First Interstate Bancsystem Inc Q2 FY2025 Earnings Call

Good morning, ladies and gentlemen, and welcome to the First Interstate BancSystem Inc. Second Quarter Earnings Conference Call. This call is being recorded on Wednesday, July 30, 2025. I would now like to turn the conference over to Nancy Vermeulen. Please go ahead.

Thanks very much. Good morning. Thank you for joining us for our second quarter earnings conference call. As we begin, please note that the information provided during this call will contain forward-looking statements. Actual results or outcomes might differ materially from those expressed by those statements. I'd like to direct all listeners to read the cautionary note regarding forward-looking statements contained in our most recent annual report on Form 10-K filed with the SEC and in our earnings release as well as the risk factors identified in the annual report and our more recent periodic reports filed with the SEC. Relevant factors that could cause actual results to differ materially from any forward-looking statements are included in the earnings release and in our SEC filings. The company does not undertake to update any of the forward-looking statements made today. A copy of our earnings release, which contains non-GAAP financial measures, is available on our website at fibk.com. Information regarding our use of the non-GAAP financial measures may be found in the body of the earnings release, and a reconciliation to their most directly comparable GAAP financial measures is included at the end of the earnings release for your reference. Again, this quarter, along with our earnings release, we've published an updated investor presentation that has additional disclosures that we believe will be helpful. The presentation can be accessed on our Investor Relations website. If you have not downloaded a copy yet, we encourage you to do so. Please also note that as we discuss our financials today, unless otherwise noted, all of the prior period comparisons will be with the first quarter of 2025. Joining us from management this morning are Jim Reuter, our Chief Executive Officer; David Della Camera, our Chief Financial Officer; and other members of our management team. Now I'll turn the call over to Jim Reuter. Jim?

Thank you, Nancy, and good morning, everyone, and thank you for joining us on our call today. This remains an exciting and busy time at First Interstate. This quarter, we continued our efforts to refocus our capital investment, optimize our balance sheet and improve core profitability. In addition to our decision in the first quarter to stop new originations in indirect lending, followed by our April announcement of the Arizona and Kansas branch transaction, we signed an agreement this quarter to outsource our consumer credit card product and the underlying loans moved off of our balance sheet. We continue to take steps to refocus the franchise in our core markets where we enjoy strong market share and believe there is high growth potential. First Interstate has a strong brand and branch network located in growth markets, a market-leading low-cost granular deposit base and a team of strong community bankers. We believe these attributes, when combined with recent strategic actions, branch optimizations, future organic growth through relationship banking and the continued repricing of our assets will lead to higher profitability. We continue to take a proactive approach to credit risk management. This quarter, we were pleased to see stability in nonperforming asset levels, modestly lower classified asset levels and 14 basis points of annualized net charge-offs. Criticized loans did increase, generally reflective of slower lease-up in our multifamily book, and we will discuss that in more detail later in the call. Our recent strategic decisions have led to strong levels of capital and liquidity, providing us with a solid and flexible foundation. We ended the quarter with a 72% loan-to-deposit ratio, minimal short-term borrowings on the balance sheet and no broker deposits. Capital had also continued to meaningfully accrete with our common equity Tier 1 capital ratio, ending the quarter at 13.43% and with an expectation for continued accretion through 2025. Later in the call, David will address new commentary we have added to our guidance regarding our anticipation for a high single-digit increase in net interest income in 2026, supported by our expectation for continued margin improvement assuming generally flat total loan balances in 2026. We are sharing this color to highlight what we believe is the impact of our disciplined approach to repricing maturing assets as we continue to focus the organization on organically growing loan balances over the long term. We have also added a slide to our investor presentation this quarter, highlighting the strength of our deposit profile, which we believe is the key driver of the long-term value of the franchise. 93% of the deposit base is located in areas where we have top 10 market share and about 70% of our deposits are in markets that are growing faster than the national average, supporting long-term organic growth. We opened one additional branch this quarter in Columbia Falls, Montana, which is a small example of our future efforts to drive organic growth. We did not announce any branch consolidations in the second quarter, but we anticipate sequential action moving forward as we progress through 2025 and into 2026. With that, I will hand the call off to David to give more details on our quarterly results and to discuss our guidance. David?

Thank you, Jim. I will start with our second quarter results. For the second quarter of the year, the company reported net income of $71.7 million or $0.69 per diluted share compared to $50.2 million or $0.49 per diluted share in the first quarter. Net interest income was $207.2 million in the second quarter, an increase of $2.2 million over the prior period. This increase is primarily driven by a reduction in interest expense from reduced other borrowed funds balances, partially offset by lower interest income on earning assets resulting from a decrease in average loan balances. Our net interest margin was 3.32% on a fully tax equivalent basis, and excluding purchase accounting accretion, our net interest margin was 3.26%, an increase of 12 basis points from the prior quarter. Other borrowed funds ended the second quarter at $250 million, a decline of $2.2 billion from a year ago and $710 million from the end of the prior quarter. Yield on average loans increased 6 basis points from the previous quarter to 5.65% in the second quarter, driven by continued repricing and payoffs of lower-yielding loans. Interest-bearing deposit costs declined by 1 basis point in the second quarter compared to the first quarter, and total funding costs declined 9 basis points due to improving mix shift driven by the reduction in other borrowed funds. Noninterest income was $41.1 million, a decrease of $0.9 million from the prior quarter. Results this quarter include a $7.3 million valuation allowance related to movement of Arizona and Kansas loans that are included in the branch transaction to held for sale. This was partially offset by a $4.3 million gain on sale related to the outsourcing of our consumer credit card product. Results were generally in line with our expectations, excluding these items. Noninterest expense declined in the second quarter by $5.5 million to $155.1 million. This decline compared to the prior quarter was due to lower seasonal payroll taxes and reductions in incentive-based compensation estimates. Results include roughly $1.5 million in property valuation adjustments and lease termination fees associated with properties in Arizona and Kansas. We continue to exhibit expense discipline related to our staffing levels driving results favorable to our prior expectations. As part of that discipline, we are thoughtfully developing efficiencies as we move forward, which includes our ongoing analysis related to the branch network and are carefully controlling staffing levels and other marginal spend. Turning to credit. Net charge-offs totaled $5.8 million representing 14 basis points of average loans on an annualized basis. We recorded a reduction to provision expense for the current quarter of $0.3 million, driven by lower loans held for investment. Our total funded provision increased to 1.28% of loans held for investment from 1.24% at the end of the first quarter. Classified loans declined $24.4 million or 5.1%, and nonperforming loans also declined modestly. Criticized loans increased $176.9 million or 17.2% from the first quarter of 2025, driven mostly by some of our larger multifamily loans, generally reflective of slower lease-up. Broadly, we are comfortable with the underlying value of the properties and guarantor's ability to support in these circumstances, but lease-up timelines are slower than initially anticipated at underwriting, driving movement into the criticized bucket. Turning to the balance sheet. Loans held for investment declined $1 billion, which included the impact from the strategic moves we have discussed. The decline was influenced by $338 million in loans related to the Arizona and Kansas transaction that moved to held-for-sale, $74 million of loans sold with the consumer credit card outsourcing, and $73 million from the continued amortization of the indirect lending portfolio. The remaining reduction was influenced by higher larger loan payoffs, including loans we strategically exited. We are remaining diligent in adhering to our pricing and credit discipline. And while competition is always strong for great clients, we are seeing initial indications of increasing pipeline activity. We do believe that loans will decline in the near term but remain optimistic that we will stabilize and return balances to growth in the medium term. Deposits declined $102.2 million in the second quarter and are approximately flat compared to the prior year, adjusted for a larger temporary deposit on our balance sheet at the end of the second quarter of 2024. Finally, in the second quarter, we declared a dividend of $0.47 per share or a yield of 7.0%. Our common equity Tier 1 capital ratio improved by 90 basis points to 13.43%. Moving to our guidance. Our guidance as displayed includes the impact of the consumer credit card outsourcing and excludes the impact of the branch transaction, which we anticipate closing in the fourth quarter. Broadly, the consumer credit card outsourcing reduces the major lines of the income statement and is mostly neutral to forward net income. We have updated our guidance to reflect our current assumption of a 125 basis point rate cut for the remainder of 2025. As of the end of the second quarter, our balance sheet has shifted from slightly liability sensitive to mostly neutral, and we do not believe the rate cut included in our guidance is meaningful to the net interest income forecast we have presented for 2025. Our net interest income guidance reflects an anticipation of continued margin improvement with an expectation of fourth quarter net interest margin, excluding purchase accounting accretion, to approximate 3.4% compared to the 3.26% figure reported in the second quarter. Compared to the prior quarter's forecast, in addition to the impact from the outsourcing of consumer credit cards, the net interest income forecast was modestly impacted by lower risk-weighted density. Our guidance now assumes a more meaningful near-term asset allocation into the investment portfolio versus loan balances as loans have declined more than previously anticipated. We anticipate beginning to reinvest into the investment portfolio in this quarter. We have added commentary in our guidance, noting that we anticipate net interest income to increase in the high single digits in 2026 compared to 2025, supported by our expectation for continued margin improvement, assuming generally flat loan balances in 2026. We're sharing this to highlight what we believe is the impact of our disciplined approach to repricing maturing assets and continue to believe we will grow loan balances over the long term. To provide additional detail, we've included the slide in our investor presentation detailing near-term fixed asset maturity and adjustable rate loan repricing expectations. Note that loan balances represent maturities in the case of fixed rate loans and maturities or repricing events in the case of adjustable-rate loans. These figures displayed do not include contractual cash flow or any prepayment expectations. We expect loan yields to continue to benefit from the tailwinds of fixed rate repricing, a key component of our expectation for continued net interest margin and net interest income improvement. The investment security figures displayed represent current market expectations for total principal cash flows during each period which provides another source of anticipated net interest income expansion. Noninterest income guidance is modestly lower than the prior quarter, impacted by the outsourcing of our consumer credit card. Finally, we reduced our noninterest expense guidance from an expectation in the prior quarter for a 2% to 4% full year increase to 0% to 1% for the full year of 2025, compared to the reported 2024 number. In addition to favorability in the second quarter expense levels to prior expectations, we are carefully controlling staffing levels and other expense levers while continuing to invest in production-driven areas as we look to drive our balance sheet growth. These areas of continued focus have reduced our forward expectation of expenses in the near term. While near-term loan levels are lower than previously anticipated, leading to some modest pressure in net interest income in the near term, we are carefully controlling the expense base as we look to drive an efficient return profile for our shareholders. Turning to the Arizona and Kansas branch transaction. We stated in our previous earnings call that we anticipate tangible book value accretion of roughly 2% at the close of the branch transaction, an improvement in our common equity Tier 1 ratio of approximately 30 to 40 basis points. As noted, we modestly increased loans associated with the transaction since the prior quarter. Together with the anticipated recognition of the deposit premium in the fourth quarter, which would occur concurrent with close, we continue to anticipate total tangible book value accretion of approximately 2% from the transaction, which would include the impact of the held-for-sale valuation allowance recognized this quarter. We now anticipate our CET1 ratio to increase at the high end of the noted range given the additional loans included. With that, I will hand the call back to Jim.

Thanks, David. We are diligently focused on continuing to make sequential progress on our strategic plan and added a slide in our investor presentation to outline our focus areas, which includes refocusing capital investment, optimizing the balance sheet and improving core profitability. We believe earnings will continue to improve through 2026 and into 2027, and the ongoing remix of our balance sheet is providing us with liquidity and capital flexibility. We are actively working through our asset quality levels and are optimistic that we are beginning to see positive underlying credit development, evidence of our disciplined proactive work on asset quality. We will continue to work diligently to improve the earnings profile of our institution, and we look forward to sharing our progress with you. Now I will open the call up for questions.

The first question comes from Jeff Rulis at D.A. Davidson.

I appreciate the information in the presentation and the insights shared. It's a challenging question, but I'd like to understand the timing for stabilizing the loan portfolio. It appears there’s significant effort required upfront with the runoff and possibly some additional shifts. When do you anticipate the portfolio will start to run off, perhaps by the end of this year, or do you expect that to occur in the first half of next year? Additionally, when do you envision the loan portfolio will stabilize?

So a couple of things here. Good question. To start, as we consider the balances in the quarter, we had held-for-sale assets, as well as indirect and credit card loans. We also noted large loan payoffs. Additionally, you'll observe in one of our slides that line utilization was somewhat lower this quarter. Adjusted for all of that, the change in loans from quarter to quarter is more in the mid-1% range compared to what's reported for held-for-investment assets. Looking ahead, we expect slightly lower loan volumes in the third quarter, which is reflected in our guidance. We are hopeful for more stability in the fourth quarter regarding held-for-investment levels, and of course, we are optimistic about our ability to grow.

And Jeff, this is Jim. To add on to that, when I look at the payoffs in the quarter, there were four larger loans. A few of those were frankly intentional and it's the type of lending we don't want to do on a go-forward basis, and one was also a multifamily that went to the secondary market. So as I've discussed the past two quarters, we completed a deep dive on credit, set up a new credit committee process to get everybody on the same page. And I can confidently say we're now on offense, have some specific promotions, and we're seeing some good activity in the pipeline.

That's great. Maybe a related question and trying to back into some of the NII guidance, sounds like a pretty good commitment on the security side. Any effort to try to peg where earning asset levels could be at year-end? My guess is it sounds out from here.

Yes, good question. Our borrowings at the end of the quarter amounted to about $250 million in short-term borrowing. We believe the third quarter marks the lowest point for earning asset levels. As you mentioned, we expect a higher level of investment securities than we had previously anticipated in the near term, based on balance sheet trends. Long term, we aim to shift that mix towards more loans. The review of the third quarter indicates we've hit the bottom for earning assets, excluding Arizona and Kansas. There might be a slight decrease heading into the fourth quarter, but it will be modest, and we think we are nearing the bottom there.

Okay. Just the last one on the capital side. I think you mentioned at the high end of the range of guidance. Maybe CET1 possibly by year-end, given that the branch deal should be behind you, but I guess that's part one, is maybe a CET1 at year-end. And then part two is just if you wouldn't mind kind of going through the capital priorities from there as you've got a pretty high-level building here?

So I think at year-end, to your point, so 13.4% was the June 30 number. We think we are around the 40 basis point number of additional accretion from the branch transaction and then modestly lower loans in the near term. So that does get you to a higher number from here, all else equal. As we think about capital, we certainly acknowledge we have strong capital levels, and it creates significant optionality for us. We're very pleased with that. We're looking at a variety of options. So we're looking at all the different capital deployment options from here and considering how we can utilize that to enhance return. So more to come there, but we're looking at our different options.

The next question comes from Andrew Terrell at Stephens Inc.

I wanted to begin by acknowledging that it was good to see the classified loans decrease sequentially, but I was somewhat surprised by the significant increase in special mention this quarter. Given the efforts your team has put in over the past six to nine months regarding the credit review process, I was hoping you could provide more insight into what drove that increase in special mention and what kind of loss content we should expect. Also, should we anticipate further movement into criticized classified loans?

Andrew, I'll take that. We saw, as you mentioned, the step-up in the criticized. A lot of that was driven with new information on some multifamily projects that, as we mentioned, primary source of repayments, what we focus on, and the builder's original plans for absorption and how that project would go are not being met. I've actually looked at 2 of the 3 larger ones that are in the group that moved up in volume, seen them personally, still feel good about the collateral, really like the guarantors. So it's really that primary source of repayment. Otherwise, it was fairly flat. And I can tell you that I see the fruits of our proactive management of credit.

I appreciate the insights, Jim. David, could you elaborate on the expense guidance? There seem to be many factors at play. It appears that the guidance suggests we should expect a notable increase in expenses in the third quarter. Could you also remind us about the potential expense savings from the branch divestiture set for the fourth quarter? Additionally, I assume that there are no branch consolidation efforts included in the expense guidance. Should we consider these as potentially beneficial to the current guidance?

Sure. So first, I'll kind of take that backwards to forward. So there are no branch divestitures included in the guidance, you're correct there. So anything that occurs there. Again, just given timing, we think that's more of a '26 impact than a '25 impact actually on the expense figure. But you're correct, no expectation is included in that. Related to Arizona, Kansas, to remind on the commentary from the prior quarter, about a mid-2s number as a percentage of the deposit base is how we view that annualized cost impact after close there. Quarter-to-quarter, as we think about our expenses, you're correct that we do anticipate third and fourth quarter to be a higher reported number than second quarter for expenses. A couple of drivers there include things such as our medical insurance we generally see a little bit higher in the back half than the front half, that will be included in there. There was some timing in the second quarter on some of the salary and wage items that will be modestly higher in the third quarter. And then we had some benefits in our tech spend in the second quarter. That we'll see a little bit higher in the third quarter. Nothing generally unusual, but some timing items as well that will cause that increase.

Got it. That's really helpful. I appreciate it, David. I would like to ask about the guidance. I appreciate you providing some of the repricing details in the presentation this quarter. It's very useful. Regarding the net interest income, you mentioned high single-digit growth for 2026. Does that take into account the net interest headwind from the branch divestiture in the fourth quarter? Would that significantly change the high single-digit expectation for 2026?

So it does not include the divestiture impact. We don't believe that materially alters that figure broadly. Loans and deposits associated with the transaction don't look dissimilar than the bank's loans and deposits as a whole. So we wouldn't view that change as materially different. And again, the capital raised with the transaction, there's different options related to that, of course. So at this time, that high single digit would be excluding any decision there related to the loans, deposits, and capital.

The next question comes from Kelly Motta of KBW.

In terms of the expense base, kind of circling back to that, I appreciate the color on the expense base regarding the branch divestitures. Wondering how you're thinking about the reinvestment of the savings versus flowing to the bottom line? And specifically, with regards to frontline hires, if you have the right talent to start to drive the inflection in growth as we look to next year?

Yes, Kelly. David discussed some details about the expense phases. There are a couple of important points to consider. When we examine growth and net interest income, managing our expenses is another crucial lever. We will closely monitor this as we aim for stronger net interest income. However, we will not compromise on having the right people in our team or on the necessary actions for growth. We do have the right talent in place, so our cost-saving measures will not diminish the quality of our workforce. Any investment needed for growth will remain a priority.

I understand. That's useful information. Regarding the NII outlook, which includes securities purchases due to the slowdown in loans, could David share insights on what you're planning to add to the portfolio and the incremental yields associated with that, as well as the new yields from the loans you're currently booking?

Sure. So on the security side, the incremental purchases won't look holistically dissimilar than what we currently have in the book. The way we broadly think about that is just given the structural rate sensitivity position of the company, shorter duration, similar to what we have today, broadly, lower risk-weighted density and no credit risk. So that's kind of limited to no credit risk. That's broadly how we think about that. From a yield perspective, if you kind of think something like a mid-duration MBS as an example, and there's, of course, a variety of different things we would be purchasing. That's 5-year plus 80 to 90 today. That will move, of course, but something in that range. New loan production, somewhere in that 7% range. It's going to be sensitive to that 5 to 7-year point on the curve, but that's broadly where we are today.

Got it. That's helpful. Last question for me, and then I'll step back into the queue. On the loan side, I appreciate the color on some of the larger payoffs you had, some of which was intentional. Looking at the line for commercial, that was down pretty meaningfully. And I know you noted some drop-down in the utilization there. Can you provide additional color as to what you're seeing on the commercial side? And if there was any sort of just like end-of-quarter flows that we should be keeping in mind in terms of thinking about the average balance sheet?

Yes, thank you for the question. I want to highlight a few points. First, the utilization did have an impact. Additionally, one of the larger payoffs we mentioned was in that segment, which also contributed to the impact. There were also loans that transitioned to held-for-sale, including some commercial real estate and C&I loans, which affected our results quarter-over-quarter. However, we don't view this as a reflection of our expectations moving forward or changes in that category. We're certainly focused on small business, but this was a one-time movement in the quarter.

The next question comes from Jared Shaw at Barclays.

We're looking to cover the year-end '25 loan levels as an exit, which indicates a decline of about 10% to 12% when considering loan sales and indirect activities, along with some payoff activity. Is that the correct way to interpret it?

Yes. So how we're thinking about that is the guide of 6 to 8 is the excluding the other items, an additional 1 to 1.5 on indirect and then the held-for-sale balances we anticipate, of course, leaving in the fourth quarter when we anticipate that transaction to close. So that would be a marginal about 2% impact. That's correct.

All right. And then when you look at the valuation allowance that you took on those loans, can you give any color on what the rate versus credit impact of that would have been?

So that valuation allowance was a rate mark on the loans. It was purely reflective of rate. And yes, so that's just a rate mark there.

The next question comes from Matthew Clark at Piper Sandler.

First one for me on the loans transferred to held-for-sale $338 million. I think you called it out as being related to the branch sale. But I think when you announced the branch sale, it was only $200 million of loans. So are those all tied to those branches? Or did you guys also move some additional loans into HFS?

They were all tied to the branches. There were some additional loans during the quarter that were identified related to the transaction, some relationship-related loans, so all related to the branch transaction.

Can you provide details on the remaining loans in the portfolio that are not relationship-based and that you intend to phase out? We see that the consumer credit portfolio is the latest component, but I would like to understand if there's a way to strategically manage a runoff from this point onward.

Yes, Matthew, I don't see much deliberate runoff remaining in the loan portfolio. One challenge we face is with multifamily construction loans, which, once they are fully leased and stabilized, may move to the secondary market. We will observe some of that activity. However, our message to the team is that just because some loans exit the portfolio doesn't mean we shouldn't seek replacements and continue to grow the bank. I will also note that the larger loans I preferred move off the balance sheet have mostly already left.

On the slide deck, regarding the deposit market share, does that suggest that you might consider exiting some additional markets where you're not ranked in the top 5? I believe that comprises around 30% of the total. I'm not saying you would exit all 30%, but is this more about highlighting an opportunity to increase market share? It seems that Colorado stands out among those markets for not being in the top position.

Yes, Matthew. Yes, it's not to illustrate where we want to exit. It's to illustrate where we have existing density, which gives us an advantage. And if you look at a lot of those states and MSAs and areas, they're growth areas. So we think it's a positive that we have that type of market share. And we hope to gain it in other areas as well. So where you see less of it, it's not an indication we're going to retreat. It's an indication of where we need to make progress.

The next question comes from Timur Braziler from Wells Fargo.

Looking at the capital priorities and examining the options here on a go-forward basis. I guess, I mean, Jim, you made it pretty clear that M&A is off the table, looking at the dividend, you guys already have one of the highest dividends out there. I guess that would leave share buyback or some sort of balance sheet restructure, one would be a slower use of capital. One would be a more kind of acute use of capital. I'm just wondering kind of where the thought is between those two, the mix of and then to the extent that some balance sheet restructure is in the card, how much of that might be included in the 2026 NII guidance?

Yes, Timur, that's a good question. As you've already pointed out, we have strong capital levels, and it's going to increase, as we've already talked about, which gives us a lot of flexibility. And so obviously, dividend is important to us. We've demonstrated that historically and currently today. Organic growth will be our focus if we can grow the bank and make use of the capital. But all that said, if we're not able to utilize the capital in that fashion, we will look at all options on the table, including all the things you mentioned. So we have a focus on creating shareholder value. And so that will be an active conversation for us.

And Timur, the '26 guide, that does not include or assume capital actions.

Got it. And then looking at the loans specifically that are maturing and/or resetting through '26, I calculate that to be about 12% of the outstanding loan book. Do you guys view that as an opportunity? Or is there a potential threat that maybe some of those either get refied away into the secondary market? Or still some composition of 'the type of blending that you don't really want to do.' I'm just trying to get a sense of this elevated portion of resets that are coming due in the next 18 months and what effect that might have on balance sheet composition and your expectations for average earning assets here to stabilize in the not-too-distant future?

Yes, Timur, that's a good question. And as I mentioned earlier, I don't see a lot of loans that don't fit our profile in that mix. There is some multifamily that, as I mentioned, that when stabilized, the borrowers' intent was to go to secondary market. Obviously, we're not going to compete with secondary market from a rate and structure perspective. And so that's why we show loan growth fairly flat. But our intent is to replace that with production and growth. And as I mentioned, we're seeing good activity in the pipeline and C&I, owner-occupied and different things. So that's where we're headed there and optimistic that we can replace a lot of that.

And then just last for me around credit. Just looking at the recent trends in criticized loans, coupled with your unchanged net charge-off guidance, I guess, what's giving you comfort to the fact that the increase in criticized that are now over 7% of the loan book isn't going to drive some volatility around charge-off activity either in the back end of '25 or into '26?

Yes, Timur, what continues to give us confidence in that area is that a lot of the movement into criticized has been that primary source of repayment. We still like the collateral and the guarantors that are backing those credits, and they're well located, which is partly why we like the collateral. So that's why we continue to be confident. And I think, again, I've mentioned this before, proactive credit management, I think, is one of the tenets of running a good bank in all economic cycles, and that's what you're seeing in play here.

We have no further questions. I'll turn the call back over to Jim Reuter for closing comments.

All right. Thank you, and thank you, everybody, for your questions. And as always, we welcome calls from our investors and analysts. So please reach out to us if you have any follow-up questions, and thank you for tuning into the call today.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.