U.S. Bancorp (USB) Earnings Call Transcript & Summary

Hi. This is Jason Goldberg. I cover the U.S. large-cap bank stocks here at Barclays. And this is our 19th Annual Global Financial Services Conference. Next up, we're very pleased to have U.S. Bancorp. From the company, Andy Cecere, Chief Executive Officer; and Terry Dolan, Chief Financial Officer. Gentlemen, thank you for being with me today.

Thanks, Jason. Good afternoon, everyone.

Hey, Jason.

I thought we would just dive right in. Terry, there's only 3 weeks to go in the quarter. Maybe you can just provide some guidance on the quarter, how trends are playing out as expected, and maybe we could use that as a baseline to kind of continue the discussion.

Sure, Jason. With respect to the third quarter, it is really progressing pretty much in line with what our expectations were that we communicated in July. We do expect net interest income to be relatively stable compared to the second quarter. And when we think about average loans, it will also be relatively stable to what we saw in the second quarter. But it will grow, what I would say, modestly on a linked-quarter basis. That growth includes being muted a bit by the paydown or forgiveness of PPP loans. We do expect our total payments revenue to be relatively stable to the second quarter. And we continue to manage our expenses given the revenue environment, and we would expect the expenses in the third quarter to be relatively stable to the second quarter as well. Credit quality continues to be strong, and we would expect net charge-offs to be relatively stable to the second quarter, too. So it's pretty much, Jason, in line with what we had expected when we gave guidance in July.

That's good to hear. I guess now maybe we can unpack some of that. I guess on loan growth, relatively stable on an average basis, which is, I think, a win for some. But just maybe talk about what is kind of underpinning that, maybe break it down within Commercial and Consumer. On the Commercial front, how are utilization rates tracking, kind of where you're seeing some weak -- strengths and weaknesses. And then maybe on the Consumer front, talk through spend trend versus payment rates and on the card front and just what you're seeing on the other aspects of the portfolio.

Yes. So let me break that down. When we end up looking at average loans again, we do expect, on a linked-quarter basis, it will grow modestly. When we think about the different components of it, on the C&I side, the biggest challenge there is that we continue to experience elevated paydowns, which I think is happening in the industry given the attractive interest rate environment and the opportunity for people to be able to access the capital markets space. There's also a fair amount of excess liquidity that exists in the market. But the pipelines are generally strong. I think it's optimistic in the markets across our geographies. I think that's a positive thing. Utilization levels are relatively stable and as we kind of think about the -- certainly the third quarter being very much in line kind of with what we had been expecting. On the Consumer side, we're tending to see a little bit more strength there. You mentioned on the credit card side of the equation, we do expect some growth with respect to credit cards. The payment rates continue to be really very high relative to kind of historical, but they've stabilized. And I think as consumer spend continues and government stimulus starts to dissipate, I do -- our expectation is that credit card balances continue to strengthen from there. And then I think one of the things that we have seen particularly good growth in is really on the auto lending side of the equation. A lot of the captives have pulled back from that market. It gives us and kind of the banking industry the opportunity to be able to capture more of that. And we are certainly seeing nice strength with respect to auto lending in our particular space. So those are kind of the puts and takes that we are seeing at this particular point in time. Commercial Real Estate is tending to hold up reasonably well as people are looking at project financing and things like that as well. So overall, it looks pretty good.

Got it. And then when you kind of gave the third quarter update, you didn't talk about NIM, but after seeing 4 straight quarters of decline, we did see reported NIM increase slightly in the second quarter. I think you were hoping for stability into the third. Maybe just talk, is that through the case and just how you're thinking about excess liquidity from here.

Yes. Our focus, really, Jason, is really on net interest income in terms of growing net interest income. And so net margin tends to be a little bit of an output as a result of that. It's going to fluctuate a bit based upon what happens in terms of the balance sheet. Our expectation for the third quarter is that the NIM will be relatively flat or stable relative to the second quarter. But kind of where it goes from here is really a function of what happens with interest rates, the yield curve and just changes in the balance sheet in terms of average loans, where we see the growth and what the mix of loans ends up looking like. So I think those will be factors that will come into play. When we think about excess liquidity, there's still a fair amount of that in the -- certainly in the industry and in the economy. We are being fairly patient, I guess, if you will, with respect to redeploying that either in the investment portfolio. We certainly would love to see the loan growth develop, but we're being pretty patient with respect to making investments in the investment portfolio primarily because, at this particular point in time, we do have an expectation of rising rates given the plan to start to taper with respect to the Fed. And we would rather be a little bit more asset-sensitive at this particular point in time, and we're willing to make that trade-off. So -- but again, NIM relatively stable in the third quarter relative to the second quarter is kind of the overall.

Makes sense. Before I move on to fee income, just a reminder for those listening in, on the top right-hand corner of your screen, there are several buttons, one is Ask A Question. If you do have a question, feel free to send those in. We'll try and get to those. And second, another button of note is Survey. Please click on that and answer some of our survey questions. We will publish those results tonight. Maybe we could shift gears and talk to us about the opportunities in the payments space. You talked about it kind of revenues being flat quarter-on-quarter. But obviously, longer-term, there's a lot of opportunities in that segment. You guys continue to invest there. Can you maybe talk to what you're seeing and just what are some kind of the areas of strength?

Sure, Jason. I'll start on that. And one of the things we have seen in banking, and frankly in nonbanking, competition is this payments ecosystem and this combination of banking and payments into a comprehensive product set. And we're fortunate to have both a great banking business but a very strong payments business. And linking those together has been a focus for us. So we have, just from a perspective, over 1.1 million, what we're calling Business Banking customers, which is $25 million in revenue and below. And just over half of those customers that have a payments relationship also have a banking relationship, and just under 1/3 of the banking customers have a payments relationship. So there's a lot of opportunity to increase the ecosystem or the depth of the relationship. And we, in fact, think that we can increase the relationships 15% to 20% and revenue 25% to 30% over the next few years by really focusing on that payments ecosystem. And a couple of acquisitions that we recently made, I think, help us along that path. We purchased talech a couple of years ago. That's focused on the receivables side of business, payments and a lot of capabilities, information, data that helps businesses run their business. That's doing terrifically well. We've actually more than doubled the number of new customers this year versus last year for the first half. And then most recently, just in July, we acquired Bento, which focuses on the payables side of the balance sheet. And again, that comprehensive capability of matching payables, receivables, having banking products, I think, offers a tremendous opportunity for Business Banking for sure. But I think we can extend that also to the Commercial Banking, to the middle market, if you will, and also enter into the equation, real-time payments.

And then, I guess, you've done some smaller acquisitions in that space. We've seen a lot of the other players do kind of big acquisitions in kind of the broader payments landscape. Are you finding it kind of more challenging to compete against some of these relatively newer entities?

No. I think one of the key aspects of how we compete effectively is this great combination of strong banking combined with payments. And as a reminder, we already have a very big merchant processing or acquiring business. We have a big card issuing business. We have a big corporate card business. And that, combined with the banking and lending, the deposit-taking and treasury management, I think, gives us this comprehensive product set. And what we've been focused on are both acquisitions, the 2 I mentioned, but also internal investment, to make sure we have more tech-led sales activity, more capabilities, more information, dashboards for the customers. And I do think that's going to be a key differentiator for banking, particularly as you compete against nonbank players in this space.

Got it. And maybe you could just talk about kind of payment volumes and sales volumes within your payments businesses. I think all 3 are back above pre-pandemic levels. We've heard some others talk today and yesterday about some softening, particularly on T&E, more at least -- so maybe just talk to us on kind of what are some of the trends that you're seeing across those 3 segments.

Certainly. And I think our trends would be consistent with what you just articulated. So first of all, both in the card acquiring and merchant -- merchant acquiring and retail card, we are above 2019 levels in total. We are seeing a bit of a softening in travel and entertainment, particularly airline travel, which is the momentum on that growth has just slowed and coming down a little bit, but that doesn't negate the fact that, overall, the volumes are still above 2019 levels. And then corporate payments is flattish to 2019. And then that again is impacted by corporate T&E and particularly the travel side, which is slipping a bit or dissipating a bit partly because of the COVID variant, and -- but we do expect it to come back. But overall, big picture, as Terry already told you, we do expect total payments revenues to be relatively stable to the second quarter.

And then -- and maybe just an update in terms of kind of what you're seeing in mortgage, some -- again, some margins have come down, some have kind of talked about maybe them coming down a little bit slower than originally anticipated, and just kind of what you're seeing on originations given your somewhat differentiated model.

Yes, Jason, we -- just think about the industry overall. You certainly are seeing refinancings coming down. And when you think about it, on a, for example, year-over-year basis, they've come down quite a bit. The other thing that, certainly, the industry has seen is that gain-on-sale margins have been narrowing or compressing. That's been more so in the correspondent channel than it has been in the retail channel. If you think about U.S. Bank and kind of what we have been focused on, over the last several years, we've made a significant amount of investment in terms of digital capabilities. Today, about 90% of all applications come in through that digital capability or channel. In addition, we have been very focused on purchase money, which is really driven more by what's happened in the home sale market, and that has generally held up pretty nicely. So when we look at the quarter and kind of what's happening in U.S. Bank, our gain-on-sale margins in the third quarter, as an example, should be relatively stable to the second quarter, and that is because of our focus around purchase money as well as the retail channel, maybe more so than some of our competitors. I think with rates dipping a little bit, we've seen a bit of a bounce-back with respect to refinancing, and we'll see some of that benefit. But again, our focus around purchase money probably mutes that a little bit relative to maybe some others. But all in all, the mortgage revenue as we think about it is pretty much in line with what our expectations have been.

Got it. And then maybe kind of shifting to the cost side of the equation. I know earlier this year, you closed a fair amount of branches. Kind of where are you in that process? Are you kind of where you want to be? And on the flip side, you obviously started the de novo expansion strategy in Charlotte. Some of your peers have been much more aggressive in terms of adding new markets. So just your thoughts there.

Sure, Jason. So as you said, we've closed about 25% of our branches over the past few years, so from just over 3,000 to just under 2,300 branches. And that's because 80% of transactions are now done in a digital way. So the branch has become less of a transaction location and more of a consultation and sales location, which is, because of that, you don't need as many branches in the markets that you are serving. So -- but we're in a pretty stable level there. At the same time, it allows us to expand to new markets, like you talked about in Charlotte. The pandemic slowed our expansion a bit, but we're still focused on that. And then the last part I don't want to lose sight of is our partnership with State Farm. It's a great example of a way to expand the distribution through another source. And that has been terrifically successful thus far in terms of expanding our deposit-gathering, our credit card sales, impact on deposits. The sales activity out of State Farm is the effective equivalent of one small MSA and a credit card, 2 large MSAs. And the majority of those accounts are coming from outside of the market and are new customers to U.S. Bank. So in market, we're pretty stable. Expanding out of market where we think we have good growth opportunities and these partnerships are the way we think about expanding distribution.

Got it. And then on the cost side, you talked about kind of stable expenses in the near term despite some of these investments that you're making. Just maybe just talk about kind of additional levers to help you kind of manage expenses to the extent that revenues remain flattish.

Yes. And we've been able to achieve that while not slowing the investments, and that's important. So the way we think about it, Jason, is optimizing the current bank to continue to invest in the future bank. And we're looking at optimization across many categories, the way we deliver our operations, creating more digital capabilities, technology stack modernization. There's all kinds of activities that optimizes, makes more efficient our current bank as we continue to invest in future digital capabilities. And that balance has allowed us to continue strong investment, while at the same time, achieving relatively flat expenses in this difficult revenue environment that we're facing with the headwinds on rates and so forth. So we would expect, over time, to deliver positive operating leverage. In an environment like we're in today, which is revenue-challenged, we're going to manage expenses flattish, as Terry already mentioned.

Right. So I guess, positive operating leverage, probably tough to come by this year given the comments you've made. As we think about next year, kind of any early indications as you kind of put together or begin to put together the 2022 budget?

That -- our goal is always positive operating leverage. A lot's going to depend, as Terry talked about, on the yield curve, interest rates overall, loan demand. And it's still a rather fluid environment, but our goal would be to achieve that over the long term.

Got it. And then maybe talk about credit quality. Obviously, it's been a very benign environment, much more benign than people expected. There's an expectation that we will begin to see normalization in charge-offs and the like, particularly as some of the stimulus gets to lessen. Could you maybe talk to kind of how you kind of foresee that normalization process and like any particular portfolios that you're keeping a relatively closer eye on?

Yes. I mean, certainly, from a credit quality perspective, despite the fact that a lot of the relief programs have now kind of gone away, credit quality continues to perform very well. We saw our net charge-off levels in the second quarter at about 25 basis points, and we would expect the third quarter to be pretty similar to that and certainly through the remainder of 2021 and maybe into early 2022. One of the things certainly that we are focused on is areas like return to office and the impact that, that might have related to Commercial Real Estate, which tends to have a longer tail. And so that's just something that we'll end up looking at. But as the relief programs go away, as the stimulus starts to dissipate, we would expect that net charge-offs and credit quality would kind of start to normalize to pre-pandemic levels. The timing of that is a little hard to gauge, certainly, probably late '22 or maybe even into 2023 from a timing standpoint. But again, that's really hard to put your arms around at this particular point in time because there's just a lot of moving parts.

Got it. But I guess, against the backdrop of still stable charge-offs at a very, very low level, one could expect, I would think, additional loan loss reserve releases. There's been some talk that they will go to CECL day 1 level. Some talk they can go below. I guess maybe can you envision a scenario where they fall below that day 1 level? And over what time frame do you think it will take to get there?

Yes. Well, we're always looking at it. We look at it on a kind of a quarterly basis. The CECL reserve levels are a function, as you say, of credit quality and the charge-offs that you're kind of expecting. But it's also a function of what you think the economic outlook is and whether or not that's going to be improving, stabilizing or maybe normalizing, I guess, if you will. So it's kind of a function of all those sorts of things. The reserve releases were largest in the first quarter, and you saw more in the second quarter. Just given the fact that the economy is relatively strong, I think you'll see some in the third and maybe a little bit in the fourth. But by and large, I think that, that kind of starts to dissipate and go away as well. With respect to day 1 reserves, I think that's probably too early to tell and to kind of put your thumbprint on that at this particular point in time. But that will be a function again of what the economic outlook and how credit quality continues to progress from here. And as we said, at some particular point in time, credit quality will start to normalize.

That makes sense. I was reviewing our conference write-up last year, while preparing for this year's conference, and we had a sentence in there, we feel U.S. Bank, M&T and PNC are all poised to do large bank acquisitions. And fast-forward to today and M&T and PNC both have done large bank acquisitions and U.S. Bank hasn't. So either we were wrong in reading the room, or is there something else causing you guys to be slower than we anticipated. So I'm not sure if you have any thoughts around that.

Yes, Jason, I think our perspective has been pretty consistent. We want to be both disciplined and opportunistic. It needs to make sense both financially and strategically. And at the highest level, from a bank deal, it needs to be meaningful in terms of acquiring customers, expanding geography and increasing share. So those -- that's the criteria we think about and make sure it makes sense into that set of things. Now while we haven't done a big bank deal, we've done a lot of other acquisitions. I talked about Bento and talech, PFM, which doubled our institutional assets, a real leverage point for municipality and government relationships. So we've done a lot of nonbank deals that expand our capabilities, and we'll look at bank deals that meet the criteria I just articulated and be open to those. But it needs to make sense across both the strategic as well as the financial landscape.

I guess on the bank front, do you feel maybe a heightened sense of urgency given some of the stuff coming out of the Biden administration recent executive orders or that doesn't kind of influence your thinking?

I think a bank deal would have to make sense for the shareholders, the communities, the customers and the employees. And I think if it meets that -- meets the criteria that it's good for all those constituencies, I think it will be appropriate to look at. And if there's a challenge in one of them, then I think we would hesitate.

Got it. And just a reminder, for those listening in, upper right-hand corner, Ask A Question button. Feel free to send in questions. We do have a couple around payments. So I'm going to read you a few of those.

Sure.

U.S. Bank guided to payment revenues flat for Q3 due to some reinvestment on the lower prepaid activity. Can you talk about some of the investments you're making? If current spend trends hold consistent, should we expect growth to resume in Q4? Are there additional headwinds from investments and prepaid declines and again in the fourth quarter?

I'll start on the trends, and Terry, you can talk about the investments. So as I said, both card merchant acquiring and card issuing are positive. The sales activities continue to be positive versus '19 levels. We expect relative stability going from third quarter versus second. Corporate payments is overall versus '19 flattish. It's being impacted by, again, corporate travel more than anything. Now prepaid will be down a bit as the government stimulus plans start to dissipate. The prepaid activity will normalize going into the latter half of 2021, but that's all encompassed in that feedback I gave you. And once payments trends start to normalize in travel and entertainment, I would expect continued growth partly because of the investments we made, and maybe you can talk about that, Terry.

Yes. I mean on the prepaid side, just kind of following up on what Andy said, it hit kind of a peak in the third quarter of last year in terms of the amount of government stimulus, and it's been coming down since then. And as he said, fourth quarter and into the first half of 2022, it kind of normalizes to pre-pandemic levels. On the investment side of the equation, we really think that this is a great opportunity for us to be focused on customer acquisition in terms of credit cards. And so we're focused on account acquisition, customer balance, balance transfer and activities with respect to partners on that particular space and making those types of acquisition investments. And then on the merchant acquiring side, always looking for new partners from a tech-led standpoint, and that is also a part of the investment that we're making when we end up looking at the merchant acquiring space. But a lot of that investment that we are talking about, at least in the third quarter, is more on the card issuance side of the equation. I think you're going to continue to see some of that pressure in the fourth quarter, but then it starts to get incorporated into the run rate and I think it will be just fine.

And I think our principal focus is what I talked about, Jason, is this payments ecosystem. It's this weaving together the banking and the payments components to help businesses run their business every day, to help them with the payables, the receivables, their banking needs. And a lot of our investment is really focused on that. That's both external acquisition, talech and Bento, as well as our internal spend on things like dashboards and information and data to help them run their business and streamline their processes around payments and banking.

And this is for the follow-up question. You talked about the fall-off in government prepaid card. Could you help dimension that or maybe talk to kind of the proportion of revenues coming from that product?

Let's see, in terms of the step-down, I guess, in terms of the impact with respect to the prepaid card in the third quarter, I want to say it's $20 million, $30 million step-down, and it really starts to get to more normal levels in the fourth quarter. So it's not a big part of credit card revenue, but it does end up impacting credit and debit card revenue balances.

Helpful. There's another question. Given U.S. Bank's unique positioning in the payments ecosystem, can you ask them about their thoughts around buy now, pay later? And is that something they're interested in?

Yes. Buy now, pay later, I think, is a phenomenon that we're looking at, and we actually have some test cases underway. There are different components to that. It's point of sale, before, after, and we're looking at all different components. And I do think that it is a capability that we want to pursue and particularly as you think about the flexibility from a consumer spend standpoint and the merchant acquiring relationships we have. So we have some test cases underway, and it's something we're looking at.

Got it. And then Andy touched on some of the opportunities with State Farm. Is there more that could be done there? And are there additional partners that they could look to leverage into the future?

Yes, I think the short answer to that is yes, Jason. So one of the things I think in this new environment that we recognize is that a bank looks -- we will look at partnerships as a way of expanding distribution. So we have a great set of products and capabilities. And oftentimes, they link well with other product that other partners could offer. And it's a very efficient and effective way to expand distribution. So looking at other partnerships and recognizing that we sometimes don't need to do it all but partner with others is one of our key strategies. So I would expect that we will continue to expand that on a go-forward basis.

Got it. And I guess, at your Investor Day a few years ago, which was obviously pre-pandemic, a different interest rate environment, you guys talked to a 17.5% to 20% ROTCE-type figure. Assuming rates normalize, is that still the right level, or if certain aspects changed and that's something you kind of look to revisit? And I guess, kind of what level of rates do you think you would need to kind of get back to that range if it's still a viable option?

Yes, Jason. We haven't changed that profitability or return guidance at all. We're still 17.5% to 20% on a return on tangible common equity. And we still think that that's very appropriate when we think about our business mix, our ability to generate PPNR, the overall risk profile of the organization, how we end up managing capital. So we still feel pretty good about that. You are right that we do believe that the interest rate environment needs to normalize. And so what that means is that both short and long term have to come up, and the yield curve needs to be a little bit steeper maybe than where it is today. In terms of the exact amount that it needs to come up, I think we just -- we need to start seeing it moving in the right direction. I think it's one of the most important things. And then as Andy said earlier, we're going to continue to be managing expenses effectively in the combination of those things. I think it allows us to be able to get back to that type of profitability in the future. So we still feel pretty good about that range.

Okay. We have a follow-up question. Can you please press Andy on his appetite in terms of the bank acquisition? Is it something that he would want to do in market in terms of consolidating branches? Or would he do a market extension-type acquisition with maybe the Southeast being a missing piece of his map?

I think the criteria we look at is consistent with what I said, which is either acquiring customers, expanding geography or increasing share in a market that we're already in. And all those have positive dynamics. They have positive financial results and positive strategic implications, and those are to be the 3 criteria we look at. So against the question that you were asked to press me on, I would say both.

Fair enough. We haven't, I guess, talked about capital management, but I think CET run -- CET1 ratio, nearing 10%. Historically, you've talked to something closer to 8.5%. Obviously, you're in the midst of a buyback program, but it looks like you could do more on that front. Just how are you thinking about current excess capital in light of the fact that loan growth continues to be not robust?

Yes. I mean you're right. Our target is about 8.5%. That's based upon kind of our overall risk profile and how we end up managing the company. Historically though, we've probably managed it a little bit higher than that. And so it's really a range of about 8.5% to 9%. I certainly expect that, that 9.9% migrates down closer to at least that 9% level over the next year or so, whatever that appropriate time frame is. We -- one of our important priorities is really around the dividend, and we've recommended to the Board and we announced that we recommended to the Board a 9.5% dividend increase here in the third quarter. We still -- we have about a $3 billion share buyback program that's in place today. It doesn't have an expiration date. It's open-ended. By the end of the second quarter, we had burned through or purchased about $1.5 billion under that plan. And we're going to continue to execute under that plan, and when appropriate, we'll extend or expand on that plan as well. So we're just continuing to work that 9.9% down.

Fair enough. I guess if you look, U.S. Bank stock has kind of underperformed peers in the last several years as well as this year. I guess, Andy, as you look ahead over the next 2 -- over the next few years, I guess, what are the 2 or 3 things you believe that if you can execute on, you'll return to outperformance?

Yes, Jason, I think our focus is on producing industry-leading returns, growth in PPNR, while managing our risk prudently and also returning capital to shareholders. So that's the big picture. But the way I think about it is pretty simple. We want to acquire customers and extend relationships through the investments we're making, and we want to make those investments by optimizing our current expense structure to allow us to have a relatively modest increased expense or flattish expenses over the long term, so being ruthless around current expenses, allowing us to invest, which allows us to increase our customer growth and our revenue and in a particular focus in that payments ecosystem, I think where there's going to be a key opportunity to take market share because that -- what's happening in banking is this combination of banking and payments is becoming more and more important and more relevant to how companies run their business. And having great capabilities there, in my view, is critically important, and that's what we're focused on.

I guess when you kind of...

I was just going to say, Andy talked about a number of different investments that we've made. Obviously, we entered into the alliance with State Farm. I think that gives us distribution. I think our focus around real-time payments and on the B2B side of the equation, the investments we made, I think will start to pay off. Andy talked about the ecosystem, our investments in mortgage. We have doubled our market share in the last -- since 2015 in mortgage. I think that, that is a testament to where you make that investment and we kind of see those. So I do think across the board, we've made some really nice investments, and I think that those have opportunity to be able to generate top line revenue growth in the future. And a lot of that is in the digital side, too. So we ought to be able to see efficiencies while being able to generate that revenue growth from customer acquisition.

Got it. And I guess, as you look back over the last several years, maybe one of the 2 things -- 2 or 3 things that you would wish that maybe U.S. Bank handled a bit differently.

Yes. Our business mix is a great attribute of U.S. Bank. It's a wonderful set of diverse businesses that are both partly fee-generating and partly derived from the balance sheet and have different impacts in different economic cycles. We were more negatively impacted by the pandemic in our payments business. And that hit us and particularly in the businesses that we're in, which is a tremendous focus on travel and entertainment, both in merchant acquiring as well as corporate payment and the activity there. I wouldn't change anything. It's just that it's an outcome of the impact. I think the investments we've made will serve us well in the long term. I think the focus on customer acquisition is appropriate. Our risk management has been prudent throughout. And I think it's showing through in good times and in bad, and that will continue to be the case. And our real focus is, again, Jason, is on making the investments, optimizing current expense levels and growing customers.

It sounds like a good plan. I look forward to you guys executing on it and us kind of marking to market with you again at this time next year. So Andy, Terry, really appreciate you guys spending time with us today.

Thanks, Jason.

Thanks, Jason.

Thank you.