Good morning, and welcome to the Regions Financial Corporation's quarterly earnings call. My name is Christine, and I will be your operator for today's call. I will now turn the call over to Dana Nolan to begin.

Thank you, Christine. Welcome to Regions First Quarter 2024 Earnings Call. John and David will provide high-level commentary regarding our results. The earnings documents, including a forward-looking statement disclaimer and non-GAAP information, are available in the Investor Relations section of our website. These disclosures cover our presentation materials, prepared comments and Q&A. I will now turn the call over to John.

Thank you, Dana, and good morning, everyone. We appreciate you joining our call today. This morning, we reported first quarter earnings of $343 million, resulting in earnings per share of $0.37. However, adjusted items reconciled within our earnings supplement and press release represented an approximate $0.07 negative impact on our reported results. For the first quarter, total revenue was $1.7 billion on a reported basis and $1.8 billion on an adjusted basis as both net interest income and fee revenue demonstrated resiliency in the face of lingering macroeconomic and political uncertainty. Adjusted noninterest expenses increased quarter-over-quarter and are expected to represent the high watermark for the year as seasonal impacts offset our ongoing expense management actions. Average loans were lower quarter-over-quarter, reflecting limited client demand, client selectivity, paydowns and an increase in debt capital markets activities. Average and ending deposits continued to grow during the quarter, consistent with seasonal patterns. Credit continues to perform in line with our expectations. While pressure remains within pockets of business lending, our consumers remain strong and healthy. We anticipate overall asset quality will perform consistent with historical levels experienced prior to the pandemic. In closing, we feel good about the successful execution of our strategic plan as evidenced by our solid top line revenue, which allows us to continue delivering consistent, sustainable long-term performance while focused on soundness, profitability and growth. Now David will provide some highlights regarding the quarter.

Thank you, John. Let's start with the balance sheet. Average and ending loans decreased modestly on a sequential quarter basis. Within the business portfolio, average loans declined 1% as modest increases associated with funding previously approved in investor real estate construction loans were offset by declines in C&I lending. Approximately $870 million of C&I loans were refinanced off of balance sheet through the debt capital markets during the quarter. Average consumer loans remained relatively stable as growth in residential mortgage, EnerBank and consumer credit card were offset by declines in home equity and run-off portfolios. We expect 2024 average loans to be stable to down modestly compared to 2023. From a deposit standpoint, deposits increased on average and ending basis, which is typical for the first quarter tax refund season. In the second quarter, we expect to see declines in overall balances, reflecting the impact of tax payments. The mix of deposits continues to shift from noninterest-bearing to interest-bearing products, though the pace of remixing has continued to slow. Our analysis of the trends and overall customer spending behavior gives us confidence that by midyear, we'll have a noninterest-bearing mix in the low 30% area which corresponds to approximately $1 billion to $2 billion of potential further decline in low interest savings and checking balances. So let's shift to net interest income. As expected, net interest income declined by approximately 4% linked quarter, and the net interest margin declined 5 basis points. Deposit remixing and cost increases continue to pressure net interest income. The full rising rate cycle interest-bearing deposit beta is now 43%, and we continue to expect to peak in the mid-40% range. Offsetting this pressure, asset yields continue to benefit from higher rates through the maturity and replacement of lower-yielding fixed-rate loans and securities. We expect net interest income to reach a bottom in the second quarter followed by growth over the second half of the year as deposit trends continue to improve and the benefits of fixed rate asset turnover persist. The narrow 2024 net interest income range between $4.7 billion and $4.8 billion portrays a well-protected profile under a wide array of possible economic outcomes. Performance in the range will be driven mostly by our ability to reprice deposits. A relatively small portion of interest-bearing deposit balances is responsible for the majority of the deposit cost increase this cycle, mostly index deposits and CDs. We have taken steps to increase flexibility such as shortening promotional CD maturities and reducing promotional rates. If the Fed remains on hold, net interest income likely falls in the lower half of the range, assuming modest incremental funding cost pressure. So let's take a look at fee revenue, which experienced strong performance this quarter. Adjusted noninterest income increased 6% during the quarter as most categories experienced growth, particularly capital markets. Improvement in capital markets was driven by increased real estate, debt capital markets and M&A activity. A portion of both real estate and M&A activities were pushed into the first quarter from year-end as clients delayed transactions. Late in the first quarter, we also closed on the bulk purchase of the rights to service $8 billion of residential mortgage loans. We have a low-cost servicing model. So you'll see us continue to look for additional opportunities. We continue to expect full year 2024 adjusted noninterest income to be between $2.3 billion and $2.4 billion. Let's move on to noninterest expense. Adjusted noninterest expense increased 6% compared to the prior quarter, driven primarily by seasonal HR-related expenses and production-based incentive payments. Operational losses also ticked up during the quarter. The increase is attributable to check-related warranty claims from deposits that occurred last year. Despite this increase, current activity has normalized to expected levels, and we continue to expect full year 2024 operational losses to be approximately $100 million. We remain committed to prudently managing expenses to fund investments in our business. We will continue focusing on our largest expense categories, which include salaries and benefits, occupancy and vendor spend. We continue to expect full year 2024 adjusted noninterest expenses to be approximately $4.1 billion with first quarter representing the high watermark for the year. From an asset quality standpoint, overall credit performance continues to normalize as expected. Adjusted net charge-offs increased 11 basis points driven primarily by a large legacy restaurant credit and one commercial manufacturing credit. As a reminder, we exited our fast casual restaurant vertical in 2019 and the remaining portfolio is relatively small. Total nonperforming loans and business services criticized loans increased during the quarter and continue to normalize towards historical averages, while total delinquencies improved 11%. Nonperforming loans as a percentage of total loans increased to 94 basis points due primarily to downgrades within industries previously identified as under stress. We expect NPLs to continue to normalize towards historical averages. Provision expense was $152 million or $31 million in excess of net charge-offs, resulting in a 6 basis point increase in the allowance for credit loss ratio to 1.79%. The increase to our allowance was primarily due to adverse risk migration and continued credit quality normalization, and incrementally higher qualitative adjustments for risk in certain portfolios previously identified as under stress. We continue to expect our full year 2024 net charge-off ratio to be between 40 and 50 basis points. Let's turn to capital and liquidity. We expect to maintain our common equity Tier 1 ratio consistent with current levels over the near term. This level will provide sufficient flexibility to meet proposed changes along with the implementation timeline while supporting strategic growth objectives and allowing us to continue to increase the dividend commensurate with earnings. We ended the quarter with an estimated common equity Tier 1 ratio of 10.3%, while executing $102 million in share repurchases and $220 million in common dividends during the quarter. With that, we'll move to the Q&A portion of the call.

Our first question comes from the line of Ebrahim Poonawala with Bank of America.

David, just following up on your comments around noninterest-bearing deposits sitting in the mid to low 30% range by mid-2024. Give us a sense: if we don’t get any rate cuts, do you see that dipping below 30% based on what you’re seeing in customer behavior and balance usage, since I’m assuming there’s some attrition on consumer balances at play? Where do you see that mix bottoming out, and what are you seeing lately in terms of pricing competition across the markets?

Yes. From a balance standpoint, we still feel pretty confident based on flows we've seen and expect that we'll be in that low 30% range. We continue to look to grow noninterest-bearing balances through new checking accounts and new operating accounts. That's what's important to us and what fuels our profitability. Being in favorable places, particularly the Southeast where businesses and people are migrating, gives us some comfort that we can grow there. We talked about deposits bottoming out in the first half of the year and then maybe growing a little from there, so I think that low 30% range is still a good level. With regard to competition on pricing, at the end of the day we haven't seen a lot of loan growth across the industry. As a result, competition for deposits is not as strong as it would be if loan demand were higher. We always have competition and must be fair and balanced with our customers, making sure we create value. We watch what our competitors are doing on price and adjust accordingly, but there's nothing unusual happening. I think the biggest driver of that is the lack of loan growth.

That's helpful. And just a separate question. As we think about capital deployment that you outlined on Slide 10, is there more to go in terms of just the appetite for securities repositioning? And how much should we expect in terms of what you did in 1Q with regards to the lift in the second quarter to bond yields?

Yes. So we consistently challenge ourselves on what's the best use of our capital that we generate. Obviously, we're at a robust 10.3% common equity Tier 1. We think we're close enough to be in striking distance on whatever the regime changes with regards to capital. And again, with loan growth being muted in the industry, we want to pay a fair dividend. So we're generating capital that needs to be put to work. We either buy the shares back or we do things like securities repositioning. We did the $50 million in the first quarter. We'll continue to look for opportunities. I would say that proof is not as close to the ground as it was because we want to keep our payback less than 3 years and frankly closer to 2.5 if we can get it. Our payback in this last trade was about 2.1. And so we think that was a great use of capital for us. And so we'll look to do that, but we're not committing to it.

Our next question comes from the line of Robert Siefers with Piper Sandler.

I was hoping you could please flesh out some of the rationale behind the softened loan growth outlook. I certainly understand it, given the backdrop and what we're seeing in the H8 data. But it in ways contrast with some peers who might be expecting more of an acceleration in the second half. So just curious to hear your updated thoughts on customer demand and how they're thinking.

Well, on the consumer side, as we mentioned, we did a pretty good job growing mortgage, growing EnerBank, growing card, but it was offset by declines in home equity, which left consumers flat. Consumers are actually in really good shape. We feel good about that, but we just don't see a lot of net-net loan growth. Relative to commercial, it depends on the industry: some are booming and others are being careful right now. We've had nice production, but we've also seen payoffs and paydowns. And of course, this past quarter we had $870 million of debt placements through our M&A group that helped us from a NIR standpoint, but obviously hurt us from a balance standpoint. If we start seeing rates actually decline, that activity will pick up. So overall, it's going to be hard to grow meaningfully through all of that activity, and we're fine with that. We don't need to push. In this environment there's still uncertainty, so we need to be careful on client selectivity. John has talked about that numerous times, and we want to be careful. We clearly have the capital and liquidity to do so, and if we see opportunities we'll grow, but we're not going to force it.

Okay. Perfect. And then separately, I was hoping you could discuss the additional operational losses. It was definitely glad to see no change to the full year expectation, though they were elevated in the first quarter. Maybe just an additional color. Were there new instances of the issues that have cropped up last year? Or were these just sort of true-ups? And what gives you confidence that all the issues are still resolved and everything?

Yes. This is John. So there were no new events. The tail was, with respect to the breach of warranty claims, was a little longer than we anticipated. And as a result, we did incur some additional losses in the quarter. What gives us confidence that we can meet our expectations is the exit rate for the quarter was significantly reduced, which implies that the countermeasures we put in place, the talent that we've recruited for our fraud prevention activities, all of that is working and gives us confidence that we can and in fact, meet our $100 million target for the year.

Our next question comes from the line of Betsy Graseck with Morgan Stanley.

So one question just on how we're thinking about NII for the full year in relation to loan growth being a little slower. So I just wanted to understand, your NII guide obviously, is the same as it was before. Loan growth expectations, a little slower understandably so. How do I square those things?

Well, on loan growth, we had talked about being in the back half of the year, so you weren't going to get a lot of carry from loan growth in our guidance. We want loan growth in the back half of the year to set us up for 2025, not for 2024, and that was never factored into the NII guidance. We feel good about where we're positioned from a balance sheet standpoint with basically neutral to short-term rates, and we have a little bit of shape to the curve when we reinvest our securities book, picking up a little over 200 basis points, about 235 basis points on the front book versus the back book. That gives us confidence that we'll do pretty well with NII. Looking at input costs, our deposit costs have also started to flatten; in February and March there was little change. Our cumulative beta is 43 today, which we had said would be in the mid-40s, and we have a lot of confidence in that, so we didn't change our NII guide.

Okay. Got it. That makes a lot of sense. And then, on the securities repositioning you talked about on Slide 5, I just wanted to understand how you're thinking about the go-forward here. You added some duration, which makes sense, but are you thinking of leaning in even more? Basically, how long would you extend the duration of the securities book, and are you comfortable extending it further?

Well, our extension duration was only like .12, 12 basis points a year. So negligible. And from our standpoint, especially if you believe the risk of rates going up is very low, i.e., you believe they're either flat to down, then perhaps taking a little duration risk where we can get compensated for makes some sense today. Our duration naturally is declining. So doing a trade to kind of keep it flat to modestly higher than where we are right now, it seems to make sense. And it's a good use of capital. If we can get a payback, like I said, the one we just did, our payback's 2.1 years. We'd like it to be less than 3, closer to 2.5 if we can. And so while we won't commit to doing that, we would look at it. And if we did it, it would be no more than what you just experienced. We want to keep it at a fairly small percentage of our pretax income.

Our next question comes from the line of John Pancari with Evercore ISI.

On the credit front, we saw a moderate increase in nonperformers this quarter. However, your loan loss reserve remains fairly stable despite the movement in reserves. Could you give a little color on how you’re thinking about the reserves and provide more detail on the nonperformers?

Yes, John, maybe I'll start. This is John Turner. First, we began signaling a couple of quarters ago stress in a few specific portfolios or industries: office, senior housing, transportation, healthcare, specifically goods and services, and technology. The increases we're seeing in nonaccrual and classified loans are largely consistent with stress in those industries. In fact, 21 credits account for 72% of our nonaccruals, and 18 of those 21 credits are in the five sectors I mentioned. So we did anticipate some deterioration, and that has matched our expectations. Second, several quarters ago we set the expectation that we would return to pre-pandemic historical credit metrics, specifically an average charge-off ratio of about 46 basis points and nonaccruals of 105 basis points, and we have trended back to those ranges. Regarding the allowance, we review it every quarter to ensure we're properly reserved for expected losses in those portfolios. Because we have high visibility into the 21 credits that make up 72% of our nonaccruals, we feel very good about our reserve position.

Okay. Great. And then separately, on the expense front, I know you mentioned that the first quarter should represent the high watermark on expenses. Is that primarily because of the elevated operating losses? Or do you expect some building efficiencies through the remainder the year, either given the backdrop or given the revenue picture?

John, several things. And we have probably $75 million worth of expense we can point to on different fronts. So part of it is operational losses that we don't think will repeat. We obviously have the first quarter issues with regards to payroll taxes and things of that nature. We had HR asset valuation that's offset in NIR that's a part of that, too. We have some things in occupancy and professional fees. If you add all that up, it's about $75 million, and we have pretty good confidence that that won't repeat. We tried to signal that the first quarter was going to be the high watermark and that you couldn't take the $4.1 billion and divide by 4, and we're sticking to that, and we're sticking to our guidance that we have. And we have pretty good confidence. We did take some actions this quarter like we did in the fourth quarter from a severance standpoint. Now the first quarter has the normal expense of payroll for those folks in addition to the severance. So that won't repeat. So all of that, like I said, adds up to right around $75 million.

And if I could ask just one follow-up related to that, what is the status of your core systems conversion? Is it still trending as expected in terms of timing and cost?

It is. Yes. We, in fact, just had a Board meeting this week and went through all that detail with our Board. We feel good about the project and the progress that we're making and our ability to stay on budget and on time.

Our next question comes from the line of Ken Usdin with Jefferies.

David, could you talk a little bit about that bullet you put on Slide 5 about stable deposit costs from February to March? What should our takeaway be in terms of mix shift and pricing movement, and I know you mentioned deposit betas remain in the mid-40s, but what is changing underneath that stability you are starting to see?

Yes. One of the main reasons we included that is our deposit cost change was higher than peers due to actions we took in the fourth quarter, which produced a full-quarter effect. Now that this is baked into the base and we are seeing offers and other pricing on deposit products come down, the February and March exit gives us strong confidence deposit costs are stabilizing, and we remain confident in a cumulative beta band in the mid-40s. A couple more points from where we are today.

Okay. And I guess as a follow-up, are you starting to change pricing, change offers, bring in duration? What are you doing in terms of trying to take that point further?

Yes, that's a good point, Kenneth. We started that last quarter. We had some CDs maturing that were longer dated 12- and 13-month CDs, and we shifted to shorter 5- to 7-month maturities to be able to reprice them this year, originally expecting rates to come down sooner than they probably are now. From a competitive standpoint, we want to be competitive; we don't have to lead with price, but we do need to be fair and balanced. You're starting to see the benefit of the promotional rates coming down here.

Okay. And on that last point about higher for longer, you've talked about $12 billion to $14 billion of fixed-rate production for a while now and you say that's per year. Does the benefit from that also get better under a higher-for-longer environment, and how does that differ when you think about this year versus next year?

Yes, I would say marginally higher for longer because many securities are repricing and we're picking up about 235 basis points today. We're picking up roughly 125 basis points on the loan side. If deposit costs stabilize, the repricing can start to overwhelm the costs you had on the deposit side. That has not been the case so far; it's been the opposite. You will see that turn, which is why we're calling the bottom for us in the second quarter.

Our next question comes from the line of David Rochester with Compass Point.

Just on credit regarding the large restaurant credit and the commercial manufacturing credit, could you guys quantify the impacts on net charge-offs and provision this quarter? And if you could just give some additional background on where you are in the resolution process there, that'd be great.

So if you were to look at those two added together, just those two made about 7 basis points of charge-offs. So if we didn't have those two, our 50 would have been 43.

Great. And then where are you guys in the process of resolving those credits?

They're both still being worked out.

Okay. And I guess just bigger picture with you reiterating the net charge-off guide here for the year of 40 to 50 bps, you're at the high end of that right now. So you're expecting that to either remain stable here or decline through the end of the year, and you have confidence around that?

Yes, we do.

Great. And then just switching to deposits with the recent inflation data that's been elevated and the shift to expectations to fewer rate cuts this year, are you noticing any impact from any of that on your corporate deposit customers' behavior at all? Are you seeing any change in activity there? And does that impact your expected range of NIB remix at all for the year?

No. Our NIB largely comes from our consumer base. We do obviously have a big NIB on the commercial side. I think folks that were going to move out of NIB to seek rate have done so. And we think that that's why we're calling for our NIB to decline a little bit but still stay in the low 30% range. And they all just want to maintain a little bit more liquidity going into a cycle that still has uncertainty, geopolitical risk, our own elections this year. But no, I don't think from an inflation standpoint, we're going to see a huge change from NIB.

Our next question comes from the line of Matthew O'Connor with Deutsche Bank.

Was just wondering if you could elaborate a little bit on some of the fee trends — the deposit service charges were up nicely. And I know the treasury management is a big part and a positive driver, but there is weaker seasonality. So I was wondering if you can scale that out.

Yes. So if you look at fee revenue across different parts of the business. Treasury management is up 7% year-over-year, and that's a reflection both of increases in fees and increases in relationships and activities. So the nice growth in that business. Similarly, wealth management is up over 6% year-over-year, which is both reflective of increases in asset valuations and increases in assets held for customers increasing relationships. We also saw a really nice increase in mortgage activity during the quarter, and we would expect that to continue. Consumer fees are down modestly, and that's a reflection really of the implementation of all the changes we've made to benefit customers with respect to overdrafts. And more specifically, as a result of the implementation of overdraft changes, we've seen about a 25% reduction in the number of customers who are actually overdrawn. So that is resulting in some decline in fee revenue, offset currently by interchange activity and customers' use of their debit cards. So generally, fee income is solid. We're seeing good growth in the wholesale parts of our business and in wealth management that reflect growth in relationships and growth in activities.

Okay. And then capital markets also came in strong, and I think you've had something like a $60 million to $80 million range in the past with wind for upside. Can you talk about whether there were any deals that contributed to that and how sustainable you think it is? Obviously it's somewhat market dependent, but could you give a little more color on the first-quarter driver there and your thoughts going forward?

Yes. I think we still stick to that range generally and incorporate our expectations for capital markets into the broader guidance of around $2.3 billion to $2.4 billion in adjusted noninterest income. But we do see good pipelines. Capital markets activity is picking up. There's more M&A activity. We're seeing more customers go to the institutional market to raise debt, which has been helpful. Our M&A activity was pretty diverse during the quarter. And then real estate capital markets, which is a really important business for us is also very active. And so we feel pretty good about the $60 million to $80 million range for the quarter.

Our next question comes from the line of Gerard Cassidy with RBC.

Gerard, before you ask your question, let me clean something up from a question that just came up in terms of the, what's the charge-off percentage would have been had we not had those two large credits. I said 7 basis points. It's 13 basis points actually. So we would have been at 37 had we not had those two. I didn't do the math correctly. I just want to make sure that gets fixed in the transcript.

Very good. All set?

Gerard, fire away.

Can you give us an update on where the proposal stands for the long-term debt and when you think it will be finalized in the NPR that's out? And as part of that, what is your latest estimate? I know you've given some color on this before, but what is your current estimate of what it might cost you, and your peers, once you have to issue the debt and carry higher levels of debt?

Yes. So Gerard, the whole Basel III and long-term debt issue has kind of gone into a bit of a hold for now. We're not sure when that will get resolved. We suspect it will be sometime this year. The proposal on debt was to have 6% of RWA, which is about $7 billion for us, and to give you credit for what you have outstanding, which is a couple of billion. So you're talking about raising $5 billion. We can leverage that and put it to work. It wasn't a terrible drag on NII, less than a 1% drag for us. The proposal would be fully implemented and that would take time. We need to address our $2 billion of existing long-term debt in the normal course of things, but with loan growth being muted there's no need to raise debt if you don't have to. We're hoping the proposal comes down from the 6% number; there has been talk it might be in the 2% to 3% range of RWA, but we don't know. We'll just have to adapt and overcome when the new rule is issued.

Very good. As a follow-up, you've been very clear about identifying the stress portfolios with credit. In your prepared comments, David, you mentioned that some of the increase in nonperformers was due to downgrades in the industries you identified. Can you share what, within those downgrades, caused them? Was it debt service coverage issues? Was the borrowers' business deteriorating for some reason? Can you give a little more color on the downgrade part of that?

Gerard, usually we're seeing strength in consumers and businesses in general. There are pockets of stressed industries that John mentioned earlier. At the end of the day, they seem to be more idiosyncratic to the borrower's business model, and these are valuation charges being taken. When you cut to the chase, credit risk is actually fairly good right now, but you will have these one-off pockets. As I mentioned, it's just two credits for us. It's a big deal in terms of the effect on the charge-off percentage. We don't see it as contagion so much as an idiosyncratic business issue.

I see. So it wasn't really like across the board, the higher rate environment for these downgrades really affected it, but it was more idiosyncratic for each one of the borrowers.

I think the one exception would be transportation, where we are seeing stress in the industry, particularly in the truckload segment and among smaller borrowers, and equipment valuations are also under pressure. Obviously, real estate-related portfolios, especially office and senior housing, are also under stress, but transportation is the area that feels broadly affected in the truckload sector. Less-intensive truckload businesses are still doing okay, but truckload carriers are having challenges.

Our next question comes from the line of Christopher Spahr with Wells Fargo.

So my question is just relating to the shift in loan mix over the last few years, particularly with EnerBank and comparing it to the average pre-pandemic charge-offs. I'd like your thoughts on where you think the mix has shifted a little bit and how that might have impacted the comparisons. And then just your thoughts about the EnerBank portfolio itself, since it seems to be holding up a little better than expected.

Well, let me couch it in terms of our overall portfolio from a CECL standpoint. If you go back to pre-pandemic, the fourth quarter of 2019 when we implemented CECL, our CECL reserve at that time was 1.71%. If you adjust that for the portfolio we have today, since there are pluses and minuses and a completely different mix, and apply those same loss rates to our current portfolio, that would imply a seasonal reserve of 162. I think that's on one of our slides. At the end of the day, we have pretty robust reserves to cover expected losses. The stressed portfolios that we've talked about are our driver. The lower FICO bands of consumer have more pressure on them than the rest of the consumer base. Some of the portfolios we've added, such as EnerBank or Ascentium, are higher-yield portfolios and have higher loss content. In both cases we had those two portfolios, EnerBank and Ascentium, at roughly 2% to 2.5% expectation, and they're performing in line with that. It comes back to the fact that businesses and consumers, generally speaking, are in pretty good shape. We've been careful to make sure we don't grow too fast in those portfolios, and so far everything is working according to plan.

Our final question comes from the line of Peter Winter with D.A. Davidson.

Just one quick question. Last quarter, you mentioned an exit rate for the NIM around 360. I'm just wondering if you're still comfortable with that? Just on the one hand, you're building more liquidity, but then you did the securities restructuring.

Yes. I think we should still get pretty close to that number. Again, we're not counting on rates being a huge driver. Incrementally, though, if the long end stays higher, our reinvestment yields would be a little better. If short rates come down, the negative carry on our swap book would be reduced and that could help propel us. So I would say upper 350s to 360. We are carrying a bit more cash; you probably saw that, just out of an abundance of caution given last quarter's events. While that cash doesn't really hurt us from an NII standpoint, it does hurt us from a margin standpoint. So we should still have one of the leading margins because we have a lot of confidence in our funding costs settling down.

Got it. And how much benefit do you get from the securities restructuring on the margin?

Well, cost is, round number, $50 million, and it's a payback of 2.1 years. So you can do quick math. You mean on margins? It's a couple of basis points of positive.

Mr. Turner, I would now like to turn the floor back over to you for closing comments.

Okay. Well, thank you all for your participation today. We appreciate your interest in our company. That concludes the call.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time.