Trustmark - Q1 2024

Transcript

Operator (participant)

Good morning, ladies and gentlemen, and welcome to Trustmark Corporation's First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the presentation this morning, there will be a question-and-answer session. To ask a question, you may press star, then 1 on a touch-tone phone. To withdraw your question, please press star, then 2. As a reminder, this call is being recorded. It is now my pleasure to introduce Mr. Joey Rein, Director of Corporate Strategy at Trustmark.

Joey Rein (Director of Corporate Strategy)

Good morning. I'd like to remind everyone that a copy of our first quarter earnings release, as well as the slide presentation that will be discussed on our call this morning, is available on the investor relations section of our website at trustmark.com. During the course of our call, management may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and we would like to caution you that these forward-looking statements may differ materially from actual results due to a number of risks and uncertainties which are outlined in our earnings release and in our other filings with the Securities and Exchange Commission. At this time, I'd like to introduce Duane Dewey, President and CEO of Trustmark Corporation.

Duane Dewey (President and CEO)

Thank you, Joey, and good morning, everyone. Thank you for joining us this morning. With me are Tom Owens, our Chief Financial Officer, Barry Harvey, our Chief Credit and Operations Officer, and Tom Chambers, our Chief Accounting Officer. We have great news to share with you this morning on multiple fronts. First, Trustmark had a strong first quarter reflecting continued loan growth, solid credit quality, increased non-interest income and revenue, and a decrease in non-interest expense. Before delving into the quarter, I want to share some other important development for our company. We have signed a definitive agreement to sell our insurance agency, Fisher Brown Bottrell Insurance, to Marsh McLennan Agency in a cash transaction valued at $345 million. Turning to slide 4, we are extremely proud of the insurance brokerage business that we have built over the past 20+ years at Trustmark.

FBBI is in the top five largest bank-affiliated agencies in the country. It has produced consistent organic revenue and profitability growth over the years, especially the last 10+ years. The transaction multiples prove what we've known for some time: that we have a very valuable and well-regarded franchise. Through this transaction, we are pleased to be partnering with MMA and think we've chosen the best home for our employees and clients of FBBI. The transaction is expected to close during the second quarter of the year. In recent months, the multiples in the insurance brokerage industry have increased significantly. The positive implications of a sale for our shareholders and for the bank became compelling. FBBI contributed 7% of the bank's net income in 2023, while the purchase price is over 20% of the bank's market capitalization.

As part of this transaction, we intend to reposition our balance sheet, and Tom Owens will give more details on that strategy. Importantly, the combined transactions are expected to generate around 16% full-year EPS accretion and 17% increase in tangible book value per share, while also increasing TCE to total assets over 100 basis points. After the sale, Trustmark has attractive fee income businesses, specifically a strong wealth management franchise and a significant mortgage business. Our pro forma fee income will be in the range of a healthy 20%. Tom now will spend some time on the pro formas.

Tom Owens (CFO)

Happy to, Duane, and good morning, everyone. So turning to slide 6. As Duane indicated, the sale of FBBI is substantially accretive to capital, and we intend to deploy a portion of that accretion via the restructuring of the securities portfolio. Based on current market conditions, which are obviously subject to change, we anticipate the sale of $1.6 billion in AFS securities with a book yield of approximately 1.7% at a loss of approximately $160 million. We anticipate reinvestment of $1.4 billion in securities yielding approximately 5%, resulting in a net increase in yield of approximately 325 basis points and an estimated earnback of about 3.4 years.

We'll be taking the advantage of the opportunity to remix our securities portfolio to achieve a more consistent ladder of cash flows over time, while also improving the stability of cash flows by increasing the mix of Treasury and agency securities with positive convexity while reducing the mix of agency MBS with negative convexity. Including the impact of the securities portfolio restructuring, the combined transactions are approximately 65 basis points accretive to CET1 and 114 basis points accretive to TCE. The additional capital provides flexibility for additional accretive capital deployment actions, including the support of organic loan growth, share repurchases, M&A, or other general corporate purposes depending on market conditions. As Duane indicated, the combined transactions are approximately 17% accretive to tangible book value per share and 16% accretive to full-year EPS.

Likewise, our other key profitability metrics improve, with ROA up approximately 12 basis points, NIM up approximately 27 basis points, and efficiency ratio down approximately 449 basis points. And then turning to slide 7, it includes a walkdown of after-tax cash proceeds as well as a tangible book value per share reconciliation, which we're happy to take questions on during the Q&A session. Duane?

Duane Dewey (President and CEO)

Great. Thanks, Tom. Now let's turn to slide 8 and review the strong financial highlights for the first quarter. Loans held for investment increased $107.4 million, or 0.08% linked-quarter, and $560.7 million, or 4.5% year-over-year. Deposits totaled $15.3 billion, a linked-quarter decrease of $231.2 million, and an increase of $554.9 million, or 3.8% year-over-year. Net interest income totaled $136.2 million in the first quarter, which resulted in a net interest margin of 3.21%. Non-interest income in the first quarter totaled $55.3 million, an increase of 11.1% linked-quarter, and represented 29.4% of total revenue. Revenue for the first quarter totaled $188.2 million, an increase of $1.6 million from the prior quarter. Non-interest expense in the first quarter totaled $131.1 million, a decrease of 3.9% linked-quarter, reflecting ongoing expense management priorities.

Our credit quality continues to remain solid, with net charge-offs during the first quarter totaling $4.1 million, representing 12 basis points of average loans. The provision for credit losses for loans held for investment was $7.7 million in the first quarter. We continue to maintain strong capital levels with common Tier 1 equity of 10.12% and a total risk-based capital ratio of 12.42%. The board declared a quarterly cash dividend of $0.23 per share payable on June 15th to shareholders of record on June 1st. Now I'd like to ask Barry Harvey to provide some color on our loan growth and credit quality.

Barry Harvey (Chief Credit and Operations Officer)

I'll be glad to, Duane, and thank you. Turning to slide 9, loans held for investments totaled $13.1 billion as of March 31. That's an increase, as Duane mentioned, of $107 million for the quarter. Loan growth during Q1 came from commercial real estate and our equipment finance line of business. We still expect loan growth in the mid-single digits for 2024. As you can see, our loan portfolio remains well-diversified both by product type as well as geography. Looking to slide 10, Trustmark's CRE portfolio is 94% vertical, with 70% in the existing category and 30% in construction land development. Our construction land development portfolio is 80% construction. Trustmark's office portfolio, as you can see, is very modest at $279 million outstanding, which represents only 2% of our overall loan portfolio. The portfolio is comprised of credits with high-quality tenants, low lease turnover, strong occupancy levels, and low leverage.

The credit metrics for this portfolio remain extremely strong. Turning to slide 11, the bank's commercial loan portfolio is well-diversified, as you can see, across numerous industries with no single category exceeding 14%. Looking at slide 12, our provision for credit losses for loans held for investment was $7.7 million during the first quarter, which was attributable to loan growth, changes in our macroeconomic forecast, and net adjustments to our qualitative factors. The provision for credit losses for off-balance sheet credit exposure was -$192,000 for the quarter. At March 31, the allowance for loan losses for loans held for investment was $143 million. Turning to slide 13, we continue to post solid credit quality metrics. The allowance for credit losses represents 1.1% of loans held for investment and 235% of non-accruals, excluding those that are individually analyzed.

In the first quarter, net charge-offs totaled $4.1 million, or 0.12% of average loans. Both non-accruals and non-performing assets remain at reasonable levels. Duane?

Duane Dewey (President and CEO)

Thank you, Barry. Now Tom Owens will focus on deposits in the outlook statement here.

Tom Owens (CFO)

Thanks, Duane. So turning to deposits on slide 14, we began the year with another good quarter, which continued to show the strength of our deposit base amid an environment that continues to remain exceptionally competitive. Deposits totaled $15.3 billion at March 31st, as a linked-quarter decrease of $231 million, or 1.5%, and a year-over-year increase of $555 million, or 3.8%. We continued to experience volatility in public fund balances during the quarter, declined $117 million during the first quarter after having grown by $463 million during the fourth quarter. So some noise there, really counter-seasonal noise related to certain large depositors. Non-personal balances declined by $36 million during the quarter, while personal balances declined by $86 million during the first quarter.

That was driven by $69 million of personal CD attrition, which reflects our efforts to rationalize the cost of our promotional CD book as they matured during the quarter. Brokered CDs were essentially unchanged, up $8 million during the first quarter. As of March 31st, our promotional and exception-priced time deposit book totaled $1.5 billion, with a weighted average rate paid of 5.07% and a weighted average remaining term of about 5 months. Our brokered deposit book totaled $587 million at an all-in weighted average rate paid that remained at about 5.45% and a weighted average remaining term that remained at about 3 months as of March 31st. Regarding mix, non-interest-bearing DDA balances declined $158 million linked quarter, or 4.9%, to $3 billion. As of the end of the quarter, that represented 20% of our deposit base.

Decline was driven primarily by non-personal balances, with personal balances continuing to show signs of bottoming. Our cost of interest-bearing deposits increased by 7 basis points from the prior quarter to 2.74%, which was down from the 28 basis points linked quarter increase in the fourth quarter. Turning to slide 15, Trustmark continues to maintain a stable, granular, and low-exposure deposit base. During the quarter, we had an average of about 463,000 personal and non-personal deposit accounts, excluding collateralized public fund accounts, with an average balance per account of about $27,000. As of March 31, 64% of our deposits were insured and 14% were collateralized, meaning that our mix of deposits that are uninsured and uncollateralized was essentially unchanged linked quarter at 22%. We continue to maintain substantial secured borrowing capacity, which stood at $6.2 billion at March 31st, representing 185% coverage of uninsured and uncollateralized deposits.

Looking at the chart in the bottom left-hand corner of the slide, our first quarter total deposit cost of 2.18% represented a linked quarter increase of 8 basis points and accumulative beta cycle to date of 40%. And our forecast for the second quarter is a 4 basis points increase in deposit cost to 2.22%, continuing the trend of flattening linked quarter increases and bringing the cycle to date beta to 41%. Turning our attention to slide 16, revenue, net interest income, FTE decreased $3.8 million linked quarter, totaling $136.2 million, which resulted in a net interest margin of 3.21%. Net interest margin decreased by 4 basis points linked quarter as the 2 basis points of dilution due to asset rate and volume, and the 6 basis points of dilution due to liability rate and volume was somewhat offset by 4 basis points of lift due to day counts.

With respect to the asset rate dilution, we had an unusual drop in loan fees during the quarter, which resulted in a 1 basis point linked quarter decline in loan yield. A normalized level of loan fees would have resulted in about a 4 basis points linked quarter increase in loan yield, which would have reduced the linked quarter decline in net interest margin to a basis point or 2 rather than the reported 4 basis points decrease. So we are continuing to close in on a trough in net interest margin. Turning to slide 17, our interest rate risk profile remained essentially unchanged as of March 31, with substantial asset sensitivity driven by loan portfolio mix with 50% variable rate coupon.

During the first quarter, we entered into $55 million notional of forward starting swaps, which brought the swap portfolio notional at quarter end to $1.105 billion, with a weighted average maturity of 2.9 years and a weighted average receive fixed rate of 3.19%. We also entered into $45 million notional of forward starting floors, which brought the floor portfolio notional at quarter end to $120 million, with a weighted average maturity of 4 years at a weighted average SOFR rate of 3.60%. The cash flow hedging program substantially reduces our adverse asset sensitivity to any potential downward shock in interest rates. Turning to slide 18, non-interest income for the first quarter totaled $55.3 million, a $5.5 million linked quarter increase, and a $4 million increase year-over-year.

The biggest driver of the linked quarter increase was mortgage banking, which was up $3.4 million, driven in approximately equal parts by increased gain on sale margin, reduced servicing asset amortization, and improvement in the net negative hedge ineffectiveness. And now I'll ask Tom Chambers to cover non-interest expense and capital management.

Tom Chambers (Chief Accounting Officer)

Thank you, Tom. Turning to slide 19, we'll see a detail of our total non-interest expense. During the first quarter, adjusted non-interest expense totaled $130.1 million, a linked quarter decrease of $4.6 million, or 3.4%, mainly driven by a decrease in services and fees of $3.1 million, resulting from lower professional fees and data processing software expense. In addition, salaries and benefits decreased by $1.1 million, mainly due to the reduction of annual performance incentives offset by a seasonal increase in payroll taxes. Turning to slide 20, Trustmark remains well-positioned from a capital perspective. As Duane previously mentioned, our capital ratios remain solid, with a Common Equity Tier 1 ratio of 10.12% and a total risk-based capital ratio of 12.42%. Although we currently have a $50 million share repurchase program in place, our priority for capital deployment continues to be through organic lending. Back to you, Duane.

Duane Dewey (President and CEO)

Great. Thank you, Tom. Let's now look at our outlook commentary on slide 21. I do want to emphasize that this forward-looking commentary is pre-transaction and does not reflect any balance sheet repositioning. So first, let's look at the balance sheet. We're expecting loans to grow mid-single digits in 2024, while deposits are expected to grow low single digits. Securities balances are expected to decline by high single digits based on non-reinvestment of portfolio cash flows, which, of course, are subject to changes in market interest rates. We'll be updating our security guidance along with our second quarter results. Now on to the income statement. We're expecting net interest income to decline low single digits in 2024, reflecting continued earning asset growth and stabilizing deposit costs, resulting in a full-year net interest margin of approximately 3.2% based on market-implied forward interest rates.

As noted previously, NII will be significantly impacted by balance sheet work post-close of the transaction. For credit, the total provision for credit losses, including unfunded commitments, is dependent upon future loan growth, the current macroeconomic forecast, and credit quality trends. Net charge-offs are expected to remain below the industry average based on the current economic outlook. From a non-interest income perspective, non-interest income is expected to grow mid-single digits, which is our wealth management and our mortgage division in the latter half of the year. For 2024, non-interest expense is expected to increase low single digits for the full year, which reflects our cost containment initiatives and is subject to the impact of commissions in mortgage and wealth management. Again, we will reset our non-insurance expense expectations after the sale is completed.

Finally, we'll continue a disciplined approach to capital deployment with a preference for organic loan growth and potential M&A. We will continue to maintain a strong capital base to implement corporate priorities and initiatives. So with that, I'd like to open the floor for questions at this time.

Operator (participant)

We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Will Jones of KBW. Go ahead, please.

Will Jones (Associate Vice President and Equity Research Analyst)

Hey, great. Good morning, guys.

Duane Dewey (President and CEO)

Morning, Will. Morning.

Will Jones (Associate Vice President and Equity Research Analyst)

So it was great to see the insurance sale hit the tape. Congrats on kind of getting that through the finish line there. I was just curious, as you think about kind of the dynamics of the transaction, we have the bond sale coming through, and pro forma, CET1 and TCE are really going to kind of remain at nice robust levels. I think you guys lay out somewhere around 10.8% on CET1 following the bond sale. Just curious, through your lens, how you would characterize where excess capital will stand following the closing of the bond sale. And then I guess the natural follow-up to that is you guys kind of list the tools for further redeployment, which are growth M&A, buybacks, and then maybe even more balance sheet optimization.

If you guys could just kind of stack rank that for us and try and ring-fence where you would prioritize further deployment, that would be super helpful. Thank you.

Tom Owens (CFO)

So Will, this is Tom Owens. I'll start. So there's a lot there. Historical context, as you know, we've been in the mode we have abstained from share repurchase activity. We have prioritized supporting organic loan growth with a desire to continue to accrete capital over time. What this transaction, what the FBBI sale allows us to do is substantially restructure most of our AFS portfolio. So we wanted to take advantage of that opportunity. And in super round numbers, in terms of regulatory capital ratios, we're taking approximately half of the accretion and supporting the restructuring of the AFS portfolio and the other half of the transaction to accrete to regulatory capital. So I would say for the foreseeable future, our priorities will remain the same, which is to say supporting organic loan growth and allowing capital to accrete.

I would not anticipate that we would become active with respect to share repurchase as a result of this transaction. I would anticipate that we'll continue to be in the mode that we have been in. But again, it is helpful. It does provide additional flexibility. And as we continue to accrete capital, position us for other opportunities.

Will Jones (Associate Vice President and Equity Research Analyst)

Okay, great. That's very helpful. I mean, does this change the way that you guys kind of view M&A opportunities?

Tom Owens (CFO)

Well, I'll respond real quickly. Well, number one, we've got to get this transaction behind us and get the repositioning that Tom was referring to behind us and move forward. We feel there are still pretty significant headwinds in the marketplace. And really, at this time, we're focusing on the organic side of things. We're adding production talent across the franchise. We're focused on our new business line equipment finance is doing very well, and we'd like to continue to support that business. We have a new office in the Atlanta market that we'd like to support. So we've got plenty of opportunity to add production talent across the system that we think really is a real opportunity for growth. And we'll continue to focus on that for the time being. The headwinds in the M&A space remain. Pressure on AOCI and other issues, the regulatory environment.

I'd see us really focusing organically for the time being until we start to see some clarity there on the other side of the equation.

Will Jones (Associate Vice President and Equity Research Analyst)

Yeah, okay. That's great. And then maybe just one very quickly on the quarter. You guys saw a really nice dip in expenses this quarter. I guess maybe a little surprised the guidance is still where it stands at low single digits. Although I guess maybe this just more pulls us to the low end of that guidance. Could you just, I guess, maybe retalk to some of the dynamics there and then how you think about it in respect to the low single digit growth guidance?

Tom Owens (CFO)

Yeah, I'll start real quick. This is Duane. I'll start real quick, and then Tom Chambers can add some thoughts. But firstly, if you look, linked-quarter comparative is really good. Year-over-year comparative, it's up in the very low single digits. And so we're still feeling that that's a pretty good guidance moving forward. I mean, we still feel inflationary pressures, costs really across the board, whether it's associate and benefits and all of that, cost is still significant. And there are still inflationary pressures out there. But a lot of the other things that Tom mentioned in his comments, professional fees, third-party fees, and data processing costs and things like that, with some of the initiatives we started a couple of years ago in the Fit to Grow process, etc., have started to take hold. So that'll keep a lid on the expense growth.

But we still see and still feel comfortable at the very low single digit range for the full year.

Tom Chambers (Chief Accounting Officer)

I can't add anything to that. That was well said.

Will Jones (Associate Vice President and Equity Research Analyst)

All right, guys. That's it for me. Thanks for all the color this morning.

Tom Owens (CFO)

Thank you, Will.

Operator (participant)

Our next question comes from Gary Tenner of D.A. Davidson. Go ahead, please.

Gary Tenner (Managing Director and Senior Research Analyst)

Thanks. Good morning. I just had a couple of kind of bookkeeping items on the insurance sale. With the expected close by the end of the second quarter, would you anticipate that the bond restructuring would also be complete by June 30 or at the very least early in the third quarter? So you'd have effectively a full quarter beginning 3Q of that transaction?

Tom Owens (CFO)

I'll start just really quickly. I mean, the expected close date should be around the 1st of June is what we're targeting. But as you know, that can vary a bit as we get into this process here, and then it requires some regulatory approval. So we're targeting June 1st for close, which then gives us opportunity for other things to happen before the end of the second quarter.

Gary Tenner (Managing Director and Senior Research Analyst)

Okay, great. And then as we're thinking about the expense piece of the insurance business, is a quarterly run rate assumption for adjusting models in that kind of $10.5 million-$11 million per quarter in terms of what will be leaving Trustmark Consolidated? Is that a reasonable number to use? Any qualms with that kind of range?

Tom Owens (CFO)

No, that's a very reasonable number. Just noting that'll be out for seven months of the year.

Gary Tenner (Managing Director and Senior Research Analyst)

Okay, great. And then yeah, last question just as it relates to that. I think there's the note that. And then they will be an insurance broker partner of the bank. Should we assume that that means that they'll be referral business where you would actually potentially generate some sort of fee income from that over time? Or just how to think about that?

Tom Owens (CFO)

Yeah. The answer is no. There's not an ongoing rearrangement. But we went through a very painstaking process. And this process of considering a partner, we and the agency handpicked MMA to join forces with. We're very excited about that ongoing opportunity for our production team, for our associates, for our clients. And we do continue to expect to have an ongoing relationship with MMA and build on 25 years of experience with the team that will be transitioning there. So we're very positive. But it is not a direct fee income referral type arrangement.

Gary Tenner (Managing Director and Senior Research Analyst)

Thank you.

Operator (participant)

Again, if you have a question, please press star, then one. Our next question comes from Michael Rose of Raymond James. Go ahead, please.

Michael Rose (Analyst)

Hey, good morning, everyone. Thanks for taking my questions. Just following up on the capital questions. I understand you're going to be conservative, maybe as it relates to buybacks. But is there a certain capital level that you guys are managing to before you would potentially look a little bit more at doing some buybacks, just given where the stock is trading and what the earnback would be on the pro forma tangible book? Or is it just kind of like you want to wait until all the actions happen before you would maybe look to buyback stock? Thanks.

Tom Owens (CFO)

Yeah, Michael, this is Tom Owens. Good morning to you. I think the baseline assumption would be based on our current sort of business-as-usual run rate of quarterly accretion in capital. It would probably be on the sidelines. Now, I mean, it's always subject to market conditions, right? I mean, clearly, we have more capital now at our disposal. So it's subject to market conditions. But I think absent volatility in the market and what might happen with the stock price, I think the baseline assumption for the remainder of the year would be that we're going to be on the sidelines on share repurchase and continue to accrete capital and support organic loan growth, some of the initiatives that Duane talked about.

Michael Rose (Analyst)

Yep, understood. Maybe if you can just, as a follow-up, just on the organic growth side, is there anything that this new capital will free up and allow you to do that you might have been a little bit cautious on before? Meaning, would you look to maybe hire some more lenders, build out some on the fee side, maybe invest some more money there? Just looking for a sense of what levers this capital can be deployed into on the organic growth side. Thanks.

Tom Owens (CFO)

Yeah, Michael. Yeah, as I stated earlier, I think this does give us some opportunity. And I mean, we've always had a preference for organic growth. And we feel this does give us the opportunity. We've got very, very attractive markets: Houston, Atlanta, Memphis, Birmingham, Mobile, etc., across our franchise where we can add talent across all those markets. And then, like I mentioned earlier, in a business like equipment finance, where we're starting to gain experience and get comfortable really understanding that business and feel there's some opportunity to add production talent there. And then the last thing I'd note, the other consideration in that process would be exploring opportunities in new markets that we don't currently operate in. We've gained experience by opening the Atlanta market.

We think there are some very attractive markets in and around regions that we already serve, where we already have exposure and knowledge that we can add talent. So we do think that this gives us a unique opportunity to expand and really focus more aggressively in some of those organic areas.

Michael Rose (Analyst)

Okay, that's very helpful. And then maybe just finally for me, when I was working through the model last night, it does seem like some of the assumptions around EPS accretion could prove to be a little bit conservative. Just if you can maybe walk through kind of the puts and takes to the projected EPS accretion, the way you see it, whether it be impact from rates or ability to deploy capital maybe higher. I know you talked about maybe potentially having the opportunity to do more on the bond book. We've seen that with a few other of these sale transactions where you've actually seen more done on the security side. So just can you walk through kind of the puts and takes to that EPS accretion guidance? What could be better and maybe what the potential headwinds would be? Thanks.

Tom Owens (CFO)

Sure. So I'll start. This is Tom Owens. Clearly, with that amount of bond portfolio restructuring, and particularly with respect to the volatility we've had in interest rates in the market quarter to date here, still somewhat early in the quarter, the amount of restructuring, the composition of the restructuring could end up. These are pro forma assumptions, could end up being different here. We've put our best thoughts together in terms of how we would restructure the portfolio. I think, Michael, to me, it's almost more interesting to talk about the puts and takes fundamentally and what some of the opportunities might be there, ex the transaction. You think about the variability with respect to where the Fed might head with respect to interest rates, the impact on deposit cost. I mean, I think that there's an opportunity there.

We continue to flatten that linked quarter increase in terms of deposit cost. I think there's when talking about puts and takes, I think there's some opportunity to outperform there relative to the guidance. At the same time, there's some risk there, right, particularly with respect to non-interest-bearing DDA balances and the trends there. So what is often done when we consider the puts and takes, we let the guidance intact basically across the board. So I guess those are the thoughts I can share with you that come to mind.

Michael Rose (Analyst)

Great. I appreciate the answers to my questions.

Operator (participant)

Again, if you have a question, please press star, then one. This concludes our question-and-answer session. I would like to turn the conference back over to Duane Dewey for any closing remarks.

Duane Dewey (President and CEO)

I'd like to thank you all for joining us for today's call. We hope it was informative. We're very excited to move into the new arrangement from an insurance perspective and very excited for second quarter and to continue to add shareholder value. Thanks again for joining us, and we'll be back to you at the end of the second quarter.