Mike Houston - Investor Relations Bob Kaminski - President and Chief Executive Officer Chuck Christmas - Executive Vice President and Chief Financial Officer Ray Reitsma - President, Mercantile Bank, Michigan Bob Worthington - Senior Vice President, Chief Operating Officer and General Counsel

Brendan Nosal - Sandler O’Neill & Partners Kevin Reevey - D.A. Davidson Damon DelMonte - KBW Daniel Cardenas - Raymond James Kevin Swanson - Hovde Group

Good day and welcome to the Mercantile Bank Corporation’s First Quarter 2018 Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Mike Houston, Lambert, Edwards and Associates. Please go ahead.

Thank you, Debbie. Good morning, everyone and thank you for joining Mercantile Bank Corporation’s conference call and webcast to discuss the company’s financial results for the first quarter of 2018. I am Mike Houston with ‎Lambert, Edwards, Mercantile’s Investor Relations firm. And joining me today are members of the management team including Bob Kaminski, President and Chief Executive Officer; Chuck Christmas, Executive Vice President and Chief Financial Officer; Ray Reitsma, President of Mercantile Bank, Michigan; and Bob Worthington, Senior Vice President, Chief Operating Officer and General Counsel. We will begin the call with management’s prepared remarks and then open the call up to questions. However, before we begin today’s call, it is my responsibility to inform you that this call may involve certain forward-looking statements, such as projections of revenue, earnings and capital structure as well as statements on the plans and objectives of the company’s business. Company’s actual results could differ materially from any forward-looking statements made today due to the important factors described in the company’s latest Securities and Exchange Commission filings. The company assumes no obligation to update any forward-looking statements made during the call. If anyone does not already have a copy of the press release issued by Mercantile today, you can access it at the company’s website at www.mercbank.com. At this time, I would like to turn the call to Mercantile’s President and Chief Executive Officer, Bob Kaminski. Bob?

Thank you, Mike and good morning everyone and thank you all for joining us. On the call today, I will provide an update on overall performance, loan development, growth initiatives and asset quality and our CFO, Chuck Christmas will provide details on our financial results followed by Q&A. As Mike said, we are also joined on the call today by Ray Reitsma, our President and Bob Worthington, our Chief Operating Officer and General Counsel. Reflecting the continued success of our strategic initiatives and a more favorable interest rate environment, Mercantile delivered strong performance in the first quarter of 2018. This was evident in net interest income and robust net interest margin, controlled overhead cost and sound asset quality. Results were also supported by the collection of interest on certain non-performing commercial loans and a lower corporate federal income tax rate. In particular, let me highlight several areas of strategic focus during the quarter and as we look forward to the full year. During the quarter, our net interest margin remained at a healthy level reflecting ongoing prudent loan pricing and underwriting. We believe these two areas of focus will lead to continued healthy margins throughout the balance of 2018 and beyond. We continued to build momentum in generating non-interest income with quarter-over-quarter gains in payroll service revenue of 13% and then credit and debit card interchange revenue of 12%. We look forward to additional growth in these products and service offerings during the remainder of 2018 and beyond. Mortgage banking production is ahead of last year was slightly below our expectations. While our purchase activity has increased the activity of being constrained by a very tight inventory of homes for sale in our primary market, pre-qualification levels are already at an all-time high nearly doubling the level of the first quarter of 2017. Commercial loans funded for new and current clients during the quarter totaled $111 million, which is consistent with 2017 performance and a direct result of ongoing sales and relationship building efforts. During the first quarter, the commercial portfolio contracted $10 million due to an unusually high level of payoffs primarily related to the preservation of credit quality totaling $21 million in sales of assets and a comparable amount by our customers. This net contraction in commercial portfolio was offset by growth in the residential mortgage and consumer portfolio of $3 million, overall during the first quarter total loans contracted by $7 million. We are pleased with the strength of our loan pipelines continuing the momentum in 2017 and that our commitments to fund construction projects currently stands at $133 million. We expect to see term loan growth resume and expand over the course of the year. Our asset quality performance metrics once again reflected strong portfolio during the first quarter. Total non-performing assets were $8.1 million at March 31 or 0.3% of total assets. Our lenders and management continued to diligently monitor our loan portfolio searching for potential signs of stress. The level of past due loans remains nominal and the loan relationships on internal watchlists, have remained relatively consistent in number and dollar volume. Total deposits increased $18 million during the first quarter driven by local deposit growth. Our broker deposits were unchanged relative to the prior quarter end. We are pleased with the growth in local deposits. It is as it was mainly driven by new commercial loan relationships and the success of various deposit account initiatives. Non-interest bearing checking account contracted to $36 million during the first quarter consistent with our seasonal pattern. Borrowed funds decreased $14 million relative to the prior quarter and wholesale funds continued to comprise 11% of the total funding base. Continued growth in our local deposits is the strategic priority. Turning to the Michigan economy, the positive trend lines continued, employment in our primary markets has improved compared to the prior year end and the real estate conditions in our markets continues to support growth. These favorable trends coupled with our focus on building and developing value added relationships gives us the confidence that strong financial results achieved during the first quarter of 2018 will continue in the current year end and beyond. That concludes my remarks and I will turn it over to Chuck.

Thanks Bob and good morning to everybody. This morning we announced net income of $10.9 million or $0.66 per diluted share for the first quarter of 2018 compared to net income of $7.6 million or $0.46 per diluted share during the first quarter of 2017. The successful collection of certain problem commercial loan relationships during the first quarter of 2018 increased reported net income by approximately $1.7 million or $0.10 per diluted share while the bank owned life insurance claim during the first quarter of 2017 increased reported net income by approximately $1.1 million or $0.06 per diluted share. Excluding the impacts of these transaction diluted earnings per share increased $0.16 or 40% during the first – during the current year first quarter compared to the prior year first quarter. Net income during the first quarter of 2018 also benefited from a reduction in our federal income tax rate which was lowered from 35% to 21% effective January 1 as a result of the enactment of tax cuts and jobs act. Our effective tax rate during the first quarter of 2018 was about 19% compared to almost 31% during the first quarter of 2017. We have remained pleased with our financial condition and earnings performance and believe we are very well positioned to take advantage of lending and market opportunities while delivering consistent results for our shareholders. Our net interest margin was 4.06% during the first quarter compared to an average of about 3.80% during the previous fourth quarter. In addition to ongoing benefits from the recent rate hikes from the FOMC, our yield on earning assets during the just completed first quarter was positively impacted by a successful collection effort on several problem commercial lending relationships. These efforts resulted in the recording of interest income that added approximately 29 basis points to our first quarter yield on earning assets. Conversely, they are higher than desired level of on balance sheet liquidity consisting of excess monies on deposit of the Federal Reserve Bank of Chicago negatively impacted the yield on earning assets by about 8 basis points. Excluding the impacts of these particular factors, our net interest margin for the first quarter of 2018 was about 3.85%. Our cost of funds as a percent of average earning assets increased from 47 basis points during the first quarter of 2017 to 64 basis points during the first quarter of 2018. The increase is the reflection of increased interest rates on certain money market deposit accounts, time deposits and borrowed funds in large part reflecting the increase in interest rate environment. We recorded $2.3 million in purchased loan accretion and payments received on CRE pooled loans during the first quarter of 2018 compared to the $0.5 million guidance that was provided on our conference call in January. The higher than expected level of recorded income primarily reflects the majority of the aforementioned collection efforts, whereby we collected approximately $1.8 million in principal and interest owed on certain purchased impaired CRE loans. As a reminder, our purchased impaired CRE pool went into recovery mode during late 2016. As a result starting on January 1, 2017, accretion income is no longer recorded on loans in this pool, but instead all payments made by borrowers are neatly recorded as interest income. We currently expect to receive a minimum of $2.3 million in principal payment on purchased impaired CRE pooled loans in future periods, which again will be recorded as interest income upon receipt. Based on our most recent valuation and cash flow forecast on purchased loans, we expect to record further quarterly interest income totaling about $0.5 million during the rest of 2018. We expect our net interest margin to be in the range of 3.80% to 3.85% throughout the remainder of 2017. This forecast assumes no further changes in the prime and LIBOR rates. Our interest rate measurement continued to reflect an improved net interest margin in an increasing interest rate environment. The overall quality of our loan portfolio remains very strong with continued low levels of nonperforming assets in loan charge-offs. Non-performing assets as a percent of total assets equals only 25 basis points as of the end of the first quarter. We recorded a net loan recovery of $0.5 million during the first quarter with charge-offs totaling $0.7 million. We recorded no provision expense during the first quarter in large part reflecting the aforementioned net loan recovery and relatively unchanged total loan balance. We expect to record quarterly provision expense of $0.5 million to $1.0 million during the remainder of 2018 in large part reflecting forecasted net loan growth. Our loan loss reserve totaled $20 million at the end of the first quarter or 87 basis points of total originated loans. This coverage ratio has remained steady for many quarters and no significant changes are expected for at least the remainder of 2018. We recorded non-interest income of $4.4 million during the first quarter of 2018 compared to $5.9 million during the first quarter of 2017 for a BOLI claim adjusted level of $4.5 million. We recorded increases in virtually every fee income category except mortgage banking. As Bob has already noted, the inventory of new home loan listed for sale throughout our markets, especially in the Western Michigan area is low and is negatively impacting our new mortgage loan volume. For the remainder of 2018, we currently forecast non-interest income to total between $4.7 million to $4.9 million during the second quarter, $5.1 million to $5.3 million during the third quarter and then the $4.7 million to $4.9 million during the fourth quarter. We recorded non-interest expense of $21.1 million during the first quarter of 2018 compared to $19.8 million during the first quarter of 2017. Expected increases in salary and benefit cost comprised the majority of the increase quarter-over-quarter. Currently, we forecast quarterly non-interest expense to total between $21.0 million and $21.5 million during the remainder of 2018 with our effective tax rate remaining about 19%. We remain a well-capitalized banking organization. As of quarter end, our bank’s total risk-based capital ratio was 12.9% and in dollars was approximately $86 million higher than the 10% minimum required to be categorized as well capitalized. Those are my prepared remarks. I will now turn the call back over to Bob.

Thank you, Chuck. At this point, we will now take your questions.

[Operator Instructions] The first question comes from Brendan Nosal with Sandler O’Neill & Partners.

Just want to start off on the excess liquidity kind of the margin, just the excess liquidity has been impacting the margin for about three quarters now, just want to get a sense of how much you think of that can come back into the margin over the next couple of quarters and how that ties into your guidance 3.80 to 3.85 margin for the rest of the year?

Yes. This is Chuck. Good question. We think we are going to work through the excess liquidity during this quarter and that assumes a resumption of our more typical net loan growth expectations. Most of that monies that we have got put in at the Fed will be going to loan fundings. We also have some wholesale funding maturities this quarter that we are already releasing. So I think that again assuming that loan growth patterns resume will be through our excess liquidity towards the middle of this quarter. As far as how that impacts the margin my forecasted margin assumes that we are at one of the excess liquidity levels during the second quarter.

Alright, great, that’s very helpful. And then one more just looking at loan growth and commercial originations, there were $111 million this quarter, I believe $130 million in the year ago quarter, so pretty similar, just high up your thoughts on how originations remaining strong, but you are seeing more competitive pressures, you are seeing more pay-downs and how that ties into your optimistic commentary for increasing loan growth throughout the remainder of the year?

Well, this is Bob. As we have talked about in the prior calls, the pay-outs are certainly unpredictable and as far as I mentioned in my comments we had a combination of our loans being paid off from watchlist or non-performing status and that the rest of the amount of $40 million some was assets dealt by customers. Those are kind of hard to predict and we would usually don’t get too much advance notice of those, but they do happen from time to time. But fortunately we had a bunch that currently traded in this quarter, but we are very excited about the continued strong pipeline. As I mentioned in my comments, we got about $130 million of constructions funding that we will fund over the next 12 months to 18 months. And then the pipeline of loans committed accepted by our customers remains very strong. So as you said our fundings have been very consistent with what we have seen in the past quarters. If you go back to the last couple of years, we expect that to continue going forward. The wildcard has certainly been the payout, but certainly on those watchlist payout, we are not [indiscernible] goes, we see those go, but asset sales by customers are going to happen from time to time especially in this environment, customers getting nice prices for buildings or for their companies and so those will happen, but again they seem to be heavily concentrated in the first quarter of this year. But we look – very fortunate strong pipeline and continued consistent funding for the rest of the year.

Alright, that’s helpful. And I can you sneak one more in there, expenses this quarter were a little bit higher than guidance had probably suggested, but with that said the run rate for the remainder of the year is the same that you guys offered previously, was the first quarter just kind of a pull-through of some of those expenses you expected to see later in the year just kind of hit the numbers a little bit earlier?

I think we had probably about $200,000 to $300,000 in one-time expenses related to some properties, we are no longer going to be using in our operations and we just needed to right size those balances as we negotiate the sales. And so we feel really good about where those balances are now and we look forward to the sales of those properties here this quarter and next. And so we don’t expect any further costs associated with those. But now, as we talked about on the first quarter call some of those investments that we are making especially in our people as well as our communities, some of those that have taken effective April 1, especially the salary portion to our hourly folks, so there will be a little bit of an offset going on. So it’s a multiple through there was kind of some one-time items going through the first quarter that we won’t see in the future quarters.

Got it. Thanks for taking my question guys.

Thank you.

Next is Kevin Reevey with D.A. Davidson.

Good morning, gentlemen.

Good morning, Kevin.

How are you? So, either Bob or Chuck, it looks like the unemployment rate continues to be a historical low levels in many of your core markets, can you kind of talk about if Fed is having any negative impact on a lot of your commercial borrowers to in terms of finding talent and continuing to grow their businesses?

Yes, Kevin. As you talked about previously, it’s affecting everybody, all businesses in our footprint, very tight job market, it’s facing a full employment economy type of situation. So, that’s why we have been proactive with some of the savings that we have generated from the tax rate decrease to be proactive and to give some increases to some of our early staff and some other areas, because it is such a tight job market and it’s our goal to keep our great employees and our staff intact. But that said certainly as we have talked to our clients, talk to other competitors in our communities, everybody is having the same problem with trying – once you have the need to hire a person to try to get that person on board and to have a competitive a situation to keep them on board. So, it’s kind of good news, bad news situation. The economy of Michigan seems to be doing very well. And at that standpoint, it’s creating little bit of a challenge with the employment situation, but we are working through it. We have got a great staff and we are very selective about our recruiting process in trying to bring new staff into the bank and I think we have got a very exciting story to tell. So, we are doing a good job there, but it is a very competitive job situation.

Yes, Kevin, this is Chuck, I will add a couple of comments and some of this is just kind of storytelling, but I have heard quite a few stories as I have talked around to folks working at different businesses is that obviously one of the ways to offset the issues we are having with staffing is to increase productivity through new equipment and I have heard quite a few stories of businesses starting to order or starting to look at order new equipment something that they really haven’t done, that is really the great recession and try to increase productivities that we don’t have to hire that one or extra two people that they are out there looking for. Obviously, that’s how it’s going to impact the businesses, but one of the things that it could be an impact for us is increased loan demand as hopefully some of those customers come to us and ask us for some additional lending help in purchasing that equipment. So, that’s something that’s going to play out over the next few quarters or next few years, but we are starting to hear more and more discussion about going out and buying some new equipment and becoming more productive, more efficient.

And then on the mortgage banking side given the shortage of housing inventory, particularly in the Western Michigan market, is it safe to assume that the bulk of your mortgage banking is going to – growth is going to come from outside of Western Michigan that given the lack of inventory?

I will let Ray answer that question. Go ahead, Ray.

Yes. Kevin, I would say that the key there is to not look at different markets, but to reposition as firm as we can away from the refinance market and into purchased market that exists, we have been able to do that. Our pre-qualifications are very high, so between those two facts, we feel confident that we will be able to garner our share of that market in West Michigan that we have successfully repositioned away from the refi market through the purchased market. And as more units come online, it’s so important we will be there to reap our share.

Yes. The mortgage pipeline is obviously a very seasonal type of thing, but doesn’t very nicely right now as we head into the mid part of April and further into the spring. We are very happy to see that the growth that’s taking place there. And as Ray said, good qualification is being so high people are looking to buy, there is no question about it, even though rates are a little bit higher. I don’t think that’s going to desolate people for once they find how it’s a very competitive situation, but they want to buy and we have got a great roast of customers that are lined up once they find a home to deal within their loans from Mercantile Bank.

And then one last question, you had some nice linked quarter growth in other fee income, how much of that growth was from basic cross-selling to your existing customer base versus I know we last talked, there was going to be some – you were looking at re-pricing certain of your products?

Yes, Kevin, this is Chuck. A vast majority of what you saw in the first quarter is from new growth from existing and new customers. We are starting to put some price increases on certain products into effect, but that literally is happening as we speak and in part of the second quarter. So what you saw in the first quarter is new growth for us.

Great. Thank you.

Thanks Kevin.

[Operator Instructions] Next is Damon DelMonte with KBW.

Hey, good morning guys, how are you doing today?

Good morning Damon.

Good morning. Just my first question regarding loan growth, I think you guys were relatively optimistic for mid to upper single-digits for the full year 2018, based on what you guys are seeing now and based on what happened in the first quarter, are you still comfortable that you can get up to that level or has that ratcheted down a little bit?

I think – this is Bob, I think we are still very comfortable with those guidance numbers that we have provided. Again, can’t control the payout necessarily as the watchlist loans we will have to see go up, but I think in terms of the consistent funding assuming we have a more normal pattern of sporadic loan payoffs, I think we feel quite comfortable with the overall objectives that we have established for the year.

Okay. And then Chuck could you just repeat that the fee income expectations I think…?

So really what we have for the second quarter is $4.7 million to $4.9 million and that’s actually for the first quarter as well, both for second and the first quarter. And in the third quarter which obviously from the mortgage banking tends to be best quarter $5.1 million to $5.3 million.

Okay, alright, that’s helpful. Thank you. And then I guess could you just give us a little update on how the expansion efforts in Southeast Michigan are going right now?

Yes, this is Bob. The office is continuing to do very well, getting some great opportunities down there in the Detroit area and suburbs, this ground and the line of expectations that we established for them and so they are contributing to the overall profitability of the bank in a very nice fashion.

Okay, great. I think all my other questions have been asked and answered. Thank you.

Thanks Damon.

Next is Daniel Cardenas from Raymond James.

Good morning guys.

Hi Dan.

Just a couple of quick questions, as I am looking at your wholesale funding percentage, you are approximately 11% of total funds, can you remind us is there an internal cap as to how high you guys would like that number to go and do you think you will hit that cap in 2018?

Our internal policy cap or maximum amount is 15%. And we don’t think we will be hitting that in 2018. I think we will actually see a little bit of a reduction here in the second quarter and then stay relatively flat. So I think we will probably stay right around that 11% on a rounded basis throughout 2018.

Okay, great. And then maybe a little bit of color on deposit betas, what you are seeing with most recent rate movements on the deposit base right now and maybe some color on competitive pressures on the funding side?

Sure. There is always competitive pressures on both sides of the balance sheet and that’s never going to wane. I will bring you through a few of the products. I think that the most intense competition and it has been pretty competitive for the last 12 months to 18 months, but especially so in the last couple of quarters is on the public unit, especially on the CD side also on some checking accounts for municipals. The good thing is we have excess liquidity, so we are not – we are letting some of the higher price and more competitive relationships that we have in the public unit side on the CDs go, so that’s helping as well. But very, very intense competition especially for the larger dollars, I would say CDs and million dollars and more, very, very intense out there right now. We are seeing more competition on CDs is general CDs, individuals and businesses. Everybody has been raising those rates for last 12 months to 18 months as the Fed has been raising, not to the degree that the Fed has raised rates, but we have seen the rates increasing pretty steadily. And I would say in the last couple of quarters that competition is getting a little bit more intense. On the non-time stuff, this past couple of weeks after the Fed raised rates it’s the first time we had to touch our money market rates. And so we did touch those a little bit. That is the first time that we have touched those since the fed has started raising interest rate, haven’t had to touch savings and interest-bearing checking account rates yet. Obviously, we are always looking on every week we look at where we are at in regards to our competitive environments. Our goal is that we stay in the top one-third of all the banks that we compete with. Certainly, there is those banks that are always very, very competitive, certainly credit unions, especially on the retail side. So, we don’t ever strive to be number one, that doesn’t make sense. But we always want to be in the top-third in making sure that we are always competitive and that our – as we drive our relationships not only in the loan side, but on the deposit side as well that our depositors can be comfortable that we are offering fair rates of return and also produce an appropriate margin for our styles. So, it looks like the Fed is going to raise another couple of times at least this year. So, we will continue to keep an eye on those deposit rates like we do every week and just see where things go from here, but that’s where we have been at so far.

Okay, great. And then maybe a little bit of color as to the sequential quarter drop in your non-interest bearing deposits, what was that attributable to?

Yes, we always see that in the first quarter down. We have a lot of commercial borrowers that are paying taxes in the first month as well as bonuses. So, that’s very, very seasonal for us to see that reduction in the first quarter and then we started seeing that built up for the remaining 9 months when we kind of go through that cycle over and over, but we also in there we also continue to get really good growth in there, especially from our new C&I customers as we make those loans and bring over those relationships. We continue to see some nice new non-interest bearing checking account relationships being funded. It just gets hidden a little bit in the first quarter with those tax and bonus payment.

Okay, great. And then just a couple of quick questions on the loan portfolio, the continued reduction on the home equity and consumer loan, can we kind of expect to see additional shrinkage on a go forward basis or do you think that’s going to begin to plateau, maybe even build up on as we look forward?

Yes, I think the biggest part of that number and the one that’s probably the biggest question is the home equity portion of that. Consumer loans, is not a very big portfolio at all and that continues to reduce probably by $250,000 a quarter or so. The big unknown is the home equity which is about $50 million, $48 million outstanding. We did see a $3 million reduction from the end of the year through the end of this quarter. That’s obviously pretty hard to forecast what’s going to go on there. We are not out there like most of our consumer products. We are not out there blasting specials and stuff like that it’s more of an accommodative type product for our existing borrowers and our existing depositors. So, I think the short answer to your question is they give you a long answer is it really kind of depends on what those existing lines of credit do as we go forward?

Okay, fair enough. And then maybe some color on line utilizations, how are those looking stay compared to this time last year?

Yes, they are about the same. They are right around 50:50 right now. We saw that actually drop in the third quarter and at the beginning of the fourth quarter. I think we are down to about 47% maybe 46% usage, but we are kind of back up into right around 50:50 right now.

Okay, great. I will step back. Thanks, guys.

Thanks, Dan.

Next is Kevin Swanson with Hovde Group.

Good morning. Can you just update us on the thoughts in the buyback, I think you mentioned in the past $35 level is a bit too high, but just make sure your thinking has changed given tax reform?

Yes, it’s a great question. We haven’t reengaged in buying back any stock. It’s been almost 2 years now. We did buyback all that stock 2, 3 years ago at a nice price of 20, little over $20 on average. We think from a multiple standpoint what we are trading $34, $36 is still a little bit too high. I was seeing some staff actually last night as the matter of fact that the average buybacks right now are right around $1.20, $1.25 a book and we are trading closer to $1.75, $1.85 depending on the day. So it’s a little bit rich right now. And so we want to see that drop-off closer to what the peers have been buying it back, say $1.25 not to put a line in the sand, but closer to that metric before we probably would reengage, but we do have existing monies left if you want to go ahead and do that.

Okay, thanks. And then you mentioned the investment in people through orderly wage increase turning to significant investments in any of the fee businesses or even on the expense side going forward did you kind of think about the impacts of tax reform now?

So I think right now we are pretty comfortable with the announcements and the decisions that we made earlier in the first quarter. Obviously, we are always whether the tax rate has changed or anything else is going on, but we are always looking to make sure that our employees are well taking care of for many respects including compensation. We obviously took a pretty big swing at that with all of our hourly employees getting a pay raise to some degree. Here effective April 1 we have got some – we increased our 401(k) match. That was for everybody going forward. We are always looking at investments in our communities, right as a way we increased our budget for charitable giving. In 2018 we are also in the final throws of putting together some retail type loan packages and programs that can help maybe even some first time homeowners also maybe some home improvement type loans for low to moderate income folks. So those are the types of things that we are always looking at what are the needs of our communities, listening to those folks what are their needs, working with the different organizations that work within those communities to try and look at the products and services that we offer and how we can best meet those needs of the communities. But we are doing that on an ongoing basis. But at least from what we announced three months ago, we don’t have anything significantly planned at least in the next couple of quarters.

Okay, great. Thanks for taking my questions.

Thank you, Kevin.

This concludes our question-and-answer session. I would like to turn the conference back over to Bob Kaminski for any closing remarks.

Yes. Thanks Debbie and thank you for your interest in our company. We look forward to talking to you again at the second quarter. This call is now ended. Thank you.

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.