OSBC - NASDAQ

Good morning, everyone and thank you for joining us today for Old Second Bancorp, Inc.'s First Quarter 2025 Earnings Call. On the call today are Jim Eccher, the company's Chairman, President and CEO; Brad Adams, the company's Chief Operating Officer and Chief Financial Officer; and Gary Collins, the Vice Chairman of our Board. I'll just start with a reminder that Old Second's comments today will contain forward-looking statements about the company's business, strategies and prospects, which are based on management's existing expectations in the current economic environment. These statements are not a guarantee of future performance, and results may differ materially from those projected. Management would ask you to refer to the company's SEC filings for a full discussion of the company's risk factors. The company does not undertake any duty to update such forward-looking statements. And on today's call, we will be discussing certain non-GAAP financial measures. These non-GAAP measures are described and reconciled to their GAAP counterparts in our earnings release, which is available on our website at oldsecond.com on the Homepage and under the Investor Relations tab. Now I would like to turn the call over to Mr. Jim Eccher.

Good morning, everyone and thank you for joining us. As customary, I have several prepared opening remarks, we'll give my overview on the quarter and then turn it over to Brad for some additional details. I will then conclude with certain summary comments and thoughts about the future before we open it up to questions. Net income was $19.8 million or $0.43 per diluted share in the first quarter of 2025 and ROA was 1.42%. First quarter 2025 return on average tangible common equity is 14.70%, and the tax equivalent efficiency ratio was 55.48%. First quarter 2025 earnings were significantly impacted by several items. $575,000 MSR, mark-to-market losses or about $0.01 per diluted share. $446,000 in merger-related expenses or just shy of $0.01 per diluted share related to costs of the First Merchants five branch acquisition as well as costs related to the pending merger with Bancorp Financial and Evergreen Bank Group. Also a $2.4 million provision for credit losses in the absence of significant loan growth, which reduced after-tax earnings by $0.04 per diluted share. However, despite all this, profitability of Old Second remains exceptionally strong and balance sheet strengthening continues with our tangible -- common tangible equity ratio increasing 30 basis points from last quarter from 10.04% to 10.34% in the first quarter of 2025. Tangible equity ratio increased by 130 basis points over the like period one year ago. Common equity Tier 1 was 13.47% in the first quarter of 2025, increasing from 12.82% last quarter, and we feel very good both about profitability and our balance sheet positioning at this point. Our financials continue to reflect a very strong net interest margin, even as market interest rates have declined. Pre-provision net revenues remained stable and exceptionally strong. For the first quarter of 2025, compared to the prior year like period, tax equivalent income on average earning assets increased $221,000 or 0.3% while interest expense on average interest-bearing liabilities decreased $2.9 million or 21.3%. The decrease in interest expense is primarily due to the deposits acquired related to the First Merchants branch purchase, which closed in December of '24, which resulted in the pay down of our higher rate other short-term borrowings, which improved our margin significantly year-over-year. Net interest margin improved 30 basis points year-over-year on both a GAAP and tax equivalent basis and improved approximately 20 basis points compared to the prior linked quarter. First quarter of 2025 reflected a decrease in total loans of $41.1 million from the prior linked quarter, primarily due to net paydowns in commercial real estate owner occupied and multifamily portfolios during the quarter. Furthermore, we have purposely reduced our purchase participation portfolio, which declined $46 million or more than 10% in the quarter. Since the West Suburban acquisition, our purchase participation portfolio has declined $376 million or nearly 49% as we have intentionally repositioned our loan book. The historical trend of Old Second is for our bank to realize some loan growth in the second and third quarters of the year due to seasonal construction and business activities. Currently, activity within loan committee remains relatively modest to prior periods, primarily due to many customers waiting to see how market volatility including any market interest rate changes or changes due to the current global tariff uncertainties play out over the coming three to six months. Tax equivalent loan yields reflected a 5 basis point decrease during the first quarter of 2025 compared to the linked quarter, but a 4 basis point increase year-over-year. Total cost of deposits was 82 basis points for the first quarter of 2025 compared to 89 basis points for the prior linked quarter and 71 basis points for the first quarter of 2024. Net interest margin has improved due to more favorable funding position we are now in even after considering the impact of market interest rate changes on the variable portions of both the loan and securities portfolio. The loan-to-deposit ratio is in excellent shape at 81.2% as of March 31, 2025 compared to 83.5% last quarter and 86.1% as of March 31, 2024. I'll let Brad talk about this more in a moment. This quarter reflected a positive change regarding our loan portfolio credit and remediation efforts, specifically we recorded $4.4 million of gross loan charge-offs in the first quarter of 2025, $3.4 million which was one C&I loan that was downgraded two quarters ago. We have now addressed the entire balance of this credit as audited financials, collateral field audits and bankruptcy declarations resulted in a significant charge of this relationship, excluding balances collateralized by cash held at Old Second and the successful liquidation of equipment through an auction. This credit was discussed in the last few quarters and with fully addressing it this quarter, we should now be able to focus on any remediation or recovery efforts if the potential is there. Last quarter, we recorded $1.7 million in OREO valuation expense on two properties, which were both sold in the first quarter of 2025. Our total OREO balances are now down or have declined $18.7 million quarter over -- linked quarter, which contributed to a 27.2% reduction in nonperforming assets since year-end 2024. Substandard and criticized loans decreased in the first quarter of 2025. Total criticized loans now totaled $116.7 million and decreased 42% or $84 million from one year ago. In the first quarter of 2024, criticized loans were $200 million. First quarter 2025 balances represent a decline in their lowest levels in three years since May of 2022. So we're very pleased with this performance. Classified and nonaccrual balances continue to improve significantly on both a year-over-year and linked quarter basis. Total classified assets declined by $52.2 million or 37% year-over-year as of March 31, 2025. Special mention loans also continued to improve dramatically. These balances are now down 51% from a year ago. The allowance for credit losses on loans decreased $41.6 million as of March 31, 2025, or 1.05% of total loans from $43.6 million at year-end, which was 1.1% of total loans. Unemployment and GDP forecast used in future loss rate assumptions remain fairly static from last quarter, with no material changes in the unemployment assumptions on the upper end of the range based on recent Fed projections. The impact of the global tariff volatility was considered within our modeling. The change in provision level quarter-over-linked quarter reflects the reduction in our allowance allocations on substandard loans, which largely relates to the 42% reduction in criticized assets year-over-year. Noninterest income continued to perform well with growth in the first quarter of 2025, compared to the prior year like quarter of $528,000 or 20.6% in wealth management fees and $304,000 or 12.6% in service charges on deposits. Mortgage banking income reflected a decrease in the first quarter of 2025, compared to the prior linked quarter, and prior year like quarter primarily due to the impact of mortgage servicing rights, mark-to-market valuations. Excluding the impact of mortgage servicing rights mark-to-market, mortgage banking income was flat quarter over linked quarter and slightly more than the prior year like period. Other income increased in the first quarter of 2025, compared to the prior linked quarter and prior year's linked quarter with the linked quarter variance primarily due to incentives received on two vendor contracts in 2025. Expense discipline continues to be strong with total noninterest expense for the first quarter of 2025 at $183,000 more in the prior linked quarter. Our efficiency ratio continues to be excellent as a tax equivalent efficiency ratio adjusted to exclude core deposit intangible amortization, acquisition costs and OREO costs was 55.48%, compared to 54.61% for the fourth quarter of 2024. As we look forward to the balance of the year, we're focused on doing more of the same, which is managing liquidity, managing capital and also building commercial loan origination capability for the long term. The goal is obviously to continue to create a more stable long-term balance sheet mix featuring more loans and less securities in order to maintain the returns on equity commensurate with our recent performance. With that, I'll turn it over to Brad for additional comments.

Thank you, Jim. I'll be relatively brief this morning. There's a not a lot of complexity here in my mind. Net interest income increased by $1.3 million or 2.1% to $62.9 million for the quarter ended relative to the prior quarters totaled $61.6 million, an increase of $3.1 million or 5.2% from the year ago quarter. Exceptionally pleased with the ability to grow net interest income from the levels that we saw with these comparable periods. Taxable equivalent securities yields increased by 18 basis points during the quarter, although loan yields were about 5 basis points lower. The increase in security yields largely relates to some maturities and re-laddering effects that we started on early in the quarter. We talked about in the past, we've done an exceptionally good job on making sure that we've got a pretty significant large chunks of cash maturing on a regular basis as we can step into a different rate world. Overall, we're exceptionally well positioned. I'm pleased with what we've been able to accomplish there. The total yield on interest-earning assets decreased by only 2 basis points over linked quarter to 5.70%, but that was more than offset by a 13 basis point decline in the cost of interest-bearing deposits and a 35 basis point decrease in the cost of interest-bearing liabilities in the aggregate. The end result was a 20 basis point increase in the taxable equivalent NIM to 4.88% for the quarter from 4.68% last quarter. Obviously, this is the exceptional margin performance and surprised us a bit. The source of that surprise was largely allocated to deposit flows during the quarter. Deposit growth accelerated throughout the quarter and has been exceptionally strong. Obviously, you can see the power of the ability to grow deposits in an environment such as this. As we sit here today, I'm exceptionally pleased with our liquidity position as we approach the potential closure of the Evergreen Bank Group transaction. This gives us a ton of flexibility. And obviously, we feel very good about where we are. Overall, period-end total deposits increased by $84 million. I don't have any grand prognostications this quarter and always feel like a more balanced person in general when I believe the curve accurately reflects the balance of risks in the greater economy, relative to last quarter and many times over the last two years, expectations have become much more realistic relative to absolute economic conditions and federal deficit constraints. We have been on the sidelines as it relates to the securities portfolio here recently, because we see outsized risk for spreads widening in the near term. As a result of the rate cuts to date and their impact on market indices margin trends for 2025 are expected to be stable to modestly down from here. So sustained success on the deposit front positions us exceptionally well to ramp profitability beyond our initial expectations as it relates to the pending merger with Evergreen. This is perhaps my largest area of optimism as the loan-to-deposit ratio was quite low at 81% and gives us some room on the absorption of those assets and doing better on the margin side than perhaps we initially expected. Old Second should continue to build capital and as evidenced by the 130 basis point improvement in the TCE ratio over the past year, which means we have added an astonishing $1.75 of tangible book value over the last 12 months, particularly impressive when you consider the branch purchase, which is done with cash. Evergreen will absorb some of this capital cushion, however, Old Second will still have an exceptionally strong and flexible capital position. The buyback is in place and is on the table after the merger is finalized. Noninterest expense was materially on track with previous quarter, increasing only $183,000 primarily due to salaries and employee benefit increases due to the annual raises and the increased payroll tax associated with the front load of FICA in the first part of the year. Noninterest expense is running higher year-over-year, increasing $6.3 million, compared to the quarter ended March 31, '24, due to again as to higher salary and benefit of expense occupancy costs, core deposit intangibles and OREO-related expenses. OREO-related expenses were high in the first quarter. They were high in the fourth quarter, but they should come down back to normalized levels beginning in the second quarter. Much of the year-over-year increase is attributable to the five branches acquired in late '24 from First Merchants in addition to the OREO operating expense increase that we talked about. For 2025, employee benefit expenses are expected to be a bit of a drag, as we talked about. Overall, we are hopeful we can keep expense growth in the 4% range, consistent with our expectations shared last quarter. That's really all I have. With that, I'll turn it back over to Jim.

Okay. Thanks, Brad. In closing, we feel this is a pretty solid quarter for the company. We're confident in our positioning and the opportunities ahead of us. We're pleased with the progress we made on the credit front and optimistic that future quarters will be very good. We're off to a strong start in 2025, and we're optimistic about the year ahead. That concludes our prepared comments this morning. So I'll turn it over to the operator, and we can open it up to some questions.

Thank you sir. Ladies and gentlemen at this time, we'll be conducting our question-and-answer session. [Operator Instructions]. Our first question is coming from Chris McGratty with KBW. Your line is live.

Good morning guys.

Good morning, Chris.

Brad, maybe start on the margin. I heard your outperformance comments. It's really incredible where the margin is. If the forward curve comes to fruition, you get two to three cuts this year. I mean, your message is basically, we're going to be flat even with the cuts. Is that kind of roughly flat to modest down from that 4.90% to 4.8% level?

Well, I said I wasn't going to do any grand prognostications, but I'll do it anyway. I don't think we're getting three rate cuts. I think that -- I think inflation is stickier. But more importantly, I think it's political at this point. And I think that there's not going to be a ton of support for what is largely a tariff/political environment in terms of that. It's awfully tough to cut rates in this scenario, particularly with what happened last time when you talk about yields actually going up along the curve. I would say that whereas before, just because everybody else will be talking to free rate cuts, whereas before, I would have said 7 basis points of margin decline. And with the contribution from Evergreen, I would probably say it's four with each rate cut from these levels. So it has been softened quite a bit. Some of that obviously is the deposit pickup as well and just the margin levers that we have with them coming on board. So overall, I'm significantly more bullish on the margin than I have been for probably over a year.

Okay. And then the other piece of the NII is what you're doing with the participations, pushing them out. What's left to go on noncore loans. Where do you think -- or do you think that the loan book has bottomed? Or any kind of thoughts there?

Yes. It's a good question, Chris. I mean, we're still, we've had that purchase participation book since West Suburban. And keep in mind that it represents about 25% of our classified. So we've been trying to aggressively push out as much of that as possible, becomes challenging, particularly on the syndication front when you don't have a voice at the table per se. But we've got another, I'd say $200 million that we're going to want to continue to try to exit over the next 24 months. So we've made good progress. We've got some more looking to do there. But overall, we're pleased with how the book is repositioning.

I think -- I think, Chris, one thing that we've done a particularly good job of is -- and we've talked about how big our efforts were to get on the front part of credit, I feel like we've done what we said we were going to do. I also think we've been aggressive and perhaps being pessimistic in our world view and making sure that we're not holding credits that we could potentially get out of if things get worse. Our credit outlook today is significantly better than it's been in two years. That's for damn sure.

Okay. All right, awesome. Thank you.

Thanks, Chris.

Thank you. Our next question is coming from Terry McEvoy with Stephens. Your line is live.

Hi, good morning guys.

Hey, Terry.

I mean you've worked through office, worked through health care. I guess my question is, are there any new segments emerging out in CRE or C&I? Just looking...

Yes. I think if there's one area that we're seeing a couple of credits come on to our radar, it's more in C&I at this point. Nothing material. We had a couple of credits, one in manufacturing, one in solutions-based drug wholesale company that missed projections that we've downgraded. We've already proactively taken reserves against those. By and large, you're right, we're through office. We're working our way through health care. We feel pretty good about where we're at, but a lot of that C&I book has obviously seen a pretty rapid increase in cost of capital. So a little bit of stress in that book. But aside from those two credits, we're not seeing any new red flags.

Thanks. And then as a follow-up, have you noticed any trends among your lower balance deposit customers, call it, late in the quarter or here in April? And I'm thinking just balances or card transactions overall?

Card transactions are down significantly, but that's a trend that started almost a year ago. We have seen significant slowdown and a move down in average balances on the low end. It actually somewhat mitigated and some of that's probably tax related just with refunds flowing in. But we're a very granular deposit base. I think everybody knows that by now. But we've seen kind of weakness in balance levels in transaction activity in that deposit base starting over a year ago. So I wouldn't say there's anything that's different here. I think that if I'm reading your question right, I think largely what people should be looking for is that stress moving up the income stratification rather than starting at the bottom end because it started at the bottom end some time ago.

Yes and that is why I was asking. Thanks for taking my questions. Appreciate it.

Thanks, Terry.

Thank you. Our next question is coming from David Long with Raymond James. Your line is live.

Good morning everyone.

Good morning, David.

We're only a few weeks removed from Liberation Day with the tariffs. But in your recent conversations with -- that you and your team has been having with your commercial clients. What is their sentiment like? And are you seeing deals getting pulled? Are you seeing pause? Just trying to get a sense on loan demand expectations.

Dave, it's probably similar to what you're hearing from other banks. We've had these conversations internally. It's ranged from the equipment leasing side, that activity remains actually pretty decent, maybe down a little bit as far as new activity from a year ago to commercial real estate, particularly on the investment side where it pencils down, and we're not doing anything until we get some clarity around tariffs and uncertainty. But by and large, it's wait and see. We are not projecting a lot of growth in the second quarter. We're hopeful with some clarity, we see an uptick in loan demand in the second half of the year.

Got it. Thanks for the color, Jim. And then as you look at the reserve level, reserves came down a bit in the quarter. You had nonperformers up. I think there's a risk of economic forecast currently where they are today, it sounds like you sound pretty stable, but I think there's a sense that these are going to worsen, what was the math you went through at quarter end in coming up with the reserve?

So we've got a situation where criticized classified and nonperformers have been trending down significantly for the better part of two years. I don't think we're in the same boat as everybody else here. Our trend is not more negative at this point even with the uncertainty that's out there. We've been very aggressive in addressing credits that we believe there is some potential weakness in. I would have been a much more pessimistic person. I was a much more pessimistic person a year ago than I am today. You can call us a leading indicator or whatever else or early in terms of the stress, but I don't see a second wave right now. Certainly, broad macroeconomic weakness will result in losses for us, but I feel exceptionally good about where we are at this point.

Great. Thanks Brad. Appreciate the color.

Thank you. Our next question is coming from Nathan Race with Piper Sandler. Your line is live.

Good morning guys. Thanks for taking my questions.

Hi, Nate.

I think last quarter, we were talking about maybe charge-offs getting south of 20 basis points going forward. Obviously, you had some clean up with the one C&I credit here in the first quarter, which is generally how you guys are thinking about the charge-off trajectory, both near term and then when you layer on Evergreen that has historically had slightly higher loss history related to peers, just given their operations?

Yes. I think you're right. We certainly as it related to one large C&I credit when you have a credit business bankruptcy, you get unpredictable results, particularly as it relates to options, equipment options and we felt, given the strong quarter in earnings, we decided to take the final charge on that. And while we're hopeful that we get some recovery on this, we elected to put this one behind us. You heard our comments regarding the declines and the substandard and criticized. So that -- those are the leading indicators that should bode well for future credit deterioration. So while the charge-offs were a little bit higher, we're optimistic that future quarters should be -- should hold up a lot better. As it relates to Evergreen, historically, they've run losses anywhere between 1% and 1.5%. However, we got to keep in mind that contribution margins on that loan book are significantly higher. You have to look at those two factors hand in hand. So -- they continue to be exceptionally well reserved, and we're optimistic about adding that vertical to our lending team.

So I realize that our tone and tenor is a little bit different maybe than most, but one data point that I add for people is that our individual specific allocations for individual credits on the commercial side right now is lower than it's ever been. The number of individual allocations hasn't been this low in 3.5 years. So in terms of problems, we believe we've dealt with them.

Understood. That's helpful. Appreciate that. And Brad, just going back to your expense comments. I apologize if you touched on this as I hopped on late. But I think you mentioned you're hopeful to get back to 4% expense growth for this year, which would imply a decent step down close to $40 million or so over the next few quarters. Is that kind of how you're thinking about it just with some of the noise in the first quarter?

Yes.

Okay. Great, I believe that's all I had. Thanks guys

Cool, thank you.

Thanks, Nate.

Thank you. Our next question is coming from Jeff Rulis with D.A. Davidson. Your line is live.

Thanks, good morning. Just to check in on the growth front, I appreciate the comments on sort of pushing out some participations and still to go, starting from kind of a net down on loans. I guess for the full-year, Jim trying to back into expectations on growth for the full-year. It sounds pretty guarded, but any detail on that side?

Yes. [Indiscernible] the acquisition, which is going to give us some more growth. I would be thrilled with low-single digit growth that would come second half of the year. But keep in mind that risk-adjusted returns today are not overly attractive in several areas. We'll be very careful and prudent on what we're putting out in the books. Obviously, with the margin that we're carrying right now, we're not going to just grow for the sake of growing. So having said that, we are optimistic that the second half is going to be much better than the first half.

Listen, I think six months ago on this call, when I said that we had a realistic shot of growing net interest income linked quarter in the first part of this year, I could feel the eyes crossing on the other side of this line, not believing that number. So it's about basically, as Jim mentioned, risk-adjusted returns. And you know what, it's not always entirely about growth, it's about making money. And there are times in this business given the cyclicality and the volatility that we've seen, that it's not time to grow. I said last quarter, the growth looks much more attractive and that we would consider loan purchases. I think that's still the case. I think that I got very confused two weeks ago when we saw equity markets going down. And at the same time, treasury yields going up, that's been a very interesting couple of weeks in terms of what interest rates are doing. I do see significant risk to spread widening at this point, as I mentioned a few minutes ago. And I think there will be attractive yields available. So it's something we will consider in order to generate growth on that front. And when you got the balance sheet flexibility that we do, you've got a lot of optionality. So it's an interesting time, uncertainty creates opportunities. And most importantly, I'm exceptionally pleased with both where we are and how much money we're making at this point.

Brad, leaning into that margin strength, I think that's the kind of the point of the discussion. Do you have a March average for the net interest margin?

I don't off the top of my head. It wasn't down from February, I can tell you that. So it trended higher. And that's been a function, as I alluded to earlier, the strength in the deposit generation. I am very hopeful that continues. If it does, we have a ton of balance sheet flexibility over the next six months. It's a nice position to be in as the CFO. And it makes me generally a happy person, and I treat my kids better and they tend to upset me less. So all smiles are out here.

Fair enough. I guess the last question, Brad, you mentioned kind of looking at that buyback, but you kind of conditioned it with post deal close. What precludes you from being active in the short run given -- sorry?

Reg M precludes us from being active in the short term. Otherwise, I would be.

Okay. And in the coming pre-deal, I mean you locked out the entire time? Or is there any windows?

Yes, we're not...

Until we close.

Until we close, I would say that we're optimistic that our timetable for that closure will come to fruition.

I know I said last one, but maybe one more. The tax rate, you've been kind of in that mid-24 range. Is that a good number to use ahead?

Normally, I like to go out to 5 or 6 basis points on that question or decimal points rather, but I hell, I don't know, yes, around here.

Okay. Thank you.

All right. Thanks, Jeff.

Thank you. [Operator Instructions]. Our next question is coming from Brian Martin with Janney. Your line is live.

Hey, Brian.

Hey guys. Congratulations on the quarter. Most of my stuff was asked. Just Brad, I think one big picture question. I think when you talked about the margin, I think last quarter. You talked about the 7 basis points, maybe now it's 4 with Evergreen. I mean, as far as I think you talked about where it could bottom. If we -- all the different scenarios, if we do see cuts, whether we don't see cuts. Just trying to understand, I mean we don't see cut and that's more of your scenario kind of where you think the margin may bottom now that we've stepped up much higher than we thought versus if we do get a couple of cuts. I thought last quarter it was kind of in the 4.35%, 4.40% range, albeit it would take a while. But just kind of big picture kind of how we should think about that?

Yes. I would say that the floor has been raised 10 basis points by deposit flows. It's a different world for us in combination with Evergreen, now at least at our current size. We will be structurally more profitable absent any significant credit events on that front. I have -- for us, obviously, we're an exceptionally high performing company when rates are high. And you've heard us say in the past that the high and flat yield curve is a panacea for us. I mean -- and that's where we are today. So investors shouldn't be surprised by strong margin performance and a high and flat yield curve, because that's where we do best. As we talked about a couple of months ago with the Evergreen announcement, we will do better in a lower rate environment. But it will still remain true that a high flat curve is good for us. I don't see we're in my macro hat for a minute. I don't see a lot of ways out of that given the balance of risk between growth and inflation at this point. We have seen a stickiness to inflation that I see no reason for that to stop or go away anytime soon, especially not with all this tariff nonsense. That isn't going to help that. I also don't think the Fed's particularly accommodative to backing off the inflation fight when a lot of itself induced from the executive branch. So I don't see any reason to lurch into needed changes, and I don't see any reason to be pessimistic about our margin performance in the near to moderate term.

Okay. As far as where we would, if the bottoming would be just 10 basis points higher than you were thinking before for now until we do a little bit more.

Yes.

Got you. And then maybe just one last one on credit, given the big improvement we saw this quarter. I think you guys have been talking about that. But just, and Jim, you talked about the -- where the criticized and classifieds are today much lower than they have been. And Brad just mentioned credit -- on the individual credits. But is there any room directionally from here in terms of credit quality, just the cadence of improvement in non-performance, is it -- is there anything big that's out there within there that's going to be coming due? Or it should be a study as you work through these to see some decline down in the non-performing just...

Yes. I mean the goal is to continue to work these even lower, right? I mean I don't think we'll have the magnitude of the decline in percentages that we had this quarter, but we're optimistic we've been very internally focused to try to improve the balance sheet. And we think we can make incremental improvements throughout the rest of the year.

Okay. Yes, just nothing big. I just want to make sure there's nothing else that was in the hopper that could come out. So okay. Thanks for taking the question guys and great quarter.

Thanks, Brian.

Thank you. As we have no further questions on the line at this time, I would like to hand it back over to Mr. Eccher for closing remarks.

Okay. Thanks, everyone, for joining us, and thanks for your interest in the company. We look forward to speaking with you next quarter. Bye.