Zions Bancorporation, National Association (ZION) Earnings Call Transcript & Summary

Great. Thank you. Thanks for joining our presentation with Zions Bank. Zions Bancorp is a $90 billion asset company. They're located in very attractive markets, operating in 11 Western states, where they have 8 distinct brands. They are also a leader in the SBA market with second in volume in their 504 program. I just wanted to share with you one stat between 3Q '22 to 3Q '23, Zions grew tangible book value by just shy of 20%, while still paying a healthy dividend. And despite that, terrific tangible book value growth they're selling at about 1.14x tangible book value. So maybe some good value there. Presenting from Zions Bank today is Paul Burdiss. Paul joined Zions as their Chief Financial Officer in 2015. Before joining Zions, he was Corporate Treasurer at SunTrust. There, he oversaw the investment portfolio, the liquidity and interest rate risk management and was also involved in the CCAR stress test process. Prior to that, Paul was Executive Vice President and Treasurer at Comerica. So please welcome Paul.

Thank you.

So Paul, I guess before -- maybe let's start big picture.

Sure.

If that's okay with you. Have you made any changes to your strategy for the current environment? And sort of what's your near-term and medium-term changes that you're making to address these changes that we're observing in the banking industry right now?

Yes. So I'll start, if I could, by talking about the third quarter. I think everyone knows that the balance sheets and earnings were a little disrupted in the middle of the year as we saw an acceleration of deposit repricing. We really held the line on deposit repricing in 2022. I said in the call in January that we were going to be catching up, which we were sort of raising rates at much less than what our models would have predicted that we would have raised those rates. And so we knew that there was going to be adjustment coming in 2023, and we talked about that in January. Of course, we didn't see everything that was going to happen in 2023. And what happened was a pretty significant acceleration of that deposit repricing. But in the July call, you may recall, I said that it felt like net interest income and net interest margin were beginning to settle down. And we, at that time, said that we thought the third quarter was going to be pretty similar to the second quarter. And that's, in fact, what happened. So we feel pretty good about that aspect of balance sheet profitability. The things that were -- so there's a lot -- direct to answer to your question, there's a lot going on, a lot of changes with the revised capital rules. We're not a $100 billion bank yet, but we will be. And so we're planning to comply with those new capital rules as they become effective. The new debt rule, we estimate we would have to issue under that rule about $3.5 billion. We don't have a bank holding company so that there's still some uncertainty around sort of what the structure that debt's going to look like. But once we have that final rule, we'll be able to manage through that. And then with the rapidly changing rate environment, one of -- some of the things more specifically what we're doing is we put on and I mentioned this in the calls, but we put on a portfolio layer hedge on the investment portfolio. And so that would be -- over the course of the second and third quarter, we had a lot of balance sheet hedges, interest rate swaps, received fixed swaps that we canceled and took those off and in fact, put on a received variable rate -- set of received variable rate swaps. And those are hedges against the AFS portfolio value. So to the extent interest rates have gone up here since those hedges were put in place, that has effectively hedged the value, not the entire value of $3.5 billion, but it's provided a hedge to the AOCI and therefore, has dampened the effect of the changes in interest rates, on the tangible common equity ratio and on the -- yes, tangible common equity ratio. So to your point, the point that you made, our tangible common equity ratio a year ago was 3.7%. It's 4.4% today. And part of that, a much higher interest rate environment, right, but part of that is this portfolio layer hedge that we've done.

And you did update guidance for your net interest income to be stable from stable to decreasing. So that's positive.

Right.

Can you talk about the drivers of that? And how comfortable are you with a stable outlook and sort of what risks you might see to that or opportunities? And then I'll ask one more follow-up after that.

Sure. Yes. So we did update and upgrade the net interest income guidance in the third quarter when compared to the second quarter. We went from, I think, slightly decreasing to stable. And the key drivers there are increasing confidence around deposit cost and deposit repricing. And then also on the earning asset side, we only have about half of our loans sort of repriced within 3 months. And then we've got sort of more an extended repricing of those loans over time. And so what's happening is that the portfolio earning assets are continuing to reprice upward in the higher rate environment. And we estimate that to be about 5 to 10 basis points a quarter here for the foreseeable future. And so with controlled deposit pricing and earning assets continuing to reprice, we just see the opportunity for more of a stable view of net interest income. The other item that's happening is our investment portfolio is continuing to cash flow at about $800 million a quarter. And so as -- we're not reinvesting that. And so those earning assets are falling off and paying off wholesale funding.

Okay. So those components sound pretty positive, better outlook, deposits stabilizing. So I know you have no control over this, but your stock price reaction was -- you surprised with the stock price reaction?

I was really surprised at the stock price reaction, yes. I thought it was a pretty positive message. And not everyone agreed with that clearly and it's hard for me to speculate as to why that is. You probably have a much better idea than I do. But yes, I was disappointed because I thought it was a solid quarter. Credit continues to be really strong. We've got increased confidence around net interest income. So I -- not only was a solid quarter, but I thought a solid outlook as well.

Yes. Okay. If we have no more rate increases, we'll see the Fed was a little bit hawkish on their commentary that they didn't raise. So if -- but if we see kind of flat from here, where do you see the deposits going? And what do you expect, excuse me, for a terminal beta? And then if you look out, how long after the Fed stops do you expect deposits to sort of stabilize? It's hard to tell, but...

It is hard to tell and somewhat speculative because the Fed eventually will stop raising short-term rates, but the way the yield curve moves absolutely also affects deposit rates, right? And so when we think about that longer-term value attached to those deposits, those things all interplay. And then the other aspect around sort of when do deposits stop repricing has a lot to do with what we've seen happen so far, right? And I think every bank is sort of in probably a slightly different position there. We saw some very significant repricing in the second and third quarter, particularly as we were bringing off-balance sheet deposits back on balance sheet. We had over $10 billion of client money that was invested off-balance sheet at prevailing rates. And so we brought some of that money back, and we had to pay very competitive rates to bring that back, right? So we've seen a lot of deposit repricing over the course of the last couple of quarters. When we provide the outlook for stable net interest income, what that includes is some continued repricing on the earning asset side, but implied in that is that the cost of deposits is going to be contained within the earning asset repricing, which is what gives us confidence around the stable net interest income outlook.

Okay. How granular can you get with monitoring your clients and say, okay, this -- these clients have moved half of their DDA into CDs or money markets or this commercial customer has moved. Can you get that fine a level of -- you can?

Yes. We can see at the account level when money is -- sort of where it's going. If it's repricing into CDs or other interest-bearing products or if it's being used in their business, we can see that. And we've got -- I certainly like to think we've got a very sophisticated liquidity management framework. And so all of those things go into that liquidity management framework. We monitor concentration risk, and we monitor flows. One of the things that we found -- not directly answers your question, but one of the things we found, you've probably heard us in the past talk about the churn ratio. Churn ratio was a measure of stability of deposits. What we found is that our assumptions kind of in the aggregate continue to be solid as it relates to liquidity and liquidity risk. But what we found is a number of transactions as churn was a measure of dollar volume of -- sort of dollar volume of in motion divided by average balance. And what we found is number of transactions is actually a much better indicator of stability of deposits. So we monitor all these things at the account level, and we aggregate them. It serves as the basis for our liquidity risk modeling.

So we sort of have this discussion internally. Most everybody has moved that's going to move for the -- 90% of the people have moved. And so that should help the deposit beta down the road, I would think.

I think so.

If you look at your account level, is that sort of what it's telling you that most everybody has kind of moved?

Well, it's hard to know kind of what everyone's intent is, but everyone woke up sort of -- in March. In the middle of the year, that sleepy money was no longer sleepy. And so we saw a lot more money in motion. We had to be a lot more competitive on pricing and other things. But certainly, if -- kind of my mind is if that didn't wake you up, I don't know what's going to wake you up, right? So the rate differential, as it's become larger, people are paying more attention, you had sort of a shock to the system that's forced everyone to stand up and pay attention. So I certainly like to think that a lot of that activity is behind us.

Yes. Okay. One more set of questions on deposits and we can move to the other side of the balance sheet. But you touched on this already about the sweep accounts moving over, talking to customers, getting them to move over. Is there still more opportunity to have some people move from the sweep accounts back on to balance sheet?

We still have over $5 billion, probably close to $6 billion that we're sweeping off balance sheet. Is that an opportunity? Yes, but it would be expensive. And so that's what we're constantly sort of thinking about and balancing is the sort of what's the right thing for the customer and what's the right thing for the balance sheet, and having those conversations in a very active way is what sort of drives that behavior.

Okay. And then last one here is that you still have a very high noninterest-bearing, 37%. Difficult question to answer, but if you had to guess sort of where that number ends up or a range, what would you sort of think?

Well, it's hard to give the range. But what I can say is that as we're thinking about the net interest income outlook and the stability sort of outlook that we provided there, that includes -- inherent in that is migration from noninterest-bearing demand deposits and into interest-bearing and then repricing of interest bearing. And so in the aggregate, we're gaining confidence that a lot of that deposit repricing is -- most of it is behind us. There will be some incremental repricing yet to come. But we think, as I said, in the context of earning asset repricing, we're going to expect to see a somewhat stable net interest income. So implied in that is the kind of deposit beta that's derived from the migration that you described.

Okay. All right. I just have one more at the bottom. What's the delta between wholesale and federal home loan bank borrowings and CDs and some of the more expensive things? Like how much more expensive is it to do wholesale versus...

CDs are really -- so I think something like a CD is very, very competitively priced. And then some of the off-balance sheet money that we brought on, that stuff was earning kind of a money market rate. So there -- we were able to bring it on at a rate that was less expensive than wholesale funds, but it's not a gigantic delta because a lot of that stuff was, I mean, probably in the range of 25 to 50 basis points. It's not a big change, but it is positive and a positive net interest income impact.

Yes. Okay. Right. I'm going to pause just for a second to see if anybody has questions before we move on.

Manan Gosalia, Morgan Stanley. Paul, I think in one of your slides, you had a 50% deposit beta on the latent sensitivity slide. Can you clarify, was that baked into the guide? Or was that just model-driven? And is there a different number baked into the guide?

So thank you for asking that question. I think we talked about stock price reactions. I think that I probably wasn't as clear as I could have been on the call in describing what that is, right? So as you know, we've -- I think it's useful, but we've provided the -- in addition to the traditional rate shock measures of interest rate risk, we also provide this latent and emergent view of interest rate risk, which is intended to be what is your interest rate sensitivity for kind of current rate environment, right? It's not an outlook, it's just interest rate sensitivity, a modeled outcome. The beta that you're describing in there, the beta that we published was the modeled beta that was associated with those latent and emergent risk views. It was not an outlook and it was not intended to be guidance. It was only intended to say, well, here's our latent view of interest rate risk and implied in that is a sort of a modeled continued repricing of deposits based on the modeled outcome. But that's not our expectation necessarily and not necessarily the one that would be included in the outlook. The outlook would be all the puts and takes and all the balance sheet flows and the expected sort of earning asset and funding repricing over the course of the next 12 months. Yes. Thank you.

I think you had a couple of larger office loans go delinquent in Q3 or become nonperforming. Can you talk about those 2 in particular? And also just more general comments about what you're seeing in office right now? And how -- and if you need to, how you're working with borrowers to kind of change the terms?

Right. We had -- if I remember correctly, you said correct me if I'm wrong, about $370 million of office loans matured in the third quarter. There were 2 that we identified that were maybe a little more troubled. And so we put those on nonperformer. We had a small charge-off associated with one of those, if I remember correctly. The -- we feel -- we continue to feel really good about the portfolio. It's about $2 billion is the entire office portfolio. We continue -- the loan to values, we think, are -- continue to be solid. We continue to work with the customers to either refinance or pay them off or sort of whatever the right outcome is. And so it was indicative of what we think could be more stress coming, but it was also gave us confidence that the portfolio -- the performance of that portfolio is certainly manageable. Those 2 particular loans were in California, not Central Business District. They're in suburban markets in Southern California. Yes?

Paul. So you're shrinking the balance sheet as you run operating assets, that's correct?

The investment portfolio has been shrinking. In my expectations, it will continue to shrink. So as that happens, the earning assets, I expect, will continue to go down. The offset to that would be loan growth. And right now, our outlook for loans are stable.

So stable loans and shrinking security, so less earning assets, correct?

Yes.

Okay. And so what do you think, though, is the -- once you get past all this noise in deposits, what do you think is the organic growth rate for deposits in earnings assets over time?

The -- well, I think you'd have to use history as a guide, right? I think right now, our -- I think our borrowers are -- the reason that we're -- the outlook is flattish on loans is because our borrowers are just a lot more careful. And so to the extent the economy grows, to the extent we can take market share, those are all positive things for both loans and deposits. Our loan-to-deposit ratio is 75%. So it continues to be really strong. And historically, I think we've got a great track record of growing loans and deposits kind of consistently in order to maintain that loan-to-deposit ratio in a pretty competitive range.

Okay. I guess I'll follow up on some of that discussion on loans. You said that they're stable. Do rates have to go lower in order for us to see an increase in demand?

I'm not sure that rates need to go lower. And the reason I say that is that rates are higher because inflation is higher, right? And sort of how those things all mix together at some point, rates aren't that high, as you know, by historical standards. And so at some point, people are going to either get used to at just a different rate environment, and then you'll see borrowing activity pick up and other things or maybe rates come down and maybe that generates demand. But I don't think -- I am personally not waiting for rates to go down thinking that's going to generate demand. I really think that it's -- there's a very big adjustment going on in psychology of borrowers. And just thinking about this, where rates are, the yield curves come up so much in the last 6 months. The longer end of the curve indicates to me that people just are getting their head around the fact that rates might just be higher for longer. And in my mind, once people get used to that, I think you'll start to see more of a return to normal activity.

So maybe it's the first step is to see stabilization from the Fed, okay, we're done. Then people digest that. And then they say, okay, this is the new reality and then maybe I can move forward.

I think that's right, yes, in my view.

Okay. And then you did say that the borrowers are a little bit more careful. We have heard that from other folks as well. Do you see any difference in the geography? Are people in your California markets more cautious than in Nevada or Utah? Or is there any [indiscernible]?

I think it's pretty consistent in the Western U.S. I think it's pretty consistent.

And then on your expense guidance, you talked about slightly increasing rather than stable. Can you talk about what's driving that?

Sure. So you would have seen a severance charge in the second quarter as we have been managing headcount to manage expenses. What we're observing because of the inflationary environment, what we're observing, though, is it the technology expense pressures. And this isn't a scale comment at all. But when you've got maintenance contracts and other things where they're being repriced pretty aggressively by the vendors, as we look at that, it's just a little bit more of a headwind than what we were expecting on noninterest expense. But that being said, we're continuing to work really actively to manage headcount and manage expenses as we move into next year.

Okay. And then, I guess, related to that, related is capital. And then you are relative to $90 billion in assets. You're getting closer to the $100 billion threshold. Do you want to just kind of organically go over that? Or do you feel like maybe some nonorganic method to get you well over and that helps to absorb the costs that are associated with that? Like what's sort of the strategy in...

Yes, we -- and Harris feels -- our CEO feels really strong about this, and I agree with him that there are no -- except in very limited places, there are almost no economies of scale in banking, which is why you see G-SIBs have an efficiency ratio that's approximately equal to what regional bank efficiency ratios are. So we don't believe that there is a benefit from going from $90 billion to $180 billion. We just don't see that benefit. The costs of compliance, the capital rules are largely already sort of being carried by us. Because we are a CCAR bank, because we were a SIFI, we've got a pretty sophisticated data architecture, a pretty sophisticated stress testing and other tools. We don't think compliance with the capital ratio is going to be a large incremental. The revised -- sorry, the revised capital rules would be a large incremental cost for us. And then on the debt rule, it's scaled by asset size, right? So there's certainly no benefit, no scale benefit on the long-term debt rule because it's kind of 6% of your earning assets. What you get for us would be $3.5 billion. And if we doubled in size, it would be $7 billion. So there's no benefit of getting much bigger. My expectation is that, therefore, we will organically grow into a $100 billion bank. My expectation is that sometime, if the rule were adopted as proposed, sometime in that transition period, we would probably cross that threshold. But we're planning now in all of the investments and sort of as we're thinking about where our capital ratios are and everything else. We're planning as if we will be bound by those rules sort of not on the day they become active, but probably fairly soon thereafter.

Okay. So you've already started the process. If you had to sort of give a range of how far along you are in being prepared for the $100 billion mark, are you 20% there, 50% there?

I -- at the risk of being pretty aggressive, I'd say 90-plus.

Okay.

Yes. I mean, technology-wise. Now we need to build our capital ratio because of the application of the AOCI to us, obviously, does have an impact. There's also a cap on deferred tax asset, which everyone needs to pay attention to. But we've -- as you've heard us say, we constructed the investment portfolio to be relatively short including these duration or these portfolio layer hedges we put on, the duration of that portfolio is about 3.5%. And so as -- again, with $800 million of kind of consistent cash flow, the portfolio did not extend when rates went up because we didn't have much, if any, 30-year mortgages, MBS. It was really all 10- and 15-year pass-throughs. And they had already sort of fully extended. And so as interest rates went up, what you've seen is that those cash flows off the portfolio have not shrunk a lot. And so our expectation is that AOCI will hold the par over a relatively short amount of time. And that provides us the headroom to be in compliance with the capital rules as they would apply to us.

Okay. So no real -- if you're 90% round numbers, no real heavy lifting. You said the technology is mostly in place. So in a couple of years' time, you're not going to say, "Oh, we have to spend a lot of money to be in compliance with these rules." You feel like you've done most of the heavy lifting.

Yes. And in fact, we've already -- we've been able to internally to come up with an estimate of the impact. And what I'll say is that the risk-weighted assets, some are a little more, some are a little less. The risk-weighted assets all sort of net out for us or close to it. And so the operational risk charge would be kind of a small incremental for us, a relatively small incremental capital charge. But it's really -- that operational risk piece would be -- and as you know, it's the worst of kind of current rules or new rules. That operational risk piece would be the one that's kind of at the margin could grow risk-weighted assets under the new rule.

And then just another use of capital. You may not want to do M&A, but there has been quite a bit of disruption in your markets. Is there a way to deploy capital to bring on teams or multiple teams or...

Yes, we're always -- we are always looking at that. We have successfully brought over -- we don't make a big deal out of it. But we certainly are hiring from other banks that are more disruptive. We have brought teams over from other banks that are more disruptive. So that continues to be an opportunity for us.

Okay. I'm going to stop 1 more second and see if there are any questions.

Paul, can I just come back on the total deposit point? The total deposit cost point versus the earning asset reprice point. So you had said that you expect 5 to 10 basis points of earning asset yield expansion. And then your latent sensitivity point talked about 70 basis points, but that's just a model.

That's the model -- that's inherent in that. When we say we're asset-sensitive under sort of the traditional view and then we're -- I think latency -- if I remember latent like minus 2%. All we're saying there is that in the model, if interest rates follow the -- sorry, that's the latent is the -- all the rate changes that have occurred but have not yet priced through. That is the modeled outcome for deposits in that view but it is not our forecast for deposit costs.

There would be pieces in the emergent and the mix and the other stuff that might not be fully representative of just of the latent model? Could your overall point about NII is that the earning asset expansion should offset the lingering deposit price increases, right? I just want to make sure that...

And balance sheet changes, that's right. All of those things kind of working in concert roughly will create a net interest income that's roughly stable a year from now, yes. And I think there has been a lot of confusion around that disclosure on that latent sensitivity in beta, the model beta. And so I just -- I want to be really clear that, that's not a forecast that, that was modeled outcome.

Paul, can you explain like the vendor relationship and the expenses? Was that TCS with future core? I mean, can you get more specific?

I can't really get more specific related to that. It's -- but it's not one vendor. It's a collection of technology providers.

At a minimum, have you been able to lock in then this pricing for a given period of time? Or is this -- how does this process work?

Yes. These contracts come to and then you reset them at the prevailing rate. And with the inflation that we've seen, the resets are greater than what we were expecting but the contracts are multiyear contracts.

Paul. Just -- sorry to beat the dead horse on the latent model sensitivity. So if that's just the modeled outcome, I guess I would ask just what then is the interest-bearing beta and the noninterest-bearing deposit mix that's tied into the actual guidance versus the modeled kind of outcome?

Right. So we haven't gotten into that level of detail because we have an expectation, right, of migration and repricing. And what we're saying is the combination of all those things will be roughly consistent with what we're seeing on earning asset repricing, which is what's creating a stable outlook.

Got it. Okay. And then could I just ask one last one on the 2 California credits? I think we talked about it on the call. Those -- part of that was some lease rolls that occurred and the tenants didn't get replaced. Did you get a reappraisal done on those properties at that time because just the charge-offs are very small. So I was just kind of wondering what the LTV was on those properties before and after appraisal.

Yes, I don't recall the specific LTVs, but you're right, the charge-offs were relatively small. But that speaks to our level of confidence in being able to exit the credits with minimal losses.

So that's the game plan to exit those questions? I think you have said on the call that the leasing up was a little bit more delayed than...

And I believe one of the -- if I remember correctly, in one of the credits, that's correct. Yes.

Okay. And so you -- the expectations you foreclose and then sell them?

No, not necessarily foreclose. We have confidence that either would they'll be refinanced or it will be refinanced out or maybe we'll stay in. But the losses will be pretty minimal, which is why the charge-offs were limited. I want to say it was $2 million in charge-offs.

And then I guess just going back to credit kind of more generally, what are you sort of thinking about credit quality? We talked about office, but maybe separate from office, what are you sort of thinking about? And then -- sorry, you're continuing to build the loan loss reserves and then the level of loan loss that you anticipate?

So we did build the allowance for credit losses a little bit this last quarter. That was based upon our view of the macroeconomic forecast. So it's not a lot. It was a little bit. We have built it over the course of the last year, though, as our outlook sort of for the macro economy has deteriorated over the course of last year, the unknown effect of changes in interest rates and things like that. So we add a little bit to the allowance this quarter. And ultimately, based on the GAAP accounting rules, the allowance for credit losses has to be consistent with our expectation for losses in the portfolio, right, over time. And so that's what that is. But for now, over the near term, it appears that credit and again, those are modeled outcomes, right? But in that case, it's an estimate on the balance sheet. And so there's a lot of rigor around it, as you would imagine. But over the near term, we're really pleased with the performance of the credit portfolio.

Okay. And then do you recall what the -- so you modified the reserving by increasing the severity, the Moody's severe outlook. And that's how you sort of got around the accountant saying you can't do that.

Well, I don't get around the accountants.

This is recorded.

But you're right, the ways that we -- there's judgment applied even in a modeled outcome. And one of the ways you apply judgment is that you look at the weightings of the scenarios, right, which is exactly what you just described. That's one of the ways that the allowance for credit losses is determined. The other is we look really carefully. Models aren't perfect. And so we spend a lot of time in our loss or credit loss committee discussing the weaknesses that may be in the model, things that the models may not pick up. So for example, our models don't do a particularly good job, in my opinion, of picking up the macroeconomic effects of changes in interest rates. So some of that's going to be in the Moody's sort of outlook. But we need to be really mindful of where the model weaknesses are and ensure that we're adjusting the outcome appropriately.

You guys have a fair amount, obviously, through your SBA program. And then in your business, you have a lot of small and middle market customers. So when you think of them, how are they doing in this inflationary environment, maybe slowing economy? Like when you think of the health of those, it's a good barometer for the economy. What are they doing?

I would say that the borrowers feel good about their businesses. I think they're a little concerned about the macroeconomic impact of higher rates. So people are -- they're paying a lot of attention to that, really focused on it, but -- and it may affect their sort of demand for investment in a more uncertain environment, and so maybe they're not borrowing as much. But generally speaking, I'd say the mood of our borrowers is pretty positive.

So their local economies are doing okay, but they're just a little bit more cautious.

Yes, that's how I would characterize it, yes.

Okay. And then when you look at their cash levels, are they holding a little bit more cash because of this caution or...

Well, what we saw was that everyone was holding more cash. Kind of during the pandemic, all of the government programs, we saw that in form of deposits, right? And so what we're seeing now, though, is that those -- they are starting to use that cash in their business. So I don't think I could characterize them as necessarily holding more cash because we are seeing more utilization of cash in the business.

And then just I had another question on the deposit side. And then we're running out of time, so I'll go back to the audience. But any opportunity on the deposit side, maybe customers who had departed during the March Madness, they put their money with JPMorgan as just a partner. Any luck bringing some of those folks back? Is there more opportunity and over time, you can get back most of the business part of that?

When we talk about bringing our money from off-balance sheet, it's not just sort of the sweep customers, but we do have customers that moved their money somewhere else. And so we're having success bringing that back. So yes, that's absolutely part of the program for ensuring stability and hopefully, we saw a lot of growth in deposits over the last 2 quarters, right? So that will slow down at some point. But the growth is really coming from our customers, either money that had been on the balance sheet or was in sweeps or new money coming on the balance sheet. It's a combination of all those things.

Okay. We have just over 2 minutes left. I don't know if there are any final questions from the audience? Okay.

Great. Thank you for inviting us here, and thank you for your attentive questions.

Thanks, Paul.

And thanks for your support.