Earnings Call Transcript - HAFC Q2 2020

Operator, Operator

Ladies and gentlemen, welcome to the Hanmi Financial Corporation's Second Quarter 2020 Conference Call. As a reminder, today's call is being recorded for replay purposes. I would now like to introduce Mr. Lasse Glassen, Managing Director at ADDO Investor Relations. Please go ahead, sir.

Lasse Glassen, Managing Director at ADDO Investor Relations

Thank you, operator, and thank you all for joining us today. With me to discuss Hanmi Financial's Second Quarter 2020 Earnings are Bonnie Lee, President and CEO; Anthony Kim, Chief Banking Officer; and Ron Santarosa, Chief Financial Officer. Ms. Lee will begin with an overview of the quarter. Mr. Kim will discuss loan and deposit activities, and Mr. Santarosa will then provide more details on our operating performance. At the conclusion of the prepared remarks, we will open a session for questions. In today's call, we may include comments and forward-looking statements based on current plans, expectations, events, and financial industry trends that may affect the company's future operating results and financial position. Our actual results could be different from those expressed or implied by our forward-looking statements, which involve risks and uncertainties. The speakers on this call claim the protection of the safe harbor provisions contained in the Securities Litigation Reform Act of 1995. For some factors that may cause our results to differ from our expectations, please refer to our SEC filings, including our most recent Form 10-K and 10-Q. In particular, we direct you to the discussion of certain risk factors affecting our business contained in our earnings release, our investor presentation and our Form 10-K. This afternoon, Hanmi Financial issued a news release outlining our financial results for the second quarter of 2020, along with a supplemental slide presentation to accompany today's call. Both documents can be found in the Investor Relations section of our website at hanmi.com. I will now turn the call over to Bonnie Lee. Bonnie?

Bonita Lee, President and CEO

Thank you, Lasse. Good afternoon, everyone. Thank you for joining us today to discuss Hanmi's 2020 second quarter results. Overall, I am pleased with the team's consistent execution during this past quarter in what continues to be an extremely difficult and uncertain operating environment, resulting from the ongoing COVID-19 pandemic. Hanmi's performance in the second quarter was underscored by solid loan growth and strong deposit gathering activity. We also continue to diligently support our customers and our communities. In addition to our efforts under the Paycheck Protection Program or P3, we remain extremely focused on the management of our loan and lease portfolio by proactively providing individual life support to our customers to ultimately help them get through the crisis. While we continue to face challenges imposed by the pandemic, the following are some of the key financial and operational highlights for the second quarter. Net income was solidly higher on both a sequential quarter and year-over-year basis. While credit loss expense arising from the pandemic increased during the quarter, we benefited from gains on the sale through the repositioning of our securities portfolio. New loan production during the second quarter was strong and included significant P3 loan production while loan payoffs were very slight. As a result, loan receivable expanded nicely on both the sequential quarter and year-over-year basis. Net interest income before credit loss provision increased slightly quarter-over-quarter despite a 21 basis point sequential quarter reduction in net interest margin that was driven in part by the lower-yielding P3 loans. Deposits increased sharply during the quarter, led principally by an increase in noninterest-bearing demand deposits. While a portion of the increase reflects deposits from various government relief programs and a flight to security, I remain pleased with the strength of Hanmi's deposit franchise. But perhaps most importantly, Hanmi remains very well capitalized and has ample liquidity. Our regulatory capital ratios are very strong, and I believe we are well-positioned to address these challenging times. Looking in more detail at our second quarter results, we reported net income of $9.2 million or $0.30 per diluted share. This compares favorably to net income of $0.08 per share in the previous quarter and net income of $0.09 per share in the second quarter last year. Net income in the second quarter continues to be impacted by uncertainties associated with the COVID-19 pandemic. Second quarter credit loss expense increased to $24.6 million, up from $15.7 million in the prior quarter. The second quarter credit loss expense includes a $21.1 million provision for loan losses and a $3.5 million provision for off-balance sheet items. The increase in credit loss expense reflects deterioration during the quarter in some of the assumptions used in determining the allowance for credit losses, including levels of economic activity and employment, among others. Without a doubt, this remains a very fluid situation, and we will continue to closely monitor the impact of the crisis on our portfolio. Partially offsetting the credit loss expense was a $15.7 million gain on the sale of securities recorded in the quarter. The gain on the sale of securities reflects the repositioning of our securities portfolio to capture the high level of unrealized gains arising from the very low interest rate environment. As expected, Hanmi did not sell any SBA loans during the second quarter because of the disruption in the secondary market resulting from the COVID-19 crisis. We expect, however, to resume selling SBA loans in the third quarter. As a result, there were $17.9 million of the guaranteed portion of SBA 7(a) loans held for sale at June 30. Let's now turn to asset quality. Nonperforming loans increased modestly to $58.3 million or 121 basis points of loans at quarter end compared with the first quarter 2020 nonperforming loans of $52.2 million or 150 basis points of loans. The increase in nonperforming loans reflects the addition of three loans, totaling $22.9 million and leases totaling $1.6 million, offset by the payoff of the $5.5 million film tax credit loan discussed on our call last quarter as well as two other loans totaling $14.1 million returning to accruing status. The COVID-19 pandemic caused a number of our borrowers to seek temporary modifications to their loan agreements. We approved in the second quarter over 2,000 applications for 90-day modifications, reaching $1.4 billion. Since then, we have kept in close contact with our borrowers and are guardedly encouraged that about 30% of our hotel, retail and other real estate secured borrowers may not seek an additional 90-day modification. As many of you are aware, the circumstances facing our borrowers can change rapidly as the instance of the virus rises or falls. As we did last quarter, we will continue to work with our borrowers in these challenging times. In terms of our underwriting, we remain committed to conservative disciplined credit criteria. For the second quarter 2020, consistent with the asset quality data from prior quarters, the weighted average loan-to-value and debt-coverage ratio on new commercial real estate loan originations were 55.5% and 1.7x, respectively. For the entire commercial real estate portfolio, the weighted average loan-to-value and weighted average debt coverage ratio as of the end of the second quarter were 48.7% and 1.9x, respectively. Anthony will provide additional detail on changes to underwriting in light of the COVID-19 crisis. With that, I would like to turn the call over to Anthony Kim, our Chief Banking Officer, to discuss the second quarter loan production results and deposit gathering activities. Anthony?

Anthony Kim, Chief Banking Officer

Thank you, Bonnie. I will discuss loan production, deposits, and gathering activities, and then I will hand it over to Ron Santarosa for more details on our second quarter financial results. Hanmi achieved strong loan production volume in the second quarter. Total loan production reached $534.1 million, which included $308.8 million in new PPP loans and $225.3 million in new loans and leases. We saw growth in all major categories except equipment leases, where we experienced a decrease as anticipated. During the second quarter, we originated a significant portion of these volumes compared to pre-crisis levels. Specifically, second quarter production primarily included $129.4 million in commercial real estate loans, $328.3 million in SBA loans, and $61.1 million in C&I loans, with the remainder being $15.3 million in commercial equipment leases. Newly generated loans and leases for the quarter had a weighted average yield of 2.35%, which reflects the lower-yielding PPP loans. Excluding PPP loans, the yield on new production was 4.20%, down 68 basis points from the previous quarter's average yield of 4.88%. Notably, commitments under commercial lines of credit increased nearly 10% from the prior quarter to $566 million. However, the balance of commercial lines of credit at the end of the quarter dropped by nearly $40 million, indicating a utilization rate of only 40.5%. Thanks to strong loan production this quarter and a relatively low number of loan payoffs, loans receivable at the end of the second quarter grew to $4.83 billion, up 6.2% from the end of the first quarter and up 5.9% year-over-year. Like last quarter, I want to update you on our customer support efforts during this challenging time. As of June 30, we had approved 2,443 requests for payment modification, amounting to $1.4 billion in loans and leases, which makes up about 29% of our total portfolio. Additionally, we have been actively engaged in PPP loan production, as mentioned earlier. We have been very involved with our customers throughout this crisis and are committed to helping them cope with these challenges. Looking back at the second quarter of 2020, we will continue to carefully originate new loans. Due to the economic disruption from the pandemic, we tightened some aspects of our underwriting, including limiting origination activities within certain high-risk industries. I anticipate that Hanmi will maintain this more stringent underwriting approach as we assess the impact of the slowing economy on our customers in the near future. Deposits at the end of the second quarter totaled $5.21 billion, an increase from $4.58 billion at the end of the previous quarter, reflecting a growth of 13.7%. The increase was led by noninterest-bearing demand deposits, interest-bearing demand deposits, and money market and savings deposits, which rose by 36.5%, 11%, and 10%, respectively. The rise in noninterest-bearing demand deposits this quarter was largely driven by increases from customers with PPP loans and the overall liquid deposit market. Deposits associated with customers having PPP loans rose from $201.1 million to $408.7 million as of June 30, 2020, compared to $107.6 million as of March 31, 2020. As a result of the loan production and deposit gathering activities in the second quarter, our loan-to-deposit ratio at the end of the quarter was 92.6%, down from 95.7% a year ago. I will now turn the call over to Ron Santarosa, our Chief Financial Officer. Ron?

Ron Santarosa, Chief Financial Officer

Thank you, Anthony, and good afternoon, all. Let's begin with pretax pre-provision income for the second quarter. With net interest income of $44.4 million, noninterest income of $20.9 million and noninterest expenses of $27.1 million, pretax pre-provision income was $38.2 million. Adjusting for security gains and the deferral of PPP loan origination costs. Pretax pre-provision income was $19.4 million, up 1.6% quarter-over-quarter. Looking at net interest income, we posted $44.4 million, up 1.1% from the prior quarter driven by a 30.2% decline in deposit interest expense partially offset by a 4.4% decrease in interest income from loans against the backdrop of an overall lower rate environment. Average yields for all asset classes decreased in the second quarter, reducing total interest income by $3.2 million sequentially, despite a 7.8% increase in average interest-earning assets. In addition, interest expense decreased 24.5% in the linked quarter to $11.3 million from $15 million driven by the lower rates paid on interest-bearing deposits. Net interest margin for the quarter decreased by 21 basis points to 3.15% or 15 basis points when excluding the effect of PPP loans. The average yield on interest-earning assets fell by 55 basis points to 3.95% with a corresponding 47 basis point decline in the cost of interest-bearing liabilities to 1.23%. The cost of deposits decreased by 37 basis points to 0.74% driven by the lower interest rate environment and the continued mix shift in deposits. As of June, relatively higher costing time deposits represented 27.5% of total deposits, declining 3.1% from the prior quarter while noninterest-bearing demand deposits were 35.8% of total deposits, rising 36.5% for the previous quarter. While total deposits increased by 13.7% sequentially, the ongoing shift in deposit mix in conjunction with the lower rate environment were the two main drivers of the improvement in interest on deposits. Turning next to noninterest income. We saw a significant increase in the second quarter to $20.9 million from $6.2 million for the first quarter. The increase was primarily due to the $15.7 million in gains on the sale of $479.9 million of securities. The gains on sales of securities reflect our repositioning of the portfolio to capture the high level of unrealized gains arising from the very low rate environment. Offsetting the increase for the quarter were lower levels of service charges and fees on deposits from lower activity and also from the fact that we did not sell any SBA loans during the second quarter. By comparison, the gain on sales of SBA loans for the first quarter of 2020 was $1.2 million. Looking ahead, as Bonnie mentioned, we have resumed SBA loan sales, and we will have gains on sales of SBA loans in the third quarter. And finally, noninterest expenses were $27.1 million this quarter, a 12.7% sequential decline from $31.1 million last quarter. This was primarily due to a $3 million decrease in salaries and benefits expense. Here, we see a $2.4 million increase in deferred loan costs, principally from PPP loans, and a $400,000 reduction in payroll taxes drove the decrease overall. We also realized additional savings from the prior quarter from declines in professional fees and advertising and promotion of 19.3% and 37.8% respectively. At June 30, the bank had $150 million in borrowings from the FHLB with $1.4 billion of remaining unused availability. As of the end of the second quarter, the bank also had unused secured and unsecured facilities of $163 million. In addition, the bank did participate in the Federal Reserve's Paycheck Protection Program liquidity facility during the quarter with $101.8 million outstanding at the end of the second quarter. We've repaid this advance in July. At quarter end, the company had $20.3 million of cash on deposit with the bank. Hanmi believes it has ample liquidity resources to address the uncertainties of the COVID-19 pandemic as they've unfolded to date, and we remain vigilant in assessing customer behavior and potential liquidity needs in this uncertain period. Tangible book value was $17.47 per share at June 30 while our tangible common equity ratio remained strong at 8.63%. With that, I will turn it back to Bonnie.

Bonita Lee, President and CEO

Thank you, Ron. As we begin in the second half of 2020, we continue to be keenly focused on operating efficiently, protecting our portfolio and maintaining a strong capital and liquidity position to effectively withstand this pandemic. As we move forward, we remain committed to supporting our loyal customers and prioritizing the health and safety of our employees and communities to ultimately emerge from these uncertain times, well-positioned and as a stronger company. I look forward to sharing our continued progress with you when we report our third quarter 2020 results in October.

Lasse Glassen, Managing Director at ADDO Investor Relations

Operator, that concludes our prepared remarks. We'd now like to open the call for questions.

Operator, Operator

Our first question is from David Feaster from Raymond James.

David Feaster, Analyst

I would like to begin by discussing re-deferral rates. What are the initial insights on modifications? Additionally, can you provide information on the proportion of these that were for 90-day versus 180-day interest-only versus full payment deferral? Lastly, what are the early observations on the re-deferral rates?

Bonita Lee, President and CEO

Sure. About 78% of our total modifications are related to payment deferrals. As we mentioned, as of June 30, approximately $1.4 billion, which is 29% of our portfolio, is under modification. Most of these modifications are for a 90-day period. Starting in late June and into July, we are conducting a second round of reviews on these modifications. We have reached out to our customers individually to assess their loan situation. Based on the feedback we received from our customers, we anticipate that the second wave of deferments will be roughly 30% lower than what is currently being focused on in the existing modifications.

David Feaster, Analyst

Okay. That's helpful. And then I guess as you grant these additional modifications, are you acquiring any additional collateral, personal guarantees? And then maybe just any downgrades to risk ratings or anything?

Bonita Lee, President and CEO

As we speak, most of the loans and the modifications, almost all of them have the guarantees in place to begin with. In terms of additional collateral, we are reviewing each individual case. So far, most of them, we haven't had to ask for additional collateral.

David Feaster, Analyst

Okay. And then I guess just the last one for me. Just how do you think maybe that translates into additional reserve builds? I mean it seems like most of the heavy lifting has been done, but just as some of these modifications come through and then maybe your negative credit migration, I mean, should we expect some modest reserve builds? Or just how do you think about that going forward?

Bonita Lee, President and CEO

It's very difficult to say that on each individual loan in terms of reserve impact on these loans because we still have the second wave of the modifications to review. So I think we can get a clearer number, perhaps towards the end of the third quarter or even maybe at the beginning of the fourth quarter.

Operator, Operator

And our next question is from Kelly Motta from KBW.

Kelly Motta, Analyst

Let's see, maybe switching to capital. Your regulatory ratios are still quite strong, but you lowered the dividend last quarter. Without the securities gain this quarter, it would have been another difficult quarter. So I'm curious about your thoughts on the dividend now and whether what you declared last May is something you believe can be maintained in this uncertain environment.

Ron Santarosa, Chief Financial Officer

Our capital ratios are quite strong, and they become even stronger when considering the impact of the PPP program on those ratios. Capital management, asset quality, and liquidity are critical for both management and the Board, which discusses capital at every quarterly meeting. They will review it again. We believe that reducing the dividend in light of current uncertainties was the right decision. The approach to future determinations will become clear soon. However, we are currently optimistic about our capital position. The dividends paid in the first half reflect our commitment to being responsible stewards of capital for our shareholders while also safeguarding the institution. The Board will meet and make its decision.

Kelly Motta, Analyst

Okay. And maybe if I could switch back a bit to credit. I appreciate all the color around deferrals. And I understand that a lot of it was for a change in some qualitative factors you put forth under CECL. I was hoping you could kind of share what backdrop you've incorporated and kind of your modeling. And maybe the unemployment rate or GDP or whatever that went in, so we can have a better understanding of what you put out this quarter is factoring in.

Ron Santarosa, Chief Financial Officer

Sure. In the first quarter, the onset of COVID and the adoption of CECL happened closely together. At that time, we were utilizing economic data from the Federal Reserve, known as FRED, which has not been adjusted for the COVID environment. We accounted for this through a qualitative adjustment in the first quarter. By the second quarter, we began looking at data from Moody’s. My understanding is that GDP is forecasted to be around 1% or less for the next year. For unemployment, we anticipate it to be just below 8%. Considering these two factors in our calculations, we are likely aligning with current consensus, although there are various opinions among Fed members on unemployment projections. While it would be optimistic to think we might be at a peak, I believe we still need to observe how the economy evolves. What seemed promising initially has been disappointing, and we may need to reset our expectations. The future remains uncertain. I would suggest that the majority of the reserve buildup could be nearing completion, but if you can provide insight into how things will unfold, I could offer a clearer perspective.

Operator, Operator

And our next question is from Gary Tenner from D.A. Davidson.

Gary Tenner, Analyst

Bonnie, I wanted to make sure that I heard your comment correctly in terms of the re-deferral rates. Did you say that the number of folks requesting a second referral was 30% of those that are expiring or 70%?

Bonita Lee, President and CEO

So currently, as of June 30, we have about $1.4 billion. And from that original modification, about 30% of the modified customers from the first wave may not request the second additional 90-day modification. Is that correct?

Gary Tenner, Analyst

Okay. So you're saying that you think 70% will request it?

Bonita Lee, President and CEO

Yes. Yes.

Gary Tenner, Analyst

Okay. Okay. That's quite a bit higher number. We've heard from other banks, obviously, with the hospitality and retail exposure, I'd imagine that there is probably an overweight amount of those borrowers that would be requesting the second round deferrals? Is that fair?

Bonita Lee, President and CEO

Yes. I think among all the segments, the hospitality will be higher, yes.

Gary Tenner, Analyst

The pay downs on the line of credit this quarter were significant and contributed to the decline in your production for the period. There was a $90 million decrease in line utilization, which reflects the line utilization at the end of the quarter. I'm also curious about your perspective on any potential additional downward pressure in that portfolio.

Bonita Lee, President and CEO

So second quarter line utilization was 40%. In any given quarter, line utilization will trade anywhere from 50% to 55%. So second quarter was much, much lower than our average. But I would presume that this is indicative of economic activity.

Gary Tenner, Analyst

Right. Do you have expectations for that potentially getting down still further? I mean I've had some banks tell me their line utilization is sub-30% right now. Do you have a sense of how far that might?

Bonita Lee, President and CEO

I would presume it will move from 40% to 45%. It may not quite reach 50%.

Gary Tenner, Analyst

Okay. So you're saying that's a little more stable from this level?

Bonita Lee, President and CEO

Yes.

Operator, Operator

Our next question is from Kelly Motta from KBW.

Kelly Motta, Analyst

Just on the NIM. I was hoping to get some color on what new loan yields were looking like, and if the pressure there is potentially offset by the repricing of P3s roll off there.

Bonita Lee, President and CEO

Kelly, new loan yields in the second quarter, excluding P3 loans, were about 4.2%. And that's partially offset by, obviously, repricing of the CD rate. Going into the third quarter, we have a little over $300 million in CDs that are priced a little over 2%. If we price it down successfully below 60 to 55 basis points, we'll have the savings there. In terms of new loan with the rate drop, there's definitely more competition, the pricing competition on the new loans. But looking at our pipeline, new loan yields are a couple of basis points lower and not too much compared to the second quarter. But we’re still at the beginning of the quarter, so we still have to watch how our pipeline goes up.

Kelly Motta, Analyst

Great. I wanted to revisit the topic of deferrals to see if the new deferrals have slowed down or if there are additional borrowers who might require assistance beyond what we observed at June 30.

Bonita Lee, President and CEO

So we did not have a new deferral. It's pretty much the same customer base that we had existing deferrals. So one positive is that, I said that no new customers are asking for a new deferral. And we're just trying to improve from the existing customer base. So based on the communication that we had so far from the middle of June to today, what the customer has expressed is we think that there'll be about a 30% decrease in the second wave of the deferral.

Operator, Operator

And our next question is from Matthew Clark from Piper Sandler.

Matthew Clark, Analyst

On the hospitality exposure, as you speak here to your customers, where do occupancy rates look like of late? And any sense for breakeven levels? I know you're dealing with averages or medians, but any color there would be helpful.

Bonita Lee, President and CEO

Sure. We are monitoring our portfolio almost daily and assessing the overall performance of the industry. Since April, when occupancy was around 20 to 25%, we've seen an increase to about 45% to 50% by the end of June and early July. Our portfolio is performing slightly better than the industry average, which is a positive indication for the overall hospitality sector.

Matthew Clark, Analyst

Okay. Great. And then on the three loans that moved into nonaccrual, the $23 million, excluding the leases, can you provide some color there on what drove that increase?

Bonita Lee, President and CEO

Sure. One loan is for hotel construction, which we previously mentioned at $12.8 million. The issue is that the customer and the general contractor are in disagreement, causing a delay in construction. The second loan is an $8.7 million tax credit related to a film financing deal, which we also mentioned earlier. We're currently waiting for the court to approve the sale of the tax credit, and we have sufficient value to settle this.

Matthew Clark, Analyst

Okay. Great. And then maybe on your deferrals, the $1.4 billion. Do you know how much of that amount received PPP?

Romolo Santarosa, Chief Financial Officer

I would say that most of our PPP staff credits were at the lowest tier, with only 17 at the highest tier. Those 17 did not participate because most of our hotel credits are quite large nominations. I don't believe any received the PPP, but I will need to examine some of the lower ones in detail, though not on a large scale, Matt.

Matthew Clark, Analyst

Okay. I just want to clarify. Regarding the SBA volume going forward, in the effort to get approved before the end of September to qualify for six months of coverage, will you be participating in that? Should we anticipate a significant gain on sale in the third quarter, followed by a normalization after that?

Romolo Santarosa, Chief Financial Officer

To clarify, when we mention gain on sale, we're referring to the traditional 7(a) loans, not the PPP loans. We anticipate activity continuing through July and August, with whatever can be achieved in September. I understand you're nearing the government's fiscal year-end, so I don't expect anything out of the ordinary, but we need to see how September unfolds since it tends to have its own trends. Regarding the PPP loans, if the program is renewed, that brings a different consideration. Honestly, we haven't assessed that yet, and we'll address it if it arises. Lastly, concerning the forgiveness process, once the requirements for borrowers are clarified, we'll be ready to engage. We expect traditional SBA activity to resume in the third quarter and likely continue into the fourth. We'll handle the PPP program as it develops.

Matthew Clark, Analyst

Okay. And the 9% premium that you guys mentioned in the release, is that gross or net that we'll see kind of in the income statement? I just can't remember.

Romolo Santarosa, Chief Financial Officer

Yes. That would be a gross trade premium.

Matthew Clark, Analyst

Okay. So something closer to maybe 7 net?

Romolo Santarosa, Chief Financial Officer

Yes. Typically, depending on the mix of loans, we have different types of percentage participations. But as a rule of thumb, maybe 75% of the trade premium would be a book gain.

Matthew Clark, Analyst

Okay. And then just lastly on the expenses. Obviously, you need to adjust for the deferred origination cost for the PPP of just over $3 million. I guess how do you think about that run rate going forward and your ability to manage expenses from here?

Romolo Santarosa, Chief Financial Officer

So we did in the end of the second quarter, trimmed some staff. We have addressed certain expenses. So that should allow us to see perhaps, a small drift downward. But we do have a spend going in the other direction, not nearly as much, but we do have the spend relative to personal protective equipment that's now kind of ingrained in our run rate. So there are things that should benefit us. But to be conservative, I'd say it shouldn't be higher than the adjusted rate for the second quarter with everything that we know today.

Matthew Clark, Analyst

Okay. And then I just forgot one more on other income, other noninterest income, it's been trending higher over the last four quarters. Is there anything unusual in there? Or is it sustainable?

Romolo Santarosa, Chief Financial Officer

In the second quarter, we saw two key items. First, regarding servicing income from our SBA loans, we received a collection of fees that were due to us from some outstanding SBA loans after discussions with the SBA, and they finally made that payment in the second quarter. Additionally, we had about $0.5 million in net fees related to approximately $30 million in back-to-back swaps. These two items are not likely to recur, so we highlighted them in the table and text for you to assess the run rates.

Operator, Operator

And we have no further questions in the queue at this time. Please continue.

Lasse Glassen, Managing Director at ADDO Investor Relations

Thank you very much for listening to Hanmi Financial's Second Quarter 2020 Results Conference Call. We look forward to speaking with you again next quarter.

Operator, Operator

Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time, and thank you for your participation.