Earnings Call Transcript - CNOB Q1 2023

Operator, Operator

Good morning and welcome to the ConnectOne Bancorp, Inc First Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Siya Vansia, Chief Brand and Innovation Officer. Please go ahead.

Siya Vansia, Chief Brand and Innovation Officer

Good morning and welcome to today's conference call to review ConnectOne's results for the First Quarter 2023 and to update you on recent developments. On today's conference call, we bring Frank Sorrentino, Chairman and Chief Executive Officer, and Bill Burns, Senior Executive Vice President and Chief Financial Officer. Also with us is Elizabeth Magennis, President of ConnectOne Bank, and Steve Primiano, EVP and Treasurer. I'd also like to caution you that we may make forward-looking statements during today's conference call that are subject to risks and uncertainties. Factors that may cause actual results to differ materially from expectations are detailed in our SEC filings. The forward-looking statements included in this conference call are only made as of the date of this call, and the company is not obligated to publicly update or revise them. In addition, certain terms used in this call are non-GAAP financial measures, reconciliations of which are provided in the company's earnings release and accompanying tables or schedules, which have been filed today on Form 8-K with the SEC and may also be accessed through the company's website. I will now turn the call over to Frank Sorrentino. Frank, please go ahead.

Frank Sorrentino, Chairman and CEO

Thank you, Siya, and good morning everyone. We appreciate you joining our earnings call today. Let's get it started and kick it off with what you've seen in our earnings release this morning. We're in a strong and solid position today, reflecting continued success in growing our deposits and enhancing our liquidity base with over 250% coverage of uninsured uncollateralized deposits. I began last earnings call by reiterating ConnectOne's commitment to serving our clients despite the cyclical ups and downs of the economy and never before has our focus on client relationship banking been so important. While the industry was surprised by the specific events of mid-March, we at ConnectOne anticipated the repercussions of quantitative tightening, and our team began to take intentional actions as early as the fourth quarter of last year. Those efforts have positioned us well with a relationship-driven deposit base, increased total available liquidity, a diversified loan portfolio of quality assets and sponsors, solid credit metrics, and a strong overall balance sheet and capital position. Looking back a few weeks to March, I'm proud of the way our team responded with a sense of urgency, proactively reaching out to our clients and providing them with peace of mind solutions while diligently enhancing our liquidity position and securing our deposit base even further. In fact, for the fifth quarter in a row, we've now realized net deposit inflows. That success is a credit to a few things. First, a relentless continuation of our ongoing efforts towards onboarding new client relationships and expanding into deposit-rich verticals while many others have allowed their deposits to leave their balance sheets. Second, part of the focus of our business development team continues in non-CRE tied verticals in order to further diversify our loan portfolio and provide additional sources of deposit growth. In this regard, our C&I division has grown at a consistent pace over the past decade, and our expertise has continued to evolve over that time, notably in the private school, healthcare, and franchise segments, providing deeper and attractive market opportunities for our team. Third, our investments in technology, such as our partnership with MANTL, play a key role in accelerating these efforts. We have now deployed the first phase of this omnichannel deposit origination platform, which has already led to the seamless onboarding of new client relationships. Now for some color on the significant improvement in our uninsured deposit percentage. An operating advantage for ConnectOne was our existing knowledge and use of the IntraFi reciprocal deposit product, facilitating immediate availability to our existing client base and new clients. ConnectOne is one of the longest and most established banks in the IntraFi network, having utilized the product for over a decade, predominantly to meet the needs of some of our more sophisticated client fiduciaries such as in the private school business segment. Through the efforts of our team, our uninsured and uncollateralized deposits improved to just 20% of total deposits. Shifting to our margin. On our last earnings call, we laid out our strategic rationale for being more aggressive towards maintaining our client relationships despite deposit rate competition, resulting in an increase in our unique client count and total deposits. That said, we experienced and expected what I believe is temporary net interest margin compression during the quarter. That’s the near-term cost of successfully achieving our goal of preserving and building our banking relationships. That should not obscure the fact that the underlying fundamentals and returns of our business remain solid. Bill will talk a little bit more about the net interest margin and its impact on our reported results for the quarter and the outlook in detail in a little bit. In regard to our commercial real estate office portfolio, first off, office represents today a very small amount of our portfolio. Our total office exposure is approximately 5% of total loans, but a majority of that is represented by specialty services such as medical or other service-oriented businesses where multi-use buildings have very high tenancy and secure leases. New York City is even lower at less than 1% of total loans. In addition, loans in this segment were underwritten with LTVs that averaged below 50% and are with strong borrowers, 80% of whom have personally guaranteed. A recent review of this portfolio indicates vacancy rates are near zero and the stressed renewal rollover risk is low. Turning to our multifamily portfolio, as I mentioned before, our focus is predominantly on purchase money loans to large generational owners and skilled operators based in more suburban and commuter-oriented areas. Additionally, our multifamily portfolio in Manhattan is less than 2.5% of total loans and 5.8% in the other four boroughs. Back to the focus on purchase money mortgages, this ensures significant equity in these projects and underwriting that includes stress testing of SCRs and minimum cap rates with tremendous upside from better management. We're always happy to see our clients create significant value and refinance this into one of the life companies or Freddie Mae or Fannie Mae or some other institution, and as a result of these prudent lending standards, including minimum realistic cap rates, when we stress the portfolio for renewal pricing, the potential for significant increases in impaired loans is very limited. Our stress testing considered increases in debt servicing, changes in property NOI, and amortization of principal since origination. Multifamily loans repricing or renewing in 2023 total only 6% of the multifamily portfolio, with only another 15% through the end of 2025. Overall, ConnectOne's credit performance remained solid during the first quarter. Delinquencies and non-accruals remained low, and as they are identified, we are proactively managing through those credits. So, looking ahead, we will maintain reserve levels commensurate with our growth and aligned with the changing macroeconomic forecast. With that, we expect our loan portfolio to remain essentially flat this year, with originations mostly offset by amortization, maturities, and pay-downs. Additionally, we could see a slight change in composition away from some CRE, including multifamily, and toward C&I and construction where we remain very opportunistic. Given the strength of our earnings and capital position, we have a great deal of financial flexibility and confidence in our trajectory forward. To that end, earlier today, we announced a 9.7% increase to our quarterly dividend, $0.17 per share, which is consistent with dividend increases over the past few years. Our payout ratio remains at a conservative level below 30%. In summary, we remain focused on serving our clients, supporting our staff, creating long-term value for our shareholders, and improving and building upon a distinctive operating platform. Further, while maintaining our long-standing financial discipline, we're well-positioned to take advantage of possibly once-in-a-generation market opportunities that could produce strong returns for our shareholders and greatly benefit our franchise. With all that, I'll now turn it over to Bill.

Bill Burns, Senior Executive Vice President and CFO

Thank you, Frank. Good morning, everyone. I'd like to start out with some color around our enhanced and fortified liquidity position, which provides ConnectOne with readily accessible liquidity that is now actually in excess of 250% of our total uninsured and uncollateralized deposits. That position resulted from efforts on both sides of this equation. On the deposit side, by reaching out proactively to our clients, we're able to both restructure accounts and facilitate the transfer of deposits to the IntraFi reciprocal network. Combined, we were able to reduce our uninsured deposits by approximately $1 billion, and now uninsured together with uncollateralized is just 20% of total deposits. On the liquidity side, we pledged additional loans, thus adding to our already existing capacity at the Federal Home Loan Bank. Those actions resulted in an additional $2 billion in available liquidity. Just to give you a rough breakdown of our current borrowing base and overall liquidity, we now have an approximately $3 billion secured line in Federal Home Loan Bank, another $1 billion secured by loans and securities at the Fed discount window, including the new BTF, and an additional $1 billion in on-balance sheet cash and unpledged securities at market value in various unsecured lines of credit. We have a strong position today, which is more than adequate, but still we could increase the space by another $1 billion to $2 billion if ever needed. Utilization of the current $5 billion base today is solely from the Federal Home Loan Bank, where we have drawn down about $1 billion. The other lines have been successfully tested but are untapped, leaving us with available liquidity of roughly $4 billion. Now, Frank mentioned earlier our success of net deposit inflows, and I wanted to give you some color on that. The total deposit increase from year-end was about $400 million, of which approximately $200 million were core client net inflows occurring over the course of the first quarter. We did see approximately $100 million of 10.31 escrow deposit balances leave the bank during mid-March, but other than this particular decrease, there were no significant outflows. We added about $300 million of brokered deposits with a weighted average cost of a little over 5%. The lag of those maturities across the year has a weighted average duration of just over six months, so these will run off fairly quickly. Let's now turn to the margin. There are several factors that I believe will continue to compress margins across the industry. I'm confident you know what they are. First, a further reduction of the money supply, which can intensify competition among banks even further than we have today. Next, we've got continued high short-term rates, which provide a hard compulsion incentive for noninterest-bearing deposits to transfer balances into interest-bearing accounts. Finally, an increasingly important factor, a continued inverted yield curve environment would negatively impact net interest margins more than most realize. In terms of our net interest margin, it did compress more than we previously expected due to intense competition. Our cycle to date is now 40%, which is pretty high versus industry averages, and this was caused in part by the fact that our core deposit base is weighted 2 to 1 towards sophisticated commercial accounts. As Frank mentioned earlier, we made a strategic decision to be more aggressive with deposit rates in order to retain our existing clients and grow our core commercial client base. That strategy is working well in terms of deposit growth for liquidity but has put added pressure on net interest margin. Additionally, like most of the industry, we have experienced an accelerated decline in non-interest-bearing balances. Looking forward, we believe we are closer to a terminal beta than most. Although deposit costs will likely increase further to some degree, primarily due to CD rollovers, we have no current plans to raise rates from where we stand today. Margin compression at this point, if any, is likely to be slow. Our forecast is that when short-term rates subside and the yield curve takes a more traditional shape, net interest margin and profitability will return to historical levels, say, in the 330 to 350 range. This is consistent with what our models say about our current liability-sensitive position. Now notwithstanding this extraordinarily challenging interest rate environment that has created a near-term pullback in our net interest margin, our performance metrics for the quarter still surpassed 1% return on assets and approximately 1.5% PPNR ratio, with an efficiency ratio below 50%. Even with dividends and share repurchases, my forecast calls for maintaining or improving our capital ratios and increasing tangible book value per share. For the quarter, our sequential loan growth was below 1%, while deposits grew by more than 5%, resulting in an improvement in the loan-to-deposit ratio to less than 105. Let me turn to noninterest income for the quarter, which was down from recent levels. There were a couple of non-recurring items in there, and some SBA sales had been delayed. Those sales are scheduled to close in the second quarter. I'm hopeful that in the second quarter, we will close on about $500,000 in gains in SBAs. By the fourth quarter, I expect we should get close to a $4 million run rate with noninterest income. Going to expenses, as I anticipated, expenses increased sequentially, largely resulting from normal salary increases in this inflationary environment, as well as an increase in staff. Increased costs related to technology were also a factor. For the rest of the year, given the anticipated slowdown in the economy, I'm going to guide you to flat expense growth. Let me move on to the ACL and credit. Our CECL modeling resulted in a relatively small provision in the quarter, which reflects no material changes to Moody's economic forecast, a slight increase in our qualitative factors, but it was flat loan growth and no material changes to specific reserves. We did have about $4 million of charge-offs in the quarter that had no impact on provision expense as they had already been reserved for. A little more than half of that was related to the resolution of a handful of taxi medallion loans. We sold them for a little bit in excess of the carrying value. The other was a one-off commercial real estate loan that was originated by an acquired bank that has also been reserved for previously and therefore had no impact on provisioning for this quarter. Regarding nonperforming assets, we had a slight uptick in non-accrual loans, which relates to one multifamily property. That loan is 90 days past due, but the current loan-to-value is 85% and that's expected to be worked out successfully. I'd also like to remind everyone that we have only limited unrealized losses in our available-for-sale securities portfolio, and our tangible common equity and tangible book value per share were largely unaffected by higher rates. As such, it is unlikely, unless the economics are overwhelmingly compelling, that we would undertake a restructuring transaction that would dilute tangible book value. By the way, tangible book value per share at quarter-end was $22.07, up from year-end. This is the 12th consecutive quarter that it has increased. Before turning the call back over to Frank, I want to close with these thoughts. I believe current ConnectOne Bancorp shareholders will be significantly rewarded in the year ahead for several reasons. First, our liquidity position is extraordinary with more than 2.5 times coverage ratio. Our credit exposures to office and New York City multifamily segments are small. We stressed our portfolio for renewal rollover risk and any risk we have is very limited. Our margin is now depressed, but in our view, will return to historical levels, and our performance metrics will get back to best-in-class. Capital remains sound, unaffected by the AOCI issue, and the current earnings rate is more than adequate to support our plans. Finally, we are trading at just 70% of tangible book value. A return on our stock price to tangible book value would imply a greater than 40% shareholder return, and at these levels, we will be back in the market repurchasing stock. Now, I'll turn it back over to Frank.

Frank Sorrentino, Chairman and CEO

Thanks, Bill. In closing, although the industry remains burdened by near-term headwinds, ConnectOne continues to perform well. Our deep experienced team continues to successfully manage through these turbulent times, much as they have in many prior cycles. The actions we've taken to focus on deposits and enhance our balance sheet and capital base position ConnectOne for the challenges ahead and provide the flexibility to continue investing in our valuable franchise. I firmly believe that our conservative, client-centric model, diversified balance sheet, solid liquidity, and our track record of profitability position us to successfully navigate any near-term challenges. This also allows ConnectOne to fully capitalize on both near-term and long-term growth opportunities that will arise. We're excited about our future. As Bill just mentioned, by focusing on our strategic priorities, we will drive shareholder value. As we move through the rest of 2023, the temporary decline in profitability is not impacting our ability to fire on all cylinders and take advantage of the market.

Operator, Operator

We will now begin the question-and-answer session. Our first question will come from Daniel Tamayo of Raymond James. Please go ahead.

Daniel Tamayo, Analyst

Hey, good morning guys.

Frank Sorrentino, Chairman and CEO

Good morning, Dan.

Daniel Tamayo, Analyst

Thanks for taking my question. I guess, first just a follow-up on your net interest margin discussion, Bill. First, what do you think happens with the mix of noninterest-bearing? What are your thoughts or assumptions for the rest of the year? And then I guess when you say you think you can get back to that normalized 330 to 350, what goes into that thought process? What does it take to get you there? Thanks.

Bill Burns, Senior Executive Vice President and CFO

Well, on the noninterest-bearing, I think it's slowing down. We're noticing that the transfer of noninterest-bearing deposits is slowing down. But I believe it will continue to drag down margins across the industry a little bit. It’s hard for me to say exactly how much, but I do believe it's slowing down. As far as getting back to our margin, I mean, you can just—it's a pretty simple exercise, but it takes some assumptions that you have to make in terms of the speed of rate cutting, which I think is now projected towards the end of this year. As rates come down and more deposits become interest-bearing, we are more liability-sensitive than ever. I think that's a good position to be in. And as you know, the beta on the way down tends to be faster than the beta on the way up.

Daniel Tamayo, Analyst

And I guess more near term, you talked about the pressure here at 3%. Just wondering if you could give us a little more detail on how you're thinking about the magnitude of pressure that may be evident this year and what the rate environment does. If we're flat for the rest of the year, kind of what you're thinking versus the...

Bill Burns, Senior Executive Vice President and CFO

Yeah. Like I said, I think we can remain flat, but it's hard to guide when you know that this pressure on liquidity is out in the marketplace. We do have some CDs that are repricing, but it's not that much. We don't have plans to raise rates anymore, and the asset side will continue to reprice higher. So it really comes down to how fast or whether it stops the outflow of noninterest-bearing balances. I think we'll be—and I think I said in my remarks that we're closer to the terminal beta than most are, therefore, I can't say for sure we won't have a little bit more margin compression, but I would expect it to be lower than the rest.

Daniel Tamayo, Analyst

Okay, understood. And last question maybe for you, Frank on the repurchases. I hear you on the fact that you will be repurchasing at current prices. Just curious if you could remind us of the limits you have in place right now and how much you think you would actually be willing to do, given the price, and at what price that starts to wane?

Bill Burns, Senior Executive Vice President and CFO

First, when the price is below tangible book, it’s actually accretive to tangible book. So the analysis works out very smoothly. Certainly, at these levels and above these levels, we would be buyers. We bought back $205,000 last quarter. We could go a little bit faster than that, but that's sort of our typical run rate when things are conducive at $300,000 to $350,000 per share per quarter activity.

Daniel Tamayo, Analyst

Got it. Well, thanks for all the color, guys. I'll step back.

Bill Burns, Senior Executive Vice President and CFO

Thanks, Dan.

Frank Sorrentino, Chairman and CEO

Thank you, Dan.

Operator, Operator

The next question comes from Matthew Breese of Stephens. Please go ahead.

Matthew Breese, Analyst

Hey, good morning. Over the years, there's been a lot of disruption in your market. With what happened with Signature and then dislocation at some of the other institutions, I was hoping you can give us some sense on the increased disruption in your markets. Have you seen any inflow of depositors or lending teams, things like that that have come your way? And to what extent do you think you can take advantage of further disruption?

Frank Sorrentino, Chairman and CEO

I think I said in my comments, Matt, that this could be a once-in-a-generation opportunity for us. As you said, we are used to disruption in the marketplace, but never like this and never with competitors that have built tremendous teams to see those teams breaking down. While I do feel bad for some of those folks, it just presents us with an enormous opportunity. We've executed on a number of those. We have a really nice pipeline of folks that have reached out to us, and I think that's going to continue for quite a while. There's a real opportunity here for us, notwithstanding all the negativity in the market. People seem to forget that. We are in the New York marketplace, which was ground zero for a lot of that disruption, and we are best suited to take advantage of it.

Matthew Breese, Analyst

And then maybe I understand loan growth guidance is flat for the year, but there will be some new originations. What is the new role on yield blended, or if you want to provide for CRE and C&I, that'd be helpful versus what's rolling off?

Frank Sorrentino, Chairman and CEO

The average loan coming on the books today is around 7.5. It depends on where it is. Some of our floating rate loans that are coming on are even a little bit higher than that. It's a really good opportunity to keep that pressure off the margin for the new loans that we do bring on board. We did guide to a flattish year. It’s hard from where we sit right now to predict where we'll be, relative to all the originations taking place. Keep in mind, we still have a big loan portfolio, which has a lot of amortization and payoffs. We do a lot of construction and we have bridge loans and lines of credit. It takes an awful lot of origination just to stay flat. So being flat in my opinion in this economic cycle, with our credit discipline, is a win. If we were to grow a few percentage points, that wouldn’t shock me either.

Matthew Breese, Analyst

Great. And then the last one from me is obviously there's a lot of concern and heightened concern around all things commercial real estate, particularly office. Given your portfolio, you have $5.8 billion of CRE. You're going through valuation appraisals and deals all the time. For stuff that is either selling from pre-COVID or being newly appraised, what is kind of the change in valuations for commercial real estate across your markets? Does it vary within New York City versus North Jersey? We'd love just some color on that.

Frank Sorrentino, Chairman and CEO

It's interesting that everyone takes out this enormously broad brush and calls it all CRE. I’m looking across the street at one of the assets we've lent on, and it’s a multi-tenanted doctor's office with about 100% occupancy. There are lines out the door of people who want to get into that space because of its location and the building’s condition and everything else. That loan is 100% secured. There are office towers in New York City that are near vacant. You cannot put those two things in the same bucket or look at multifamily that’s in suburban markets with transit-oriented locations the same way you look at rent-stabilized apartments in New York City. When I think about our CRE exposure, I think about the various segments we're in, and we've been very careful and disciplined about what we loan against. We look at more than just the asset itself; we're looking at the sponsors, track records, and growth trends in each of the submarkets and categories. From a peak valuation perspective, I would say we're probably down somewhere between 15% and 20%.

Operator, Operator

And the next question comes from Frank Schiraldi of Piper Sandler. Please go ahead.

Frank Schiraldi, Analyst

Good morning.

Frank Sorrentino, Chairman and CEO

Hey Frank.

Frank Schiraldi, Analyst

I just had one question left on my list here. In terms of the—Bill, you talked about the expense guidance being pretty flat going forward. Given the inflationary environment, and given some of the things Frank talked about in terms of opportunities in the marketplace, can you talk a little bit more about how do you have the opportunity to hold that back or cut elsewhere to think about that being flattish through year-end?

Bill Burns, Senior Executive Vice President and CFO

Yes. Well, good question, and I'll have to add that Frank had a few comments. Seasonally, we generally have more expenses in the first quarter because of the way compensation is paid out. Last year, we had a lot of hiring and growth throughout the year. It's possible that our staff count goes down a little bit. So the combination of those two things, along with potential for less staff going forward, could lead to flat growth in expenses.

Frank Sorrentino, Chairman and CEO

And Frank, part of that flat projection—there seems to be some contradiction, which is there are opportunities to hire some really great talent in the market. We're going to seize those opportunities and, at the same time, optimize our existing staff count, branch count, and everything else we look at. We'll utilize technology to reduce the human capital we have in certain areas. This allows us to invest in high-performing revenue-producing people instead. This has been ongoing here for years, but I think there's more opportunity for it today.

Frank Schiraldi, Analyst

Thank you. And then I guess just a clarification. I want to make sure I heard correctly. Frank, during your prepared remarks, I believe you said LTV is under 50%. But I missed what that was on. Was that on the office portfolio?

Frank Sorrentino, Chairman and CEO

Yes, that's correct. That's the office portfolio.

Frank Schiraldi, Analyst

I think you talked about some valuation contraction in different property types. What are you seeing in terms of New York City office? I mean, either anecdotally or through some updated appraisals you were able to see. Just kind of curious about the valuation contraction you think has been on that property side.

Frank Sorrentino, Chairman and CEO

I don’t think you can apply any sort of average contraction in the New York City office portfolio. We have very little of it, so I can’t really speak. I can only tell you anecdotally what I've seen, either because it’s been presented to us or we've spoken to folks in the market. It's really a hit-or-miss situation. For example, our office is located at 550 Madison, and I think that building is pretty much 100% occupied. But across the street, there’s a newer modern building that isn’t even 50% occupied. Those are two completely different dynamics that are not too far away from each other. There are buildings in New York that are under 20% occupied and buildings that are 100% occupied with waiting lists. It is asset-specific. I really don’t like how broad the CRE discussion tends to be. Yes, there are strategic and structural issues around back-to-work, but it is very specific to locations, building types, and tenants. Depending on the mix of tenants—if you have more tenants looking to reduce versus expand—you’ll have buildings in trouble. It depends on how much leverage each building has, too.

Matthew Breese, Analyst

Okay, I appreciate it.

Operator, Operator

The next question is a follow-up from Matthew Breese of Stephens. Please go ahead.

Matthew Breese, Analyst

Hey, good morning again. We didn't touch on this. I know we've discussed a little bit of a mix shift but wanted to get your thoughts on what you expect in terms of total deposit growth for the rest of the year.

Frank Sorrentino, Chairman and CEO

That's a hard thing to forecast. Again, I think if we end the year with a flattish-type balance sheet, I would say that we've done a really great job. But I do think that we will see continued inflows of deposits over time. There is some seasonality to some deposits, so we’d have to take out some of that noise. Efforts here are mostly around organic deposit origination, originating the types of credits that bring deposits with them, and reinforcing the expansion of verticals that are generally deposit-rich. There are a lot of other programs that continue to bring deposits out, whether they’re digital or built with human capital. My expectation is deposits will continue to grow. What percentage they grow over the size of the portfolio is hard to assess right now, but I believe we will be in a positive mode as opposed to what the rest of the industry has been saying or talking about. It’s strange to me how they’re willing and able to let their deposits roll off their balance sheets to protect their net interest margin. We are looking to onboard high-quality clients who appreciate and value our services.

Bill Burns, Senior Executive Vice President and CFO

Just one other note—obviously cash balances and liquidity bolstered during the quarter. Do you have a timeframe for when that might normalize, and how do you expect the securities portfolio to play out for the rest of the year as well? It’s already coming off the balance sheet due to that excess cash. To me, having those readily accessible lines is equivalent to having cash. We just have to press a bond to get it. The securities portfolio is part of the liquidity equation. Part of that portfolio has been pledged for loans. It has also been used for collateralization for deposits, but there’s a couple of hundred million available for sale at market value. It’s part of the whole liquidity equation, not just cash on the balance sheet. Everybody talks about bolstering liquidity in press releases, but it’s not just cash.

Matthew Breese, Analyst

Understood. Okay. I'll leave it there.

Bill Burns, Senior Executive Vice President and CFO

I can talk to you more about it after. Okay.

Matthew Breese, Analyst

I appreciate it very much, guys.

Operator, Operator

This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Frank Sorrentino, Chairman and CEO

Again, I want to thank everyone for joining us here for our first-quarter conference call. Look forward to seeing you all at our next meeting in July. Enjoy and thank you.

Operator, Operator

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.