Andres Viroslav - Director, IR Damian Kozlowski - CEO Paul Frenkiel - CFO

Frank Schiraldi - Sandler O'Neill William Wallace - Raymond James Matthew Breese - Piper Jaffray

Good day, ladies and gentlemen, and welcome to The Bancorp Second Quarter 2017 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference Mr. Andres Viroslav. Sir, you may begin.

Thank you, Kelly. Good morning and thank you for joining us today for The Bancorp's second quarter 2017 financial results conference call. On the call with me today are Damian Kozlowski, Chief Executive Officer; and Paul Frenkiel, our Chief Financial Officer. This morning's call is being webcast on our website at www.thebancorp.com. There will be a replay of the call beginning at approximately 12.00 PM Eastern Time today. The dial-in for the replay is 855-859-2056 with a confirmation code of 51244121. Before I turn the call over to Damian, I would like to remind everyone that when used in this conference call, the words believes, anticipates, expects and similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties which could cause actual results to differ materially from those anticipated or suggested by such statements. For further discussion of these risks and uncertainties, please see The Bancorp's filings with the SEC. Listeners are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. The Bancorp undertakes no obligation to publicly release the results of any revisions to forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Now, I would like to turn the call over to The Bancorp's Chief Executive Officer, Damian Kozlowski. Damian?

Thank you, Andres. Good morning and thank you for joining us today. My name is Damian Kozlowski, I'm CEO of Bancorp and the President of The Bancorp Bank. I've been in these positions since June 1, 2016. I welcome you to our second quarter earnings call. The first quarter of 2017 was a turning point for our company. Our second quarter demonstrates that we've turned the corner on our financial performance. We believe our performance will continue to improve and is sustainable. In this quarter The Bancorp earned $18.9 million in net income or $0.34 a share of $45.4 million of total net revenue. Earnings were net of restructuring charge of $0.06 per share which reduced operating net income and in this quarter we recognized $0.22 per share of tax benefit comprises of both the deferred tax asset and the Delaware State tax refund. Our run rate earnings continue to improve, reflecting continued revenue momentum and the impact of continued expense cuts and restructuring. Here are some of the highlights in the second quarter that drove our performance. As we have discussed previously our integrated business plan has been completed and we are now in full execution stage. Our version of this plan on our website and we will update this presentation during the third quarter of 2017. In the second quarter we exceeded our own internal budget and are tracking well with all our key initiatives. We see opportunity on the upside for our financial targets with the disposal of certain assets such as the Orlando mall and the potential for increased loan in gross dollar volume growth over our initial estimates. Tax rate increases in December, March and June are having a positive impact on our operating revenue run rate. We forecast approximately $2 million short-term yearly run rate increase per 25 basis point rise from the Fed. Our expenses continue to show improvement. Our cost reduction effort has identified approximately $20 million in operating cost savings from - for 2017 over 2016. European operations will no longer impact our financials as all costs have been terminated. The restructuring charge we took in the second quarter of $3.4 million will be non-recurring. This was partially offset by a 2.5 million gain on the sale of substantially all of our remaining HSA business. All other cost savings are on target with about 75% completion of our Phase 2 cost restructuring implemented. Expenses should continue to show improvement throughout 2017. Phase 3 cost reengineering will begin in the third quarter of this year. This will focus on creating a more rational, efficient and productive operating platform just for innovative growth. Cost savings are hard to determine but additional savings are approximately 10% to 20% of operating cost is possible after full implementation in 2018. Core revenue continue to grow both quarter-over-quarter and year-over-year. Year-over-year business growth was led by leasing balances which grew 18%. Quarter-over-quarter business growth was led by SBLOC balances which grew 9%. Notwithstanding the losses and volume due to program shutdowns and in acquisition, gross dollar volume at prepaid transactions increased 4% over Q2 2016. We are continuing to make real progress concerning our regulatory situation. We have implemented our first draft of our integrated compliance plan and we will significantly enhance our compliance management process in BSA/AML, third-party risk and consumer compliance. In connection with this program, the bank has made substantial progress in addressing many aspects of our regulatory issues and validating our actions to meet regulatory expectations during our next full scope exam. We also announced this week our new operating team that is comprised of season executives from JPMorgan, Citibank, Bank of America, AIG and the Federal Reserve. These experts significantly improve our knowledge base and experience in operations, technology, BSA/AML third-party risk and consumer compliance. In summary I believe the second quarter we turn the corner on our financial performance, prospectively validated by recognition of the deferred tax assets. We saw a considerable work to fully implement our integrated compliance plan but we are on track to deliver progressively better results for all the constituencies that comprise The Bancorp community. I'm now turning the call over to Paul Frenkiel our CFO who will review the financial results in more detail.

Thank you, Damian. Consistent with our business plan and budget, Bancorp increased its profitability in the second quarter of 2017. Net income was $18.9 million for the quarter which included an approximate $12 million net reversal of deferred tax valuation allowances. Future additional reversals will be largely dependent upon recoveries in the Walnut Street instrument. Net income also reflected revenue growth and progress in expense reduction. On a linked quarter basis, loan interest income increase in excess of 10%, while additional cost reductions were realized and while other cost reductions continue to be pursued. A 30% increase in Q2 2017 versus Q2 2016 net interest income reflected growth in leasing, SBA, and SBLOC loans, as well as commercial loans, held for sale and securitization on which interest is earned through the sale date. The increase in net interest income also reflects the impact of the 25 basis point rate increases in December 2016 and March 2017. Since the second quarter 2017 rate increase occurred in mid-June, the full quarter positive impact will not be realized until the third quarter. Linked quarter net interest income grew by net 9% reflecting these factors. Our largest percentage increase in loan balances was in leases which grew organically 18% over the year. The leasing portfolio continues to yield in excess of 6%. Loan balances excluding loans held for sale grew 16% year-over-year. These lines of business - the lines of business comprising those totals have historically had low charge-offs. Our cost of funds grew minimally reflecting only a partial adjustment of rates on our prepaid deposits to changes in market interest rates. Prepaid card deposits are our largest funding source and rates thereon should continue to adjust to only a portion of future increases in market interest rates. The interest margin should benefit accordingly as rates on variable rate SBLOC and SBA loans and variable-rate investments adjust more fully to higher market rates. Prepaid cards in addition to being our largest funding source are also the primary driver of non-interest income. Compared to the prior year second quarter, prepaid fees were relatively flat reflecting the impact of the client that exited as a result of its sale. Notwithstanding that factor and the decision of several other clients to terminate their prepaid card programs altogether, the total amount spent on prepaid cards or gross dollar volume increased 4%. Growth in other programs significantly offset the impact of those changes resulting in that volume increase. Reductions in non-interest expenses also contributed to second quarter results. Non-interest expense of $37.4 million for the second quarter was lower than 2016 quarters and reflected significant progress in implementing expense reductions in several areas. As Damian noted, additional reductions have been identified and should be realized throughout 2017. Net interest margin for the quarter was 3.10% compared to 2.73% in Q2 2016 and 2.7% for the linked quarter. The improvement in net interest margin over Q2 2016 reflected the impact of the rate increases in December 2016 and March 2017 which resulted in higher asset yields versus the lesser increase and deposit costs as discussed earlier. The $1.3 million net income from discontinued operations reflects the results of the discontinued Philadelphia commercial division. In addition to the interest which continues to be earned on those loans, the second quarter benefited from modest amounts of loan recoveries. Primarily as a result of the $18.9 million of second quarter earnings and lower average assets, the leverage ratio at the bank and holding company were respectively 7.6% and 7.75% at quarter end. Risk based ratios already at elevated levels as a result of weightings based upon the lower risk profile of certain loans and investments also benefited from the increased capital. All risk-based capital ratios exceeded 15% at quarter end. That concludes my comments and I will return the call back to Damian for questions.

Okay, let's open the line for anyone who would like to ask us question.

[Operator Instructions] Our first question comes from the line of Frank Schiraldi with Sandler O'Neill. Your line is open.

Just a few questions if I could. I wondered - first on the valuation allowance reversal, Paul you noted that - further reversals are dependent upon Walnut Street. So I guess you would expect that - I guess you're not expecting more necessarily to come back this year and I'm just wondering if that or how that impacts your expectation to get to a Tier 1 capital ratio at the bank of 8.5%.

We see a clear path to 8% just based on earnings and on balance sheet management and our plan shows us getting there this year to 8%, and if we don't get to 8.5%, it may take us a quarter more or so to do that but just on the basis of earnings and our relatively low loan to deposit ratio, investments that we could sell and replace with loans we think we can easily get there.

And one thing, the 8.5% is our own target that we set for ourselves based on a risk-based analysis that we used to set our capital minimum. That was set in June of last year. Obviously we are in the process - we don't know if that will - our own target will change as our minimum, as prescribed minimum, but we set that target last year in a very different situation and I think you can say a year now that we’re going to review that target whether that's a reasonable target. We still think it's probably reasonable, but that was a target we set - we think 8% is a number that a broad audience of constituencies think is a good near term target.

And then just in terms of the continued improvement on the expense side, is there a new target you have for where you want to be or where you think you can get to by the end of 2017 and then that 10% to 20% sounded like just kind of soft expectation, it could be possible is that coming off of current levels?

Yes. But 75% that also has been realized inside the income statement but we've identified and acted on 75% of the $20 million and we have visibility to probably 20% over that number to. So we do have an ability to go above the 20, the soft numbers right now and this is just on the Phase 2 operating cost restructuring. The reengineering now that we put this whole team in place that we announced that starts in the third quarter and what we basically doing is taking white sheet of paper, getting rid of redundancies and upgrading our technology and information systems and everything - that's very undetermined right now. It's just pure experience when you do that it can have a dramatic impact on your productivity and efficiency but 10% or 20% is probably a good target to keep in mind thinking about 2018 much is fully implemented. However, depending on our revenue growth which has been continuing even in bad situation as we come out of these some of the headwinds that we have and they turning into tailwinds, we might have increased growth going into - the end of 2017 and 2018 that does affect our cost structure.

But I guess for 2017 it sounds like you still got 5 million left totals so maybe like 1 million run rate a quarter would be really more expectation?

Yes, you have to look to year-over-year right. So you have to look at what we were doing last year and then I think you're right. I think you just look at the trends. We do think - you know its bumpy, you take costs in each quarter you know its bumpy but the trend should be - continue to be - it should be down press run on the cost structure over the next couple of quarters.

And then just finally on the order and you mentioned Damian in the first draft of the compliance plan, just wondering if, I don't know what the timeline is here if you can share at all what you expect the timeline, potential timeline is to getting just in front of regulators and then ultimately obviously getting the order lifted?

I’ll get in front of everybody right second, if you go on our website to our new section there is a video that we created that will take you through what the integrated compliance plan is, I think it will be very informative. The regulators have been lockstep with us in the development of this plan, they are coming in for their safety and soundness exam in September. We're well prepared for it and we've remediated, I would say a ton of the base issues that we believe are holding us back in their view. But we’ve got much further than that, we're just not resolving issues with this plan, what we’re getting to is root causes. So what are the root causes that at the end of the day resulted in these consent orders and that’s what we’re really doing with the integrated compliance plan. Once again go to our website, see the video. I think it will make it very clear exactly the approach we’re taking in order to reengineer the compliance and regulatory environment at the bank.

[Operator Instructions] Our next question comes from the line of William Wallace with Raymond James. Your line is open.

Maybe just real quick follow-up on the DTA valuation allowance, how much is left that could be recovered depending on the Walnut Street?

I hesitate that there is a specific number but I hesitate to give it because it’s hypothetical. So I don't want to create an expectation now that we've got more clarity into its recognition. I can talk to you offline, it's actually a very complex tax situation with several issues involved that we're still working on that are relatively complex, so I can talk to you about it offline if you like.

You’ll disclose in the Q what the actual amount of the allowances I assume because it's an equity account, I am sorry.

Yes, I'll have the disclosure and yes we’ll have a disclosure in there and it will be documented in the Q.

But as far as our models go, we shouldn’t be thinking about recovery moving forward in any one quarter having it been lumpy or just they’ll be very dependent on recovery?

Yes, this is the definitive statement. We do not have visibility and we're trying to be as transparent about everything here. We don't have a visibility on that, I'm taking the rest of it and there's too many other actions that have to take place in order to realize that number. They may happen but we don’t have visibility to those things right now.

So assuming - without assuming any credits or anything related to allowance reversals, what kind of tax rate should we be looking at moving forward, what’s your tax rate?

It’s going to be a normal tax right so federal and state around 36.

Any updates on the mall property in Florida?

Yes on the marketing stage, the marketing proposals have been sent out and - we're going through its started about two weeks ago. So there's a lot of interest in the mall. We don't have any visibility right now what we might ultimately realize from the mall. One thing is for sure though we’re actually running the mall at a profit now, so we did taken in some income into the second quarter what was the total?

Around $250,000.

So that we actually have a bank account with more in there, but we took $0.25 million in the second quarter and we probably will take that or more in the third quarter. So we're running the mall profitably it’s not a drain on Bancorp and I think there is a market for the asset. We currently have it on the books for '18, the initial marketing assessment was 25, but we would like to have more but we have no idea what the final disposition number will be.

And then just as it relates to - go ahead, I’m sorry was somebody trying to say something.

No we didn’t hear anything.

As it relates to the accounting around the discontinued assets that are held for sale it seems like those were more kind of in run off or liquidating mode is there - I mean might we see those come back on to balance sheet as I mean continuing operations there are chance that we’ll see an accounting change for all these assets and for that part of the…?

It's a possibility. The rules for discontinue for taking when discontinued goes back to continued are somewhat subjective. We continue to dispose of the assets and as of right now it appears they still should be in discontinued but yes it is possible after a certain point in time that they come back to continued.

We are aggressively working it down. We didn’t have a big move in discontinued quarter-over-quarter, but we expect third quarter the pace to be picked up substantially. We do know we can tell you that there are four properties that we're disposing - over the next few weeks alone. And so we will be probably down at least $25 million to $30 million in discontinued in the third quarter, but it will probably be more. So if you know the loans are getting worked down aggressively we’re taking the opportunities to make sure that when we have an opportunity to dispose of the assets that we do it quickly. And we continue to work that down aggressively.

And did you say you got four properties under contract?

We have already closed - we have dispositions we know of that will come in the third quarter most of them over the next few weeks. There are - two sales, there was one - two repayments. So we're working it down there is what a lot of movement in the first quarter, but they’ll be a - second quarter excuse me, but there will be movement in the third quarter on the discontinued number of discontinued the total number.

And then with the visibility you have on that that have sold in our - under contract, you're feeling pretty comfortable with the marks I assume.

We didn't lose any. Actually there's some gains in there. So we have visibility to gains. We never – companies are really marked down so if you actually get back the loan amount, you're going to gain. So right now we are really comfortable. I think we're managing very tightly discontinued, then there is the Walnut Street we put the defense line then. If we do get an opportunity to get a big pay-off, we'd have to wave back in either Walnut Street or discontinued. We'd have to wave value of that, the near term value of actually disposing the asset and maybe a discount and getting the rid of the ambiguity versus the cash flow value over the term to the shareholders. But right now I think the only word we can say is stability.

And then looking in the second half just kind of overall balance sheet. You made a lot of moves in the second quarter with the sale of HAS, the sale of the European business. Is there anything coming in the second half that would shrink the size of the balance sheet or do you think $4.3ish billion is the right size?

We actually averaged $4.2 billion during the quarter and we're obviously managing it for capital ratios and so forth. I think $4.2 billion, $4.3 billion is probably realistic.

We've got some businesses like our ACH business, we has payroll component and stuff to it, that sometime distorts but we are now running that business internally we think profitably. So - because of increased volumes, so – there is some, we are bank so in some cases we have to have a larger balance sheet to do business so that’s one of the area. But we think we can manage around $4.2 billion and probably maybe a little bit higher at the end of the year but then in the - probably $4.4 billion $4.5ish billion when you run into the first quarter always, and then get back down to the $4.2 billion level. We think we are pretty comfortable with that number for the next 1.5 years, 2 years. We want to stay in this $4 billion to $4.5 billion range and that grow the balance sheet too much.

And then, I just want to make sure I understand the Philadelphia, the commercial mortgage business that you – I thought you would change the nature of the loans that you're originating. Within the prepared remarks somebody - Paul said you had shut it down.

Yes, that goes back to discontinued ops - that’s the discontinued operation.

So of course the mortgage business - you're still originating, now you're doing the variable rate C&I loans that you’re originating for sale.

No, not C&I, the only - the shut down - the commercial mortgage fixed rate business at the end of last year and we did that because the market had changed so much, so it really wasn't room for major players anymore and you had to take a risk there. So we are ready created a floating rate business which has a lot more transitional loans. It's a national platform. We had done asset sales to large institutions in the past and in November, December of last year, we created our first branded Bancorp CLO type of structure which was well received in the marketplace. We saw those earnings in the first quarter of 2017 and we've been very successful at continuing that platform and we will see securitizations in the future and those will obviously impact the revenue line. Last time we took about $5 million gain on the security but we don't know what's that going to be in the future, it changes - spread in it, and all those things changes but that’s how - we don't expect to have long-tail exposure to commercial real estate in that area. We expect to originate the loans and securitize them.

So the gain of that business will continue to be lumpy but then in the quarter there's 730,000 booked on that line item, what's that coming from, is that like SBA loan sales or something?

No we had – we actually disposed of some of the fixed rate on the books.

So we had a lump of loans when we closed down the business. So it was about 140 million went into a CMBS structure of a partner of ours. And so we have a little bit left and we are just disposing of those loans. So that will be up for the fixed rate exposure to real estate but it’s small.

And then my last question, I have asked too many but - you made the announcement of the big - kind of risk management team. Lot of pedigree on that team, yet you're still expecting cost to come to down. Is that - are those costs - is that coming from the cost saves out of shut down of Europe and HSA, is that how you're funding that team, I imagine that's a real - that's going to be a meaningful number that many employees with that kind of background.

Well the great thing is they replaced the people that were here, so I’ll be honest with you, the cost structure hasn’t changed. So you can pay - the pay is the market. Sometimes it maybe you have to pay a little bit more for a special person but you know…

They are replacing any good team…

Pretty much, and to be honest, and through the integrated compliance plan, I don't think we're going to be - what's come to light is that their gaps in our organization no doubt about it. This thing that we're creating so that we can be more responsive bank to our regulators but there is a lot here. Sometimes you're inefficient as an institution and you can reorganize yourself to better support your business but general what happened was that a resourcing better people, is they understand how to do it in better ways and that reduces - increases your productivity while also increasing your efficiency.

Well then shouldn't we see a pretty - a relatively meaningful reduction in operating expense in the third quarter then without the European and now the PHSA support staff move up?

We don't know exactly, we can’t predict that number. We think there is going to be downward pressure. We're obviously managing a lot of different streams of activities here at the bank. But if you look year-over-year where we are right now and the continuing side of 75 million, so if you look at our financials - the last year that's just - it's almost an enormous - that’s a $150 million run rate and we have talked I guess on this call before about us wanting to be under - maybe mid or under 160. I mean we’re really dead on with our focus on the cost side of the business. Yes, you're right, there maybe - like we said, we can’t give you any more clarity than we think it will trail. We continue to show improvement. And it could be a little or it could be a little bit more than that.

Our next question comes from the line of Matthew Breese with Piper Jaffray. Your line is open.

Just staying on net expense topic, I want to make sure I have a better handle on all the nuts and bolts. It sounds like the current expense initiatives still have some likes to it. I think you said maybe $5 million. And then on - once that's completed close to the end of the year, there is Phase 3 component another expense initiative. So, I just want to get a sense for - maybe longer term 2018, 2019, what do you think the annual expense rate could trend to?

Well there is also some other nuts in here that we don't account for like FDIC insurance things like that. That might be - that are elevated because of our regulatory situation. There is - let's put this way, if we - because our jars have opened up so substantially and that’s what created this improvement in our financial productivity. If we simply keep our - at the end of 2017, you got better expense nut, if we continue our revenue growth and it would to stay the same, we were able to contain the expenses for another year like 2018, we would be extraordinarily happy. I just don’t have the visibility to it right now. You remember when you create growth, you create expenses too. And we've got a lot of going on here and a lot of revenue momentum and I don't want to dampen that, I just want to have a good job. The one thing we could have easily high single digit revenue or more revenue growth with zero percent expense growth. I can guarantee you though, if we do have expense growth, it will be small and it will only be at the expense of even higher revenue growth. We are absolutely not going to accept this idea that we need to invest ahead of revenue - that’s not the stage of business we’re in right now. We think we don't need to do that right now. We have enough expenses within the business to support productive growth of the business and a lot more inefficiency to get out. And that's as much color as I can give, but once again if we as a business - I’ll be very happy as CEO to keep our expense base flat year-over-year for 2018 that saying that’s our internal target that’s why I’m just fit balling with you and continue our revenue growth that would substantially increase our profitability.

And then maybe switching to the revenue side of the equation. The margin improvement this quarter was substantial and I want to get a sense for what that could look like next quarter as you continue to grow loan book and potentially threat the securities portfolio. So could you give me an idea of the loan growth outlook and the margin outlook for the next quarter or two?

I'm go to give it’s Paul after I say that really difficult because it’s timings of securitization and stuff that we might have in the pipeline so but over time and I think I miss call last time what we said was we were hoping to get to 3% by the end of this year. Obviously 3.10 is a lot higher than 3% and it’s the middle of the year. So do we think it’s going to it depends on interest rate increases also from the Fed it depends on a lot of things but kick it to Paul.

So Damian first point if you look at the loans that we sell under - security and do the securitizations into they’re relatively high yields close in the 6% range. So depending on when you sell those they’ll have a negative impact on the margin because that first until we rebuild that portfolio to sell it again it will go into Fed funds at 1% it’s difficult to predict the timing of that and that in itself has a significant impact. However, the trend because there was another Fed increase at the end of March and that we didn’t get that much benefit out of that’s clearly a positive and because our cost of funds is only going to increase per fraction of that, that will also help the margin. So it's very difficult to predict.

And our overall size of the loan book is growling. So SBA loans are higher yield, leasing is higher yield that’s what driving the number. Our SBLOC businesses are very low risk and lower yield. So as we get this proportionate growth from those two other businesses versus SBLOC business you do get higher net interest margin. But the trends that we’re looking at are all positive so you should - depending on the securitization timing you should see increased NIM going into the end of the year.

I mean maybe just thinking about the net interest income line this quarter you firmly broken the $100 million year mark should we model out from this level to 105, 110 for the next 12 months that kind of level?

I think you can look - I mean I think it's - during a very difficult time of this bank you think about the last year there has been good focus on these businesses growing the revenue and I expect the historic revenue growth to continue. If anything were in a much stronger competitive position than we've ever been, we’ve taken a hard look at our competitive and operating strategy to visit each of these businesses, everything about who our clients are and how we compensate our employees and if anything we're seeing increased growth because of those moves. So if you were to model in historical growth alone, you would see that happen. And if you think about enhancements that we're making to the businesses, you should see increased growth. We don't know if that’s going to be obviously, but historic growth - just a historic baseline is I think a starting point to think about how the businesses are going to play out.

And then my last one is really around the prepaid card business, can you just give us an update there what you expect for gross dollar volume over the next 12 months, how the margins are holding up and the fees just like some more color on the business there?

Now that’s a difficult one, that’s bumpy over quarter-over-quarter and you saw that in this quarter our GDV grew 4% but our fees were basically flat down a little. What’s happening - what you’re going to get over the next couple of quarters is we’re working out, you'll see the GDV growth continue most likely and fees will be a little bumpy but you’re going to start getting over these drags that we had on the business. By this time next year, you’re going to have a very different what we think is a very different growth level because what we've done is, we've launched these programs we had this acquisition and we've been replacing the revenue with new programs and new initiatives. We think that this is something that's going to work its way out quite quickly. By the first quarter next year you're going to see just a very different GDV of fee growth level and it’s going to be a super kicker for us because you’re going to have this balance sheet at only different level because the balance sheet always doesn’t just give once it gives every quarter. And then you’ll see the fee year-over-year impact because our fee had the stress - the fee business had to stress on it from the first quarter and the first couple quarters of this year. So you know it's very accretive so we still think we'll have historic GDV growth high single digit, low double-digit even growth into the future, we cannot predict that and fee growth will trial about a bit a few percentage point and we’ve said that in the past. But we got to back to the run rate we were and that will happen as we close this year out and get to the next year and then you’ll see the impact of all the initiatives we had to replace the revenue. It’s never when you always get this locations and these things we don't have a huge concentration in any one client, but we just so happen to have changes in the marketplace that some of our biggest provided decided to shut a few things down and then there was an acquisition. That really hasn't happen over the last couple of years. We don't think that’s going to happen over the next couple of years to be honest with you. We think we’ve got the right mix of business going forward so we don't have these dislocations. And I think you’ll see it prove-out over the next couple quarters.

Thank you. And I’m showing no further questions at this time. I’d like to turn the call back to Mr. Kozlowski for closing remarks.

So I want to thank everybody for joining us today. We're really looking forward to continuing to manage the business tightly and show progress to everyone on this call. I want to thank everyone for joining us and have a nice day.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a wonderful day.