new high and client activity remains robust. During the quarter, we also had a couple of small tactical opportunities to create liquidity in our securities portfolio and also repurchased another 250,000 shares at what we believe were very attractive prices. This year so far we have repurchased 1 million shares at well below intrinsic value. We continue to be on the lookout for similar tactical openings. As we look ahead, we remain optimistic about the opportunities we have across our markets and businesses. Of note, the New York SMART I-Corridor tech hub, which spans Buffalo, Rochester, and Syracuse, was recently selected as one of only 12 national tech hub winners. As a frame of reference, our Buffalo and Rochester regions have combined footings of $4 billion in deposits and $3 billion in loans and our Syracuse region has $3 billion in deposits and $2 billion in loans. Our Wealth, Insurance, and Benefits businesses also have a deep presence in those markets, which positions us very well for the economic activity we're seeing today and expecting in the future. In addition, recent headlines and developments with some of our national and regional banking competitors continue to create opportunities for market share gains. Lastly, as mentioned on our first quarter call, M&A activity and dialogue is picking up and I expect that we will have opportunities to deploy capital at a favorable risk and reward balance. With that, I will pass it on to Joe for more details on our financial performance.

Thank you, Dimitar, and good morning, everyone. The second quarter was very solid for the company. GAAP earnings per share of $0.91 increased by $0.15 or 19.7% compared to the first quarter, driven by rises in net interest income, strong credit performance, and record quarterly revenues in our Employee Benefit Services and Insurance Services sectors. These results were also $0.02 higher than the previous year's second quarter result of $0.89 per share. Operating diluted earnings per share, which exclude certain non-operating revenues and expenses as detailed in this morning's press release, were $0.95 in the second quarter compared to $0.82 in the first quarter and $0.96 in the same quarter last year. The increase of $0.13 or 15.9% over the first quarter was fueled by gains in net interest income and operating noninterest revenues, a lower provision for credit losses, and a decrease in fully diluted shares outstanding, although this was partly offset by higher operating noninterest expenses and income taxes. The $0.01 decrease from the same quarter last year was attributed to rises in the provision for credit losses, operating noninterest expenses, and income taxes, partially offset by increased operating revenues and a decrease in fully diluted shares outstanding. Operating pretax pre-provisioned net revenue per share was $1.29 for the second quarter, which was an increase of $0.11 or 9.3% over the first quarter and $0.05 or 4% over the second quarter of the previous year. During the second quarter, the company registered total operating revenues of $183.2 million, up $7.9 million or 4.5% year-over-year and $5.9 million or 3.3% from the first quarter, setting a new quarterly record and marking the fourth consecutive quarter of revenue growth. The company recorded net interest income of $109.4 million in the second quarter, compared to $107 million in the first quarter, with improvements in yield on interest-earning assets driven by loan growth and decreasing funding costs enhancing both net interest income and net interest margin for the quarter. The company noted a migration of customer deposits from lower-rate accounts to higher-rate money market and time deposits, although at a declining rate, resulting in a 9 basis point rise in the cost of deposits to 1.23%. This marked a smaller increase than the 16 basis points in the first quarter and 22 basis points in the fourth quarter of last year. The total cost of funds was 1.37% in the second quarter, up 6 basis points, while the yield on interest-earning assets increased 11 basis points to 4.35%. The fully taxed equivalent net interest margin rose from 2.98% in the first quarter to 3.04% in the second quarter. Comparatively, net interest income was $109.3 million in the second quarter of 2023. The outlook for net interest income expansion remains positive for the full year. Operating noninterest revenues increased in all four business sectors compared to the prior year's second quarter, making up 40.1% of total operating revenues for the quarter. Banking-related operating noninterest revenues rose by $1.9 million or 10.6% over the same quarter last year, largely due to an increase in mortgage banking revenues. Revenues from Employee Benefit Services increased by $3.5 million or 12.4% from the prior second quarter, reflecting growth in total participants under administration and asset-based fees. Insurance revenues grew by $1.4 million or 12.2%, indicative of both acquired and organic growth, while Wealth Management Services revenues rose by $0.8 million or 10.6%, thanks to favorable market conditions during the same period. On a linked quarter basis, banking-related noninterest revenues increased by $1.4 million or 7.6%, while Employee Benefit Services and Insurance Services revenues grew by $0.4 million or 1.3% and $2.2 million or 19.8%, respectively. Wealth Management Services revenues saw a decrease of approximately $500,000 or 5.6% due to seasonal factors. In the second quarter, the company registered $119 million in noninterest expenses, which is a $6 million or 5.3% increase from the prior year and a $0.9 million or 0.8% increase from the first quarter. Total operating noninterest expenses, excluding certain non-operating expenses as detailed in the press release, amounted to $115 million for the quarter compared to $108.3 million in the previous year and $114.4 million in the first quarter. Year-to-date, total operating noninterest expenses increased by $10.7 million or 4.9%, consistent with the mid-single-digit growth rate mentioned in the previous two earnings calls. Reflective of rising loan balances and a stable economic outlook, the company recorded a $2.7 million provision for credit losses during the second quarter of 2024, compared to $0.8 million in the same quarter last year and $6.1 million in the first quarter. The company had net charge-offs of $1.3 million, which corresponds to 5 basis points of average loans annualized during the second quarter, and overall credit performance remains robust. The effective tax rate for the second quarter of 2024 was 22.8%, an increase from 21.4% in the second quarter of 2023. When excluding the effects of tax expenses and benefits from stock-based compensation activity and income tax credit amortization, the effective tax rate for the second quarter was 22.3%, up from 21.4% in the same quarter last year. Ending loans rose by $140.4 million or 1.4% during the second quarter, marking the 12th consecutive quarter of loan growth and reflecting the company's continued investment in its organic lending capabilities, including growth in both business lending and consumer lending portfolios. Year-to-date, ending loans increased by $319.3 million or 3.3%. Total ending deposits decreased by $214.1 million or 1.6% in the second quarter of 2024, driven by seasonal outflows of municipal deposits. In contrast, ending deposits increased by $266.1 million or 2.1% compared to one year ago. Despite the higher funding costs observed in the second quarter, noninterest-bearing and lower-rate checking and savings accounts still represent nearly two-thirds of total deposits. The company’s cycle-to-date deposit beta of 22% remains among the best in the banking industry, reflecting the stability of the company’s core deposit base. The liquidity position is strong, with readily available sources including cash and cash equivalents, funding sources at the Federal Reserve Bank's discount window, unused borrowing capacity at the Federal Home Loan Bank of New York, and available investment securities totaling $4.44 billion at the end of the second quarter. These sources of immediate liquidity represent over 200% of the company’s estimated uninsured deposits after adjusting for collateralized and intercompany deposits. The loan-to-deposit ratio at the end of the second quarter was 76.3%, indicating opportunities to transition lower-yielding investment securities into higher-yielding loans. Regulatory capital ratios for the company and the bank are significantly above well-capitalized standards, with the Tier 1 leverage ratio at 9.07%, well above the regulatory requirement of 5%. As Dimitar noted, the company repurchased 250,000 shares of its common stock at an average price of about $45 per share during the second quarter. The company recorded net charge-offs of $1.3 million, equating to 5 basis points of average loans annualized in the second quarter, which is a slight increase from 3 basis points in the same quarter last year but a decrease from 12 basis points in the first quarter. The allowance for credit losses stood at $71.4 million or 71 basis points of total loans outstanding at the end of the second quarter, up from $63.3 million or 69 basis points one year prior. The allowance for credit losses to total loans outstanding also remained at 71 basis points at the end of the first quarter. The allowance for credit losses at the end of the second quarter is more than nine times the company’s trailing 12-month net charge-offs. As of June 30th, 2024, nonperforming loans totaled $50.5 million or 50 basis points of total loans outstanding, reflecting a slight rise from $49.5 million at the end of the first quarter. Nonperforming loans were $33.3 million or 36 basis points a year ago. Loans that were 30 to 89 days delinquent also increased from $42.1 million or 43 basis points of total loans at the end of the first quarter to $45.1 million or 45 basis points of total loans at the end of the second quarter. Overall, asset quality remains stable and strong for the company. On July 17th, the company announced a $0.01 or 2.2% increase in the quarterly dividend to $0.46 per share. This marks the 32nd consecutive year of dividend increases for the company, demonstrating the effectiveness of its long-standing and resilient business model. We believe the company’s diverse revenue streams, strong liquidity, regulatory capital, stable core deposit base, and historically robust asset quality provide a solid foundation for future opportunities and growth. Looking ahead, we are optimistic about the revenue outlook across all four of our businesses and the prospects for ongoing organic growth. We will continue to focus on growth and allocate capital in the most effective manner for our shareholders. Finally, on Friday, September 6th, from 9:00 a.m. to 12 noon, we will host an investor day at the New York Stock Exchange. This event will give investors a chance to engage directly with the company’s management, gain insights into strategic initiatives, and explore future growth opportunities. Links to register for the CBU Investor Day were included in this morning's earnings press release. That wraps up my prepared comments. Thank you. I will now turn it back to Ashiya to open the line for questions.

Thank you. We will now begin the question and answer session. The first question comes from Matthew Breese with Stephens, Inc. Please go ahead.

Hey, good morning.

Good morning, Matt.

Good morning, Matt.

I was hoping to touch on the topic of the NIM first. And maybe to get there, I was hoping you could provide what is the balance sheet exposure to pure floating rate loans today and adjustable and fixed rate loans on the opposite side? And I'd love to delve into a little bit of the difference in what those portfolios are yielding today.

It's a good question, Matt. We periodically review this internally to understand the dynamics of the potentially changing yield curve and possible shifts at the short end of the curve. In summary, we have just under a billion dollars in floating rate loans, which are typically tied to an index like prime or SOFR, or something short term. In the next 12 months, we have adjustable rate loans, such as those with a seven-year term that reprice in year three or year five; we have about $250 million of those. Additionally, we expect maturing cash flows from our fixed rate portfolios to amount to around $1.5 billion. Altogether, between floating rate loans, adjustable rate loans, and fixed rate loans, including anticipated prepayments, we expect about $2.8 billion of loans maturing at an average rate of around 6 on a blended basis. The floating rate loans are slightly higher, around 8, but that summarizes our outlook on the adjustable and floating rate portfolios.

That suggests the fixed rate loans are likely yielding in the low 5% range and might be subject to an additional spread of about 175 to 250 basis points. Is it accurate to assume that the yield on fixed rate loans is significantly higher?

Yes, I think you nailed it, Matt. It's about, on a blended basis, on the fixed rate loans, around five, and last quarter new loans were in the mid to low 7s. So, there is a significant opportunity for repricing just by replacing maturing cash flows within the fixed rate portfolio.

Right. And so here's where I'm going with this, right. I know you all don't typically provide NIM guidance, but historically CBU is an organization that's run with a NIM that's in the 350s, upwards of 4%. As this all kind of normalizes and resets, is there a pathway back to that kind of NIM? Assuming no major changes in the yield curve, obviously we might get a couple of cuts, but you get my point, is there a natural upside to the NIM long duration over time as the fixed rate book reprices?

Matt, I believe that in the next 24 months, there’s significant potential from the loans on the balance sheet that are maturing. As we reach a point where deposits and funding costs are stabilizing, we're currently gaining more momentum on the asset side compared to any losses on the liability side. You should begin to see this in the next couple of years. Additionally, as our securities start maturing, there will be substantial gains on top of the loans. Can we return to previous ranges? I think there is a possibility of that happening over a timeframe of about three years, which may be longer than some might prefer to consider.

I appreciate that. I also wanted to discuss the expense outlook and expectations for the remainder of the year, specifically regarding any significant changes from what we observed this quarter through the end of the year, considering you have been very careful with expenses due to the current yield curve.

The expectations for operating expenses have not really changed as we approach the end of the year. In our last earnings call as well as the one before that, we provided some historical ranges for our operating expenses, typically between 3% and 6%. I still believe that is our expectation for the full year. In 2023, we faced some unexpected changes in operating expenses and made investments to support our growth looking towards 2024 and beyond. However, this past year was less typical for us regarding overall OpEx growth. We continue to anticipate mid-single digits for operating expenses, not including any potential M&A activities that could arise later on.

Understood. Okay. And then just last one for me, I was hoping you could touch on loan pipelines and expected growth for the balance of the year. Growth this quarter was pretty widespread and you've done a better job as of late versus historical, so just an update there.

Yes, I think, Matt, as we consider the Banking business, the pipelines today are just as strong as they were at the end of last quarter. It's widespread across regions and products. So I believe we will maintain the momentum in the banking sector, and our other businesses are also experiencing significant tailwinds. Therefore, the performance for the second half of the year should be similar to what we are experiencing today.

Perfect. That's all I had. Thank you for taking my questions. Appreciate it.

Thank you, Matt.

The next question comes from Manuel Navas with D.A. Davidson. Please go ahead.

Hi, good morning. This is someone on for Manuel Navas. Thank you for taking my question. For my first question, could you provide an update on the fee income outlook and discuss trends in fee lines such as Mortgage Banking, Insurance, and Employee Benefit Services?

Sure, morning. So as you think about our four businesses, we have two of them that are very much market-based and market values-driven as well. So that's the Employee Benefit Services business and our Wealth Management Services business. So in both of those, as markets remain hopefully strong, our performance should remain consistent and frankly improving. There's potentially upside from the fixed income market potentially returning to a better outcome than it has been. So the current values and performance you're seeing are really driven by the equity market predominantly. So even if the equity market kind of softens up a little bit, the fixed income market should hopefully offset some of that. So we remain pretty bullish on those businesses. Our Insurance business had another double-digit year-over-year growth this quarter. We're making up the ground as we kind of alluded to in the first quarter call as well. So I expect that Q3 and Q4 will also remain strong year-over-year in that business and on a full-year basis will be closer to those kind of high single digits and maybe low double-digit growth on the insurance side. As it relates to the banking fees, we did have a strong quarter in mortgage banking, which I think would be a little bit harder to replicate for the next couple of quarters. With that said, there are more opportunities that we're seeing in the secondary market, but this quarter we had a couple of things frankly that went our way that may not be repeatable.

Thank you. And for my next question, could you talk a little bit about like we talked about deposit costs, where they could peak? They're stabilizing right now. And any updated thoughts on the impact on them if rates were cut in September?

Yes, currently our cost of deposits has a beta of 22% based on the cycle-to-date. We've previously indicated our internal expectations to be between 20% and 25%, and I believe that estimate remains accurate. The transition from lower cost deposits to higher cost deposits has slowed somewhat, but it is still ongoing. Therefore, we should anticipate continued higher costs for deposits, although at a significantly slower rate compared to what we experienced in 2023 and the first quarter of 2024. Regarding a potential Fed rate cut, it would negatively affect the yield on floating rate loans. However, we have nearly $10 billion in interest-bearing deposits, which can help offset some of the lost interest income from floating rate loans if interest-bearing deposit costs decrease. While we hope these two factors can balance each other out with a short-term drop in rates, I would advise that the trajectory of higher net interest margin and net interest income is not always straightforward from quarter to quarter. Typically, in the third quarter—as we've seen at the end of the second quarter—we experience a lower deposit base due to seasonal trends in municipal deposits. As these deposits deplete, we may need to rely on overnight borrowings at 5.5%, adding pressure to our overall funding costs. Nonetheless, we are optimistic about future improvements in net interest income and net interest margin based on the current rate environment. However, it’s important to note that progress may not be uniform each quarter, and we may see some stagnation in the third quarter before hopefully resuming growth in net interest income and margin in the fourth quarter and into 2025.

Thank you. That's all for me.

The next question comes from Chris O'Connell with KBW. Please go ahead.

Hey, good morning.

Good morning, Chris.

Good morning, Chris.

I think in the press release it was noted that there is an insurance acquisition completed at the beginning of April. I don't recall it being covered on last quarter's call, but I was just hoping you could walk through what the impact was to revenues this quarter and just the annual impact to revenues and expenses from that transaction?

That acquisition was relatively small in the overall context, contributing only a few hundred thousand dollars in revenue expectations for the quarter, and perhaps around half a million for the entire year. It's a modest addition, but it aligns with how we operate that segment. The market is quite fragmented, with numerous small agencies and opportunities for consolidation in the independent agent sector. Consequently, each acquisition we make, whether it's worth $0.5 million or $1 million in revenue, positively contributes to our total revenue for that segment.

Great. That's helpful. And circling back to the margin discussion, do you share maybe what the blended CD costs are right now? What the current offering costs are? And just how much it has to reprice in the back half of the year?

Yes, just give me a moment here, Chris.

I think, Chris, while Joe is getting those exact numbers, I'll just comment that during the quarter, we kind of crossed over, if you will, on the CD side where the new production or replacement rate is now lower than the rate at which the back book is. So in other words, it's a net positive as we replace those CDs that we built over the past few quarters from a margin perspective. And we have actually lowered our rates twice during the quarter. And we're now kind of in the high 3s and low 4s depending on the tenure of the CD.

And in the quarter, all in, just under about 375 to 380 was kind of our time deposit costs for the quarter.

Great. That's helpful. Great. And then you talked about, I think, in the prepared comments that the M&A dialogue is picking up. How do you guys balance the usage of the buyback here with the potential for M&A opportunities in the future? Maybe just talk about the thought process around continued use of the buyback, especially after the recent rally we've had. And then also what type of M&A targets and opportunities you might be looking at in the future?

So, Chris, I think on the bank side, basically year-to-date, we've bought back 1 million shares as a company. And as we looked at capital deployment, we basically couldn't find a better bank to buy than our own. So we bought back 1 million shares at $45. And if for whatever reason, we have a similar opportunity, we'll probably take a hard look at it again, hopefully not. The M&A dialogue is stronger because I think a number of sellers have also realized that valuations of buyers like us were extremely appealing. At one point we were yielding over 4%, which I think has happened only once in the past 15 years. So sellers also want more stock, the ones that at least we've been discussing with, because they understand the upside in the currency that we have and we're just going to have to balance all of that. Obviously, the equation today is a little bit different at $60 versus $45 from the perspective of buying our company versus some of the other opportunities, which may not have appreciated quite as much in the past few weeks. So I think we will continue to balance that. We always look at risk and reward. So in other words, the upside to a transaction needs to be significantly better than the downside to it. So the things that we like on the bank side, in particular, remain strong balance sheets, liquidity, things that are additive in the markets that we're interested in or things that have market share in the markets we're already in. So those are the kinds of things that we're focused on and the lower risk the better. And we're going to continue to look at those. As we deploy capital, we're also keeping a very close eye on non-banking opportunities, which are always cash. And as we say around here, we're in the business of capital deployment, not in the business of share issuance. So we generally have a preference for cash M&A if we can do that.

Great. You guys are a bit larger now, and in the past, you have been open to deals under $1 billion in assets even as you've grown. With the outlook for organic growth picking up from historical levels, do you still find value in pursuing deals in the $500 million to $700 million range? Are you open to considering those smaller transactions, or are you aiming for opportunities with a more significant impact compared to what you've done historically?

Yes, I think, Chris, on the bank side, that goes back to the risk and reward. And I think the more you look at it, the more at least we believe that that risk and reward also tends to flip less favorable the larger you go in transactions. And typically the larger you go, the less liquidity that company is going to have as well. The more concentrations they might have as well. So, whether we will do something as quite as small as $500 million, I think that really is dependent on what exactly it is. But certainly things between $500 million and $1 billion still remain of interest to us, especially if they check the boxes with low risk, right market, strong liquidity profile. We could drive a couple of hundred million of their liquidity and put it to use in our growth strategy. So that's always additive as we look to the banking side.

Great. And then, I mean, credits held up really well. The trends this quarter, rapid, flat quarter over quarter on NPAs, NPLs. And you guys haven't seen much cycle-to-date yet. Is there any areas that you guys are seeing any pressure at all in either the consumer or the commercial side or that you're keeping a closer eye on from here?

Yes, I mean, to be quite frank with you, the answer to that is not a lot that we're seeing. We're certainly keeping a very close eye to it. As we've talked before, our markets have a bit of a unique dynamic right now because of the demand, especially on the housing side and just the lack of supply. All of the economic activity that's happening here in upstate New York and frankly in Northeastern PA and to a degree in Vermont is driving a lot of housing demand and we haven't built homes in those markets in many, many years. So some of the things that frankly keep us a little bit more focused on that side of the equation is things like the fact that Syracuse, for example, had the highest increase in rent prices in the country last year. So that's not typical for a market like Syracuse and kind of puts us a little bit on the lookout for what might that mean in terms of sustainability going forward. So we keep a close eye on that. On the commercial side, again, a lot of those businesses are benefiting from the same dynamics in terms of economic activity. And I believe year to date were actually negative charge offs on the commercial side. I think last year we had 3 basis points of charge offs. Are we going to see some migration here and there? Yes, we will. But nothing that really worries us at this point that's out of the historical norm. Frankly, we continue to be quite a bit better than the historical norms across all the portfolios.

Understood. Really helpful. Thanks for taking my questions.

The next question comes from Steve Moss with Raymond James. Please go ahead.

Good morning.

Good morning, Steve.

Good morning, Steve.

Dimitar, I wanted to follow up on the M&A discussions. I'm curious about how much reduction you anticipate in the fee income revenue mix as you consider the banks you are engaging with, especially since they are likely to generate significantly more net interest income than fee income.

There are several factors to consider. Our non-banking financial services businesses grow at a faster rate than our banking operations. Historically, we have seen high single-digit growth outside of banking, while banking has seen mid-single-digit growth, which includes mergers and acquisitions. This trend influences our fee income ratio, which is currently around 40%. If we consider organic growth, we can expect about a two-point increase every five years from those faster-growing segments. Unlike other banks, we have unique metrics that set us apart, which means any addition from banks will dilute our ratios. However, our organic growth in fee income helps mitigate some of that dilution. Additionally, we excel at integrating our fee income capabilities into acquired businesses, both in non-banking and banking sectors, where we typically offer more products and services. While these integrations take time, they tend to balance out in the long run. We're aware of these challenges, but they do not prevent us from considering bank transactions. Size is also an advantage, and we often find more favorable risk-reward scenarios in smaller deals rather than larger ones. Over the past decade, despite engaging in more bank mergers and acquisitions than financial services, our fee income ratios have significantly increased.

Okay. And then in terms of just the transaction opportunity here, curious if it is $500 million to $1 billion type transaction, are you willing to do two acquisitions simultaneous or would you look to do one and then potentially do a second one after you complete the first?

Steve, my comment was more general than a specific transaction, but I would say that most of the discussions we're having are in the under $2 billion range and a couple of them under the $1 billion range.

Okay, great. Appreciate that color there, Dimitar. All my other questions have been asked and answered, so thank you very much.

This concludes our question and answer session. I would like to turn the conference back over to Mr. Karaivanov for any closing remarks. Please go ahead.

Thank you, Ashiya. And thank you, everyone, for joining the call and the interest in our company and we will speak again with you in October.

This conference has now concluded. Thank you for attending today's presentation. You may now disconnect.