BankUnited Inc (BKU) 2008 Q1 法說會逐字稿

Good afternoon and welcome, ladies and gentlemen, to the BankUnited First Quarter Conference Call.

(Operator instructions.)

This press release and the presentation to which it refers may contain certain forward-looking statements, which are based on management's expectations regarding factors that may impact the company's earnings and performance in future periods.

Words and phrases such as: "will likely result," "expect," "will continue," "anticipate," "estimate," "project," "believe," "intend," "should," "would," "may," "can," "could," "plan," "target" and similar expressions are intended to identify "forward-looking statements." Actual results or performance could differ from those implied or contemplated by such statements.

Factors that could cause future results and performance to differ materially from current management expectations include, but are not limited to, general business and economic conditions, either nationally or regionally; fiscal or monetary policies; significant weather events such as hurricanes; changes or fluctuations in the interest rate environment; a deterioration in credit quality and/or a reduced demand for credit; reduced deposit flows and loan demand; real estate values; competition from other financial service companies in our markets; servicing capacity; legislative or regulatory changes, including, among others, changes in accounting standards, guidelines and policies; the issuance or redemption of additional Company debt or equity; the concentration of operations in Florida, if Florida business or economic conditions decline; reliance on other companies for products and services; the impact of war and the threat and impact of terrorism; volatility in the market price of the Company's common stock; and other economic, competitive, governmental, regulatory and technological factors affecting the Company's operations, price, products and delivery of services.

Please refer to the documents that BankUnited Financial Corporation files periodically with the SEC, such as the Form 10-K, Form 10-Q and Form 8-K, which contain additional important factors that could cause its actual results to differ from its current expectations and from the forward-looking statements.

I will now turn the call over to Alfred Camner, Chairman and Chief Executive Officer of BankUnited.

Thanks for joining us.

We apologize, their appeared to be some technical difficulties with respect to the telecasting conference call company and the webcasting.

So we're going to get started.

We have also included a slide presentation which some of you should be able to refer to during the call.

Joining me on the call today are Ramiro Ortiz, BankUnited's President and Chief Operating Officer; Bert Lopez, Chief Financial Officer; and Jim Foster, Senior Executive Vice President of Corporate Finance.

Like everyone in our industry we have been impacted by the downturn in the housing markets and overall instability in the economy.

This turn of events ultimately led to us to report a large provision for loan losses which resulted in a loss for the quarter.

It's disappointing, but it's the prudent thing to do.

Concerns about continued deterioration in national housing markets and rising delinquencies led us to a provision of $65 million in loan loss reserves.

The total reserve for loan losses is $118 million, a 101% increase over September 30th, 2007 quarter.

Excluding that provision, our operating income would have been $17.3 million.

Let's look ahead.

We are taking actions that will position and strengthen the company for the future.

For those of you who have the availability of the Web, please turn to page 6 of the slides.

If you don't have the slides you will be able to find them on our website or in our 8-K filing.

When we take a hard look at our company we start with the end goal, aligning ourselves for improving shareholder return and maintaining a well-capitalized model that will benefit and protect long-term shareholders.

Our plan of attack begins with a new strategic plan that will outline the transition for the company to a more traditional retail and commercial bank.

We were on a path to this model and diverted resources to be opportunistic when the mortgage area was lucrative.

We're going back to these roots.

We already have the branch structure in place and its complimentary business areas that are gaining traction.

The plan will be outlined in the very near future and we will discuss it in detail on our earnings call next quarter.

We expect loss revenues in the wholesale division to be more than made up by gains in other business areas, improved efficiencies, cost-cutting, and belt-tightening.

We have already taken some steps to begin this evolution.

We are reducing the size of the balance sheet thereby bolstering capital ratios.

We have significantly downsized the wholesale residential business.

We continue to strengthen our risk management programs and we have launched a major expense cutting program which Bert will discuss in more detail later in this call.

The plan will involve three major themes: protection of our capital structure, evolution of the wholesale area, and credit quality.

I'll go into each of these individually.

The first area of focus is our capital structure, and again you can see that in slide 6.

It is our intention to remain at capital levels well above the FDICIA's well-capitalized range as we are today.

As we shrink the balance sheet and evolve wholesale production to lower level and more salable products, our needs for capital will drop measurably.

Our current levels of capital are more than sufficient to carry us through this cycle, however if the opportunity presents itself we may raise additional capital.

There seems to be a misperception out there about the shelf offering that we recently filed.

Many companies have shelves and we needed to bring ours current.

The amount stated is not indicative of any near-term transaction.

Additional tangible support for our company is provided by the mandatory conversion of 3.68 million shares of 675 HiMEDS equity.

These were offered in April 2007 and will convert in 2010 at a minimum price per share of $23.40.

Whatever opportunistic steps we take will be executed in any event with long-term shareholder value in the forefront.

The second area of focus is the evolution of the wholesale area.

If you look on slide 7, for those of you who have it available, this area of the business has been very good to us, but the world has changed.

The mortgage market is stagnating, consumer behaviors are shifting, from where they go for loans to the type of loans they want.

We envision wholesale as a valuable but smaller part of the company going forward.

Recently, and through actions taken today, we closed sales offices in Arizona, California, Colorado, and Oregon.

We also closed six of our nine operation centers; the remaining offices are in mature markets that we know well and have sales staff deeply entrenched.

These actions have reduced staff in this division by more than 50% and enabled us to cut the run rate of expenses significantly.

Additional cost savings will be recognized in future quarters.

We have also radically changed our product mix and are seeing larger percentage of conforming agency and saleable product.

Option-type mortgages are less in demand by customers and clearly the actions of Congress coming up will further shift products toward conforming agency.

The transition of our product mix is another support to our efforts to shrink the balance sheet.

Our third major theme is credit standards.

If you make a reference, we're on slide 8.

We have been different from other lenders; it's something we need to emphasize because there seems to be a constant concept of trying to throw us in with others.

And so we'll get back to some of these statements, we've made them before but I think it needs much more emphasis by many who have listened to us in the past and perhaps missed it.

We don't engage in subprime lending.

We did not and don't piggyback mortgages.

We don't originate 100% financed residential properties.

We have minimal exposure to luxury high-rise condos in downtown Miami.

We underwrote our optioned loans at the fully indexed rate, always have.

We required loans with LTVs greater than 80% to have mortgage insurance.

Our standards have been in place many years.

They've mirrored almost all of the (inaudible) agency guidelines many years before they were released in 2007.

We put a lot of efforts and resources into the area in this past few months.

We do not have an appreciable number of NPAs in the last few years and therefore we have now built from scratch an organization in position to take care of our NPA situation.

We've been able to re-sign quite a few employees in this new created area and they've all hit the ground running.

We are focusing on managing exposure to at-risk loans and helping customers who have changed life situations.

Our history of stringent underwriting leads us to believe the charge-offs will remain moderate.

In recollection of that, and as our previous -- points out, we had approximately $6 million in charge-offs this quarter and that was approximately what it was last quarter.

Our reserve levels reflect expected market conditions.

We must be prudent and protect us in the chance that economic instability worsens and continues.

One more point.

We are disappointed to have reported a loss.

However, we are committed to the long-run health of the organization and are confident that we'll emerge from this challenging time as a strong, well-capitalized institution that is aligned with our long-term shareholders' interest.

It is now time to turn it over to Ramiro to discuss some of the operational details for the quarter.

Thank you, Fred.

Fred outlined the preliminary details of our strategic plan, the restructuring of the wholesale area, affirming credit quality, protecting our capital structure.

I would add a fourth, a strong focus on reducing expenses.

Some of these actions will provide immediate effects and some will take a little bit longer, but in any case we will continue to focus on the daily activities that have both immediate and ongoing impact.

We continue to deepen relationships with customers in our 86 branches.

Total relationships have increased -- from branch relationships -- have increased from 58,000 in fiscal year 2003 to more than 100,000 in the first quarter of '08.

Now, remember that I'm talking about household relationships, not number of accounts as others report.

Ours are real relationships.

Commercial relationships have increased from 73 in fiscal year 2003 when we first started focusing on that, to 286 in the first quarter of 2008.

Focusing resources on our small business banking, commercial, commercial real estate, and consumer lending areas will continue to help.

Expanding non-interest income producing areas such as wealth management will also have a strong impact.

The value of our core bank has not been recognized in this market.

Our retail footprint with offices in 13 Florida coastal counties is expanding relationships with customers.

Our internal cross-sell measurements show steady improvements during the last two years, which tells me we're gaining traction in the markets we serve.

Our model is an old-fashioned, high-touch, neighborhood based return to service.

Customers are simply treated differently in our branches.

I'm on slide 10 now.

Growth in deposits continues and our cost of funds is staying reasonably flat.

This is especially impressive in the competitive environment of the most recent quarter when national players were paying aggressive rates.

Consumer and commercial real estate loan balances have become a larger percentage of BankUnited's assets, reflecting the changes we're now making to our strategy.

Total loan balances remain flat at $12.6 billion.

Commercial, commercial real state balances increased to $1.3 billion and that's up 10% over the same time last year.

Our stock has been punished by many factors, the market, general economic climate, unregulated short sellers and some of their tactics, but we can't control any of those things.

What we can control is the management and direction of our company.

Our interests remain aligned with those of our shareholders.

We're committed to having the market recognize the value of this company in the long run.

For more details about our specific financial results, I'll now turn the call over to our Chief Financial Officer, Bert Lopez.

Thank you, Ramiro.

Let me jump into some of the numbers and start with the more important ones, non-performing loans and non-performing assets.

At the end of this quarter, first quarter fiscal '08, we had $384 million in non-performing loans, up $47 million in real estate owned, for total non-performing assets of $431 million.

That's up from the $209 million from last quarter.

As Fred mentioned, our reserve now stands at $118 million and that's more than double from where we were at the end of September.

Charge-offs were $6 million for the quarter.

$5.5 million of that $6 million came from the residential and consumer area.

This compares favorably to $5.6 million for last quarter.

Our provision, as Fred mentioned, was $65 million, more than three times the one we provided for in September.

We feel this is prudent given the increase in NPAs and the level of losses inherent in our portfolio.

Some more credit quality numbers are non-performing assets and total assets, now sits at $299 million.

Our allowance for loan losses is a percentage of the total loan portfolio with 93 basis points, double what we were last year at 46 basis points.

And our charge-offs for the quarter at $6 million, 4% for the quarter annualized run rate of 17%.

That was for the residential charge-offs, and then total charge-offs 4.5% annualized at 19%.

As Fred mentioned, we strengthened our risk management programs, we've tightened our lending standards, and we've increased our staff in the asset disposition area to approximately 50 people, up from just a handful of folks a year ago.

Charge-offs again remain low at $6 million, however we do expect not only NPAs to continue to climb but we do expect our charge-offs to increase also but remain within moderate levels.

On page 16 we talk a little bit about the residential portfolio.

There you see the breakout on the left.

Again, our '05 vintage is 21% of the total, '06 is 36% of the total, and '07 makes 21%.

Of import, though, our MI coverage on our '06 portfolio is 29% and the coverage on the '07 portfolio is 25%.

On the right side of the slide you see our geographic breakdown, still primarily Florida with 53% of our loans in Florida; and there you see the other states, California, Arizona, Illinois, decreasing from 9% on down to 6%.

So no other state has double digit percentage of our portfolio.

On slide 17 we take a look at some of the characteristics by which we analyze our non-performing loan categories.

We look at geography, vintage, collateral type, collateral usage, FICO, LTV, doc type, and product.

And we look at the occurrence of each of these characteristics in the non-performing loan category and compare that to the percentage of occurrence in the regular portfolio and look obviously for discrepancies that tell us the trend which maybe be going wayward.

We don't have any trends unusual, except for -- as we've mentioned before -- the 2006 vintage does have elevated levels.

And on slide 18 we talk a little bit about this vintage.

Again, $3.6 billion are 36% of the residential portfolio.

29% of the portfolio has mortgage insurance.

Mortgage insurance payments continue to come in as expected.

We're getting timely payments and we're getting full payments from our mortgage insurers.

Obviously we continue to monitor their performance.

We do that on a monthly basis.

The good news for us is, particularly for the '06 vintage, we have two major companies -- two very strong companies -- UGI, which is a subsidiary of AIG, and Republic cover 75% of those loans insured by mortgage insurance for the 2006 vintage.

On page 19 we talk a little bit about our strong liquidity and capital position.

On the left side, there's our liability funding.

Our core deposits represent 35% of our funding, other deposits 14%.

Again, $7.1 billion of deposits generated from 86 branches, all in Florida.

On the wholesale side we do have $7.5 billion line from the Federal Home Loan Bank, a $1 billion line with various repos, a $0.5 billion line with brokerage CDs which we have never used but that is available, so strong liquidity position and strong deposit base position.

On the right side of the slide you'll see the capital ratios for our bank, about $1.2 billion in total capital, 8.1% actual tier one leverage ratio.

Compare that to the 5% that is the well-capitalized minimum.

We have excess capital of $442 million above that 5% limit.

That's obviously an after tax number.

Pre-tax of that of course is $700 million of capital above the well-capitalized limit.

There you also see the tier one risk base and the risk base -- the total risk base numbers which offer us $683 million and $454 million of capital above the well-capitalized level.

The aforementioned reduction of the balance sheet will of course continue to improve our capital ratios.

On slide 20 we discuss our expenses.

As Romero mentioned we have cut our expenses rather handily and we continue to look for more ways to cut our expenses.

Our fiscal '08 budget expenses are now targeted to be about 9% below our fiscal '07 expenses, excluding our asset disposition cost.

9% reduction is pretty good for a company that's been growing as quickly as we have, and it's a good start.

We will obviously look for more.

Reductions of FTE from the end of September '07 to today, we've gone from 1,500 FTEs down to 1,341, an 11% decrease in the three month period; and we'll obviously continue to look to reallocate FTEs and limit new hires as appropriate.

The expense impact of our reductions in the residential area amounts to $1.5 million in total, $300,000 of which have been recognized in December quarter, $1.2 million which will be recognized in the March quarter.

Before turning the call back to Fred, just want to mention a few items on the income side.

This quarter, as Fred mentioned, we are moving more towards conforming in sellable products.

We sold $379 million in loans this quarter for a $2.3 million gain of 54 basis points.

And we've had a lot of interest and questions after the Fed cut the rates on Tuesday, and then with the anticipation of another 50 basis point cut next week.

Structurally that will obviously help us.

Lower rates with the balance sheet that we have will allow us to re-price our liabilities.

And of course we have an MTA portfolio that's about 70% of the residential portfolio, 58% of the total loan portfolio that operates on the MTA index which will lag as rates come down.

We expect that to come down 14, 16 and 18 basis points over the next three months; certainly much slower than the 75 and 50 basis point cut, one that was announced, one that is imminent.

The challenge for us obviously will be to execute on this we have to bring down our deposit rates.

Competition has been very difficult on that front and again our challenge is to bring down deposit rates while we continue to shrink the balance sheet and while we enjoy the lag on the MTA.

This of course will be somewhat offset by the carrying charges of the increase MTA.

So structurally the margin should improve, but we will have the drag from the increased MTA.

I'd like to turn the call now back over to Fred.

Thanks, Bert.

Before we go on into questions I want to talk about two other items, one of them relates to Florida itself.

This state is home of our banking franchise and home to over 50% of our mortgage loan portfolio and a substantial portion of the rest of the portfolio.

This state is thriving.

Employment is strong and the unemployment caused by the slowdown in construction, particularly in housing, much of which stopped well over a year ago, has been also absorbed over this last period.

The state is not falling into the ocean, contrary to a number of people who seem to make that commentary.

People are still moving here, businesses continue to grow, and entrepreneurship continues to be a hallmark of the state.

We really are in one of the best, if not the best, markets in the country.

The other thing I want to just mention as an aside is someone recently wrote -- I believe it was an analyst in a newspaper article -- how we have been unfairly broad brushed in terms of throwing us in with other companies that have had problems in the housing area.

We know we have difficulties ahead.

We have housing situation that clearly our NPAs will be growing.

We have indicated in the past that we believe because of our underwriting and the way we addressed it that our losses from that would be somewhat moderate.

We believe that thus far that has been proved out.

We can't totally predict the future.

We recognize that it's possible there will be a deep recession and that we could have some more aggravations ahead.

But this company is strong, it has an excellent management team, and it's extraordinary when we see some of the nonsense that's been printed about is relating us to other companies that made large amounts of second mortgages, that made large amounts of piggyback mortgages, that constantly underwrote all their mortgages to 1% start rates as opposed to adjusted rates, that did no checking of their income statements, so on.

We could go on down a laundry list of items that makes us different and which we feel clearly will be proved out as the market goes forward.

Okay.

With that, Susan, we're ready to open up the questions.

Okay.

Thank you, Fred.

(Operator instructions.)

(Operator instructions.) Your first question comes from the line of Jefferson Harralson of KBW.

Thanks.

I wanted to ask you guys about the option ARM boat.

Is it fair to say that the option ARM boat to $7.5 billion is in runoff mode here, or are you still make new option ARM loans?

It is and will probably run off to some degree downward.

We're making some option ARMs but the real option ARMs that we're making are what we call our select product.

It's a much narrower amount of neg am involved, much higher start rate, and we will be making that only in a very selective way, maybe keyed into the name of the product; because, as we've emphasized, a large part of what we'll be doing in the future is sales of mortgages in the secondary market.

And we believe most of that will end up being Fannie Mae, Freddie Mac.

We actually believe that as a result of actions that Congress will take, that a substantial amount of the entire mortgage market will shift over into conforming products.

Okay.

What percentage of that book runs off per year, do you think, and what's the target balance sheet size that you want to get to eventually?

We're going to do some announcements of that down the road as to the actual targets, but it's fairly evident to say that the actual pre-pay rates and present situation may approximate it somewhere in the $1 billion area.

There will be some additions to product coming in, some subtractions to that number because the reality is we think there will be some pre-pay picked up as a result of people switching to conforming products.

So for ourselves I would say that that is the probably minimum runoff in a year's time.

Great.

Then I'll get off the phone, but what's the appraisals versus -- the current appraisals on foreclosed property versus the original appraisals that you did when the loans were first made?

Does that make sense?

I'm looking for on your foreclosed properties, or the properties you're foreclosing on, the new appraisals, how do they compare to the original appraisal on average?

It's generally remained relatively low considering that most of what's coming in the MTA area, and that's running at 90% right now.

And given that most of the 2006 is what's actually flowing into the MTA area, that's a fairly good number.

Okay, thank you.

Your next question comes from the line of James Shanahan of Wachovia.

Yes, I'd like some clarification there on Jefferson's last question.

I want to get comfortable with the $118 million now in reserve, granted a lot higher now but then so are non-performers and real estate owned.

I have to get comfortable with $118 million is really sufficient.

Maybe you could really provide some more detail there regarding the range of LTVs or average LTVs.

What percentage of your non-performers have mortgage insurance?

Is that ratio of reserve to non-performers in REO is still lower than many of your peers?

Sure, Jim.

We can talk a little bit more about the levels.

And I know, obviously, we provided more because we did see the MTAs go up.

Our losses, though, continue to remain pretty low.

What is going into MTA has about 38% of those loans have mortgage insurance and that compares obviously favorably to the 18% in the portfolio.

We are seeing the higher LTV loans drop into the non-performing category and a higher percentage of those are insured.

So that is one of the reasons we've been able to keep our charge-offs low.

Our loss rates on the loans are averaging between those with MI and without MI about 11%, so again still very low.

Those severity factors are low compared to the industry and compared to our peers.

So when we put everything back together, the MTA levels -- we even look at those that in the 90 day category, reserve for those, look at the '06 vintage -- we feel we've got it pretty well covered with the reserve levels that we've set.

Obviously we keep looking at them, we look at them every quarter, and if MTAs continue to go up we'll see an increase in our reserve going forward.

But we thought this was a prudent level given the level of inherent losses that we were able to determine in our portfolio.

Your next question comes from the line of John Pancari of JPMorgan.

Good evening.

Good evening.

Wanted to just get some more color on your MTA outlook -- I know you indicated you expect it to continue to rise -- and then also on the charge-off outlook you had characterized it as moderate.

Is there any way you can give us more clarity around the numbers that you think would be reasonable here near term, just given the signs that you're seeing so far this quarter?

You mean try to make a projection for next quarter?

Well, I guess just along the lines of your traditional targets that you've tried to give us in the past.

Wanted to see if you are able to give us some type of color given what you've seen this quarter.

Well, once upon time I got burned on that.

We made the first target, didn't make the second target, then everybody dropped bombs on me for not making the second target.

So I've learned my lesson.

I can tell you, and I think Bert would generalize, that to some degree there is a de-acceleration with respect to our delinquency levels presently, but as exactly how the MTAs will work out there are too many factors at this point for me to come up with a number for you.

We certainly don't -- I mean, they approximately doubled this last period.

We certainly don't expect them to double this period.

So the actual rate, it's a tough question to answer.

Yeah.

And I'm not looking for exact numbers, just coming off of Bert's comments just a minute ago had indicated that if MTAs continually show the rate of increase, that there could warrant an increase to the reserve again.

So that's why I'm trying to understand a magnitude that you think you've got coming your way, particularly seeing the signs you're seeing this quarter.

The only general I can give you is we do not anticipate a reserve increase of this magnitude this next quarter.

Okay.

And then separately -- actually, just ask you a question outside of the residential side of the portfolio, just given the Lennar results that we saw come out today and some of the challenges they're seeing in meeting their terms on their revolver, do you have some clarity on your exposure to the company and what your concerns may be on that side?

John, this is Ramiro.

We really don't give specifics about one particular customer, but I can tell you that our total exposure to public homebuilders is in the $70 million range.

So it's --

I'm not sure.

I don't generally, again, comment on the particular companies, but right now we do not have in our estimation on the commercial loan area what we could -- with respect to national homebuilders -- what we consider to be any significant exposures at this point that we would think we would have to take write offs.

Now, obviously some of those things can change down the road if you have a very deep, prolonged recession, and so forth.

But this is not something we presently anticipate.

Okay.

And also, going back to the question that Jefferson had touched on in terms of the balance sheet reduction, if I could just re-clarify there in terms of the option ARM portfolio and that you do expect that that would be a primary driver on the option ARM side?

The question got interrupted.

I think Susan is desperately trying to keep this to one question.

So I missed the content of the question.

Let's go ahead and do the question and then please, everybody, let's try to keep it one question, one follow up.

Let's be fair so we can get everybody in.

But go ahead, please.

Okay, yeah.

No problem.

I was just trying to touch on the balance sheet reduction.

I just want to get additional clarity there, whether a big piece of that reduction is likely to come through the option ARM portfolio.

I know you had touched on it a bit with Jefferson, but I wanted to see if you could just clarify a little bit more there.

We expect that that will decline.

It has been paying down.

It will pay down.

And we believe that in the process a certain amount of the loans will end up moving also to Fannie Mae, Freddie Mac product as time goes through.

And, more than likely, as people contact us in terms of payoffs, we'll attempt to go ahead and put them into products that they want, which will I believe be primarily Fannie Mae and Freddie Mac.

Your next question comes from the line of Gerard Cassidy, RB Capital Markets.

Thank you.

Good afternoon.

Fred, could you share with us your comments about the color on the Florida economy being very strong, and I find it to be such a dichotomy in your state of loan, as well as Nevada and Arizona and California, that you've got economies that are quite strong relatively speaking, but their housing markets are very weak.

If the nation goes into a national recession this year affecting the Florida economy, what does that do for the outlook that you guys have for your business?

All these things are generally difficult to make determinations of, but I would say that also in a number of past recessions -- and given the particular circumstances where we're located and where a large portion of our loans are located, which is South Florida -- that the reality is that this area has been somewhat resistant in the past to recessionary situations.

And the reasoning for that is -- I mean, you could just read a headline the other day in the New York Times about all the Venezuelans that are moving to Miami.

You could just multiply that by many-fold of people from Latin America that are still coming into the South Florida area and are still looking for housing.

Now, you say, "Why is there a housing crisis in Florida?" The housing crisis in Florida, much as everything else -- and I've tried to emphasize this in prior calls, but I think it's even clearer when you all discuss the Lennar headline and others that'll be coming out -- is that national homebuilders, which captured a larger part of the overall home building market in the country, had excessive building even into a market that had started to have reduced demand.

They actually continued to build houses and create very significant inventories.

So if you go into the Sarasota area, if you go into the Fort Myers/Naples area where there's a lot of land, and if you go into the Stuart/Martin County areas, you will find tremendous amounts of projects from national home builders because there was a tremendous amount of land available.

And similarly in some areas in Orlando.

If you take Dade and Broward, except for the giant condos that are in downtown Miami which we stayed well away from for a long time, other than that, I mean, essentially there's a limited amount of land in Dade County.

There's a limited which is Miami, for all of you that don't actually know.

Broward County is the general Fort Lauderdale area.

There's a limited amount of land available in Broward County and you didn't have the massive overbuilding by national home builders in these particular areas.

So there is some dichotomies in the state.

The whole activity, the business activity, the international activity and so forth that represents South Florida, is something that generally has continued, even in recessionary times.

It's possible we would experience a further slowdown, but this state has held up very well.

And I think the other thing that's missing -- and we've mentioned this in other calls -- is that one of the reasons we've already absorbed a lot of the home building reduced employment is that there are major infrastructure projects going on, both governmental and non-governmental, in this state that are catch-ups to the huge population increases.

So we have hospitals being built, we have major university facilities being built, and we clearly have all sorts of roads and other types of public facilities going on -- schools, so forth.

So that has had an absorption of a lot of the employment in the housing area.

Just as an example, Florida added 85,000 jobs since December 2006.

Education/health services was 31,000, 3% increase.

Hospitality 29,000, over 3% increase.

We can go on with a lot of statistics.

There are clearly inventories of homes in the areas.

Some of the areas have actually started picking up, which never gets a headline.

For example, Tampa recently had a pick up in housing sales, but they've got a ways to go to eat away at that inventory.

And you're going to see that in a lot of counties here, that there are some fairly expensive inventories, but there is some pick up in some of those counties in sale and there's some steady sales going on and still be eating away at those inventories.

I don't know if I can get -- just opinions from me, somebody who has been here a long time.

Can we have the next question?

We're all set.

Your next question comes from Annett Franke of Friedman, Billings.

Good evening.

Your non-performing loans, are these the loans that are hitting the neg am cap, or are the loans actually just more away from the neg am cap; meaning are they recasting at this point?

And are you trying to work on these loans with loan modification efforts, or are you seeing people just walk away from these homes?

No, Annett, these are not loans that are coming in because of reset or any of those issues.

These are just loans that are past due, due payments.

We really don't have much of anything in the way of reset to be concerned with at the present time.

Remember, the monthly ARM obviously adjusts every month, so it doesn't truly have a reset cap.

There is a five year limit on that, but we started originating these in late '08 so we really only have about $46 million of these loans that are set to recast later on this year.

So the reset is not really an issue for us.

These loans are those loans that are past due, though.

The characteristics of them pretty much mirror the portfolio except for, as I mentioned, the 2006 portfolio.

I just want to make a generality for everybody.

The loans we have -- and I can't tell you this is for every institution; it is what we have found in the market.

The people who default on loans have a general overextension, and it doesn't matter if they were paying at a 3% rate or paying at a 7% rate, that's why they default.

So we have not had a great deal of difference with respect to these.

And we don't really have actual reset situations of any significant amount into '09.

And Annett, let me give you some more color on that.

Fred had mentioned earlier that the loans that were in non-performing had occurring LTV of about 90%.

That's up from about 78%.

The difference of 12 percentage points, only 3 of that is coming from the neg am; the rest is coming from the valuation.

So it's not the neg am that's creating the non-performers.

It's a cash flow event in the lives of the individual holding the loans that is creating the event.

So the neg am really doesn't affect us going into NPLs to a great extent.

Your next question comes form the line of Matthew Kelley, Sterne, Agee.

Yes.

You know, when you look at the increase in MTAs it's really pretty shocking, and then rapid.

And I think that's really the bulk of the concern.

I think that the crux of your argument that your reserves are adequate now really rest in the assumption that while severity will remain modest, when you look at what S&P, for example, is forecasting for loss severity for the option ARM product it's up in the 30% range and you guys are in the 11% range.

And so help us understand why you think loss severity is going to remain under control for the next couple of quarters as MTAs continue to move higher as you've indicated.

Matt, I think it all goes back to when the loan was originated.

I think our underwriting standards are probably some of the strongest in the industry.

Again, we never dabbled in the subprime, we don't do piggybacks, we have low LTVs -- we start at about 74% LTV -- FICO is at 709.

So it's a good quality portfolio.

And, yes, obviously there's been some price depreciation and devaluations; but again, starting with that lower LTV, we have a lot more cushion to absorb that.

It's kind of like not every MTA is created equally.

If we were sitting with an original of 90% and then had appreciation we'd be looking at maybe the severity rate that you mentioned of 30%, but we haven't.

So I thin it all goes down to the beginning, of when the loan was originated and the underwriting criteria that we used.

And what were the actual losses on the homes that were disposed of during the quarter?

If you look at the gross charge-offs, what were the losses on those loans?

I have a number for you, actually.

It's going back for 15 quarters it was a total of about $7 million.

The losses in this particular quarter for the residential side were about $4.4 million.

Is that the net of recoveries -- or, insurance, I mean?

That is net of insurance.

Now, we booked the insurance with a 10% valuation, but, yes, that number is net of insurance.

You know, just getting back to your question.

I can't speak for Standard & Poor's, and I don't really know what their numbers are coming to, but given that they're the ones that originally rated the bonds that were involved in the first place that everybody has, that we're not really particularly involved in, I wouldn't give any more accuracy to that number then any other number they've ever produced.

So from my viewpoint, you've got to look at what we are, and what we didn't do is what a lot of major lenders did.

And even after the federal guidelines were passed, people were underwriting their loans at 1% start rate.

Now that's just a joke, okay?

So, if that's the joke, the joke wasn't one that we adopted, and obviously has spilled over to all of us in some sense because it's hurt the markets in general and hurt the mortgage markets in general, but we avoided that type of underwriting.

We also had -- as the time went on, as time elapsed over the last several years, required larger and larger portions of our loans to have an in-house appraisal review as it was processed through; because we were concerned about appraisals starting to have some question marks.

So that also protected us in the end.

We had a lot of turn-down loans that other people made, that we didn't make because we didn't think the appraisals were any good.

So I think -- you know, there's a lot of items we can go through and a lot of differences about underwriting, but we believe that our portfolio's in much better shape than a lot of the entities you're talking about.

Okay.

And what is the actual disposition cost been to get a home out the door and sold and auctioned off?

How much is it costing you to carry that property and get it off your books?

We've looked, Matt, really, at the disposal cost and that's about 11%.

Now that includes the writedown due to valuations.

The home will stay on through NPA and then through foreclosure about five, six months on disposition, so we can compute a cost from that.

But really what we've seen is an 11% loss, all-in, except for the carrying cost of the interest.

Your next question comes from the line of Paul Connolly of Southwell Partners.

Yes, thank you for taking my question.

Can you update us on what the 30 to 89 day past due and still accruing number is for the quarter?

Yeah.

I mean, we don't generally publish that information.

It was $234 million last quarter.

It's in your call reports, and I'm just trying to get a feel of where you are with delinquencies currently.

Residential delinquencies for those, $234 million, we haven't published that number yet, but it will be slightly up from that number.

Okay.

So this quarter will be slightly above the $234 million.

Yes.

Great.

Thanks for my questions.

Your next question comes from the line of Dave Bishop, Stifel Nicolaus.

Good evening, gentlemen.

I don't know if you answered this or not, I lost track there.

But in terms of trouble debt restructuring loan modifications I've seen some of your option ARM peers pursue, is that something you're contemplating in terms of heading to these borrowers early and modifying some of the loan structures and rate payments?

In terms of troubled debt restructuring, we really have not had any trouble debt restructuring as yet.

We do have programs for those customers that do end up in the impale status.

We do what we do -- what we call "letter agreements," where we'll take some of the payments and just help modify their payment structure to help them in the short term.

But we really haven't done any TDRs as yet.

On the performing side, we do have a loan modification group which is really more of an asset retention group.

They do go out, and when a customer will call in to pay off, we will try to do everything we can, given the good credit quality and the collateral value of the customer, which we obviously examine and underwrite.

Given those, we will try to save that customer and maintain that customer -- the loans on our books.

Your next question comes from the line of Gary Tinner, SunTrust Robinson.

Thanks.

I was hoping you could give us a feel for the inflows and outflows of the OREO category this quarter; went up 19% net -- but give us an idea of what came in and what came out.

Sure.

Just a roll forward, Gary?

Yeah.

For the quarter, we started with 93 properties, about $28 million.

We added during the quarter 90 properties.

We sold 23 and then we ended December at 160 units, or about $147 million.

And that all, of course, former residential loans.

Now since the end of December through yesterday, we have 23 additional units that are either under contract, in negotiation to be sold, or have actually closed during the month, so we've dropped that 160 by 23.

Yeah.

We expect the pace of that to pick up.

The truth is that in terms of actually having properties available for sale, it's taken awhile to get to the point that you can actually get them and get them out the door.

It's what's referred to as "marketable", and some of the things we've seen this go-around is some people will stay in the property; you have to then evict them; and certainly particularly with some of the initial properties we had, which frankly, of those that have the largest losses that we've experienced, really relate to a few properties we've had out in Michigan and Minnesota.

And they have redemption periods out there that are very long; and so some of those properties will end up sitting on the books for awhile.

We've already taken substantial writedowns.

All right.

And on that $1 billion number you mentioned earlier, Fred, is that meant to be over some specific period of time, or is that just the ultimate kind of runoff from where the current balances are?

What I was giving you is a year's -- generality; a year's prepayments on loans are -- run about $1 billion.

And I would tend to say that a piece of that will probably pick up, because as they open up -- as rates come down here, which they're coming down, and as you have more availability, Freddie Mac/Fannie Mae, which obviously is going up in the figure they'll have available, we'll undoubtedly see some pickup in the whole refi area.

So I think some of that will be coming up soon, and the whole industry will see that.

I want to mention one other thing which I think a lot of people forget, is that rates are coming down and the amount of negative amortization that will be occurring in loans, a has happened in all the other cycles, will be narrowing and may very well cross over into the positive area in terms of amortization off the payments.

So -- this is a phenomenon that will be occurring as we go through it, and it also relates to many resets of other loans that are coming up; these rates are coming down and the reset problem -- if the Fed keeps lowering rates, which I expect they will -- it's really becoming much less of a problem than people were concerned about.

And just to add to that, actually, this quarter we did see a slight decrease in the amount of negative amortization created.

We're at $47 million, down from $49 million, and we do expect, as Fred mentioned, with a decrease in rates, obviously given the same amount of payment, the application of principal will be greater because less is going to interest.

So we should see hopefully a continued decrease in the level of neg am that's created.

Your next question comes from the line of Albert Savastano of Fox-Pitt Kelton.

Good evening, guys.

How are you?

Hey, Al.

Just two questions here.

On the wholesale percentage, what percentage of earnings of your balance sheet do you expect that to be going forward?

Kind of -- what's the timeframe for the transition?

I'm sorry.

In terms of our plans of transition, as we indicated, we would over the next period and certainly by the next quarter report, give everybody some guidelines on where we're more specifically headed, what areas we'll be emphasizing in terms of that transition.

So we haven't set that totally out.

What we've tried to indicate is that we've started the shrinking of the balance sheet and we've kind of given you some general parameters on it.

Al, this is Ramiro.

I just want to add something, you know.

We've talked about transition, but in reality, it's really more of a focus.

We started that transition years ago.

Over the last five years, our branch growth has gone from 31 branches up to 86.

We've redone that whole branch network; the commercial division has done well.

Our wealth management area is particularly kicking in very nicely.

Our investment sales over the last quarter have gone up 50% quarter over quarter.

The commercial bank -- it's not like we need to start building that from scratch.

I mean, that's in place.

It's just been overshadowed because of the housing boom by the large volumes of wholesale.

So really, what we need to talk about is more of a strategic positioning of the company with more of a focus on the commercial side as opposed to the wholesale side.

It's also a resource question because we won't be spending the same amount of time that we were spending during a housing boom on matters relating to wholesale production and to other residential production.

So that enables Ramiro to spend a lot more focused time, and the rest of us to spend a lot more focus time.

And that's why we decided to really move back.

It's not only a change.

I mean, we recognize there's a change in the housing market that's occurring, and even if ultimately there's a restoration of some secondary market, and there certainly will be through Fannie Mae and Freddie Mac, it's changed, and we need to recognize that.

I think a lot of other people are going to have to recognize it.

And we want to move back in the sense of having a greater emphasis on our whole commercial banking and retail banking operations, which have done very well and which for some reason never get much note.

Maybe we're at fault because we had so much housing going on, but more people need to pay attention to how well we've done with it.

This is Bert.

You know, the one thing we want to make sure is we don't speed this along.

We want to make sure we get this right.

It's going to take some -- obviously, serious thought and some strong modeling on our part as we go through the transition, make sure we're doing it correctly.

You know, obviously, by shrinking the balance sheet, deemphasizing residential loans, that also means there'll be less revenue coming in.

Positive items that we can focus on, though, is without the fast increase in our residential area, we don't have the pressure of growing deposits in the form of CDs or higher cost deposits as much as we have in the past.

Our neighborhood banking groups can really focus even stronger then they have on the customer and the customer relationships and building a better cost funding structure from that standpoint.

Also know that if overall our revenues decrease, we're going to take a very strong, hard look at the expense structure.

We really have to rethink the expense structure of the company as we look through this transition and make sure that we rightsize it and improve the efficiencies.

So this'll be a well-thought-out plan that, as Fred mentioned, we'll have available for the next earnings call.

Your next question comes from the line of James Shanahan of Wachovia.

My questions have been asked and answered.

Thank you.

Your next question comes from the line of Gerard Cassidy, RB Capital Markets.

Thank you.

As a follow-up question, can you give us a breakout -- when you look at your non-performing assets at $431 million, how they're broken out by loan category; what percentage is in the residential versus construction versus commercial real estate and commercial?

Really, on the commercial side, Gerard -- this is Ramiro -- we've only had 2 non-performing loans; one we've talked about for a while, goes back to the last couple of quarters, and then one that's a $9 million loan on non-performing, but the collateral is under contract.

Hopefully, we could be out of that within the 60 day timeframe.

And then the remaining part is about another $5 million on the consumer side.

We really don't have any non-performers on the commercial -- direct commercial-C&I side, and so the remainder of the $431 million really is the residential balances.

Now let me just take one moment.

I want to correct something I said earlier.

We were asked about the 30 days plus.

I had mentioned they'd gone up slightly from the $234 million from last quarter.

They're going to be closer to about $300 million; $290 million, $300 million when we report.

And as a comment or a question on the new ceilings on Fannie and Freddie that look like they're going to be put into law, at least temporarily, do you expect some of the option ARM loans -- can they be just moved into that Fannie and Freddie type of category, or do they have to be rewritten as a Fannie and Freddie conforming loan and then moved in?

No, they'd have to be rewritten, but it's my belief that given where the market is today, that a number of borrowers -- and we think there are a decent number of them on our balance sheet -- that are in decent shape will move over to ultimately look for Fannie and Freddie refinancings as we go down the road.

It'll be a process that goes on.

And otherwise, I think the overall refinancing market is largely going to be determined by Fannie and Freddie; and I believe there is a refinancing market coming up because rates are coming down and they will come down some more, and that's going to be available to borrowers.

Notwithstanding some people's visions of what's happening, if you take Florida, rates coming down like this are bringing us back more into the affordable, you-can-buy-your-house position where -- there are a number of things going on in Florida.

One is there's real estate tax relief in process.

Two is there's a certain amount of insurance relief that's occurred to help bring to a more affordable house.

And the third item will be that rates will be coming down on financing.

And furthermore, it opens up jumbo financing.

The reality is that one of the things that's slowed the housing market is that it's not that easy for people to go out and buy a house above a $417,000 mortgage situation.

And so this is now going to substantially open that up.

And when it does, it is going to allow some people to get off the sidelines and start buying houses again, and I don't think this is totally been factored in to what's really happened.

Inventories in Dade and Broward have actually declined somewhat modestly, but there's no question; there's a large number of houses that cannot really be purchased unless people can get the financing.

And there are only a couple entities in Florida that are making loans, and those are loans at higher rates when it comes to jumbos.

So this is going to make a difference.

I think it's going to make a difference other places in the country, and it's certainly going to make a difference in Florida.

Thank you.

Your next question comes from the line of Christian Cott of Cott Asset Management.

Yes, thank you.

Were there any buybacks in the quarter, and what's your outlook for buybacks in general?

Buybacks by the company?

We have taken a general attitude -- well, we will not rule out buybacks whatsoever.

We've taken a general attitude given uncertainties in the markets that maintaining capital is extremely important.

Obviously, as we shrink going down the road, it's very possible at some point we'll reach a stage where we fell comfortable with buybacks again.

Your next question comes from the line of Matthew Kelley, Sterne, Agee.

Yes.

I was hoping you help clarify the whole process of potentially raising capital and some of the avenues that you would consider, including common equity, which obviously would be massively dilutive.

So if you'd comment on the component that common equity may be in a capital raising process, and the other options that you have on the table to boost capital levels.

It's more a generality.

What we've tried to say to people who have called and asked us if we did raise additional capital, would we protect current stockholders, and the answer is yes.

So -- there are ways of doing that and we have some long-term holders of our common stock, and we expect -- to the extent we did raise such capital, that we would protect them in such an offering.

You would not sell common equity at these levels, obviously.

If we determine to sell any common equity, we would do it in a manner that allows all such people to participate.

Your next question comes from the line of Donald Guise, private investor.

Donald Guise.

I'm not sure who gets this question.

I am a long-term investor.

I'm not an accountant and I'm not an analyst, so I will have non-technical question here.

I'm very impressed with the thought on slide number five, with the goal of improved shareholder return.

Could somebody explain in fairly simple terms that I could understand why the transition to a retail/commercial bank structure will yield good --improved shareholder return?

Thank you.

Well, first of all, the market -- this is Ramiro Ortiz.

How are you?

The market commands a higher P/E for a commercial bank, so you have that value to begin with.

We think that one of the areas we've been hit is that we have been treated purely as a mortgage company in a market where the mortgage world is hurting.

We don't believe that the value of the franchise, that being the commercial bank franchise, has really been there.

And by focusing on the commercial franchise, that is kind of back to basics; loan and deposits -- commercial loans, consumer loans, and deposits -- that will really help our P/E and ultimately help the stock price.

Yeah, Donald, and one of the things that's Ramiro mentioned in the P/E of a commercial bank tends to be higher because the earnings streams are much more stable for a commercial bank as for a mortgage entity.

So as we move to that and then take advantage -- in Florida, just a natural competitive advantage that a bank has by lowering funding costs, we feel that we can have higher levels of profitability and a more stable level of profitability over a long period of time.

That should command a better P/E times our earnings, and hopefully the stock price will reflect that.

Follow-up question there.

Do you plan to continue the growth in the number of branches?

I believe you're at, what, 86 now?

Yeah, Donald, that has been slowed down significantly.

When you grow at the pace that we've grown, you tend to just throw resources at problems.

That's why now we're looking really -- '08 is really kind of an internal focus year where we consolidate what we've done and weed out inefficiencies where we can.

On plan for '08 is much, much smaller growth -- rate of growth in terms of our branches.

We've got two scheduled and that's for the end of the year.

But it's a much, much lower pace of growth.

Well I've been a shareholder for 10 years.

I've seen a lot of change, a lot of strategic changes, a lot of changes in style of operation.

I look forward to the next 10 years.

Thank you, Donald.

We appreciate it.

Your next question comes from the line of Jefferson Harralson of KBW.

Thanks.

I want to follow up with -- you've been talking about (inaudible).

Can you talk about what the assets are of the commercial bank and where you think the ROA is -- what do you think it was in 2007 or in the most recent quarter?

Well in very rough numbers, you're talking about $1.2 billion in terms of commercial/commercial real estate balances, and about another $1.1 billion in terms of consumer balances; so you're talking about assets in the $2.4 billion range.

The ROA, I don't know.

I think it's kind of difficult to --

We don't have separate segment reporting.

We have some internal reporting that shows that we're having solid ROAs in those areas, but we really don't have external reporting that shows that, and the way we'd compute that.

But if you were to look at the bank, Jefferson, what you would look at is $7 billion in deposits and about $2.5 billion in terms of traditional commercial bank portfolio.

And Jefferson, just to add to that, we have -- we've grown those asset sizes over the last quarter.

The residential balances have come down, but we have had some solid growth in each of those other areas.

Would you put the 315 mortgages, the mortgages that originated out of the branches?

Are those also in runoff mode, or you think those are the type of product or type of business line you continue?

No.

I think there's certain home mortgages that get originated out of the offices really fit in the normal definition of a retail commercial bank.

I think what Ramiro's referring to is the pure commercial assets.

That's what the pure assets are; you think the pure type of consumer assets.

The reality is, there is no commercial bank -- with a few exceptions, and really in the state of Florida, other than some extremely small ones -- that don't have some residential assets.

There have been some who avoided that who've had none.

We have always believed that on a relationship basis, that if you don't have available home loans to your customers, that you really have some problems in terms of those relationships.

It gives you an advantage to have it.

So we would expect to always maintain that in terms of our offices and be able to get residential mortgages for our customers.

So the overall concept of the retail bank would be somewhat larger than the numbers we were just giving you.

On the other hand, clearly, wholesale production would be a much diminished item and would be -- I hate to use examples in life; I suppose you could use, in a sense, a Broadway, a Wells Fargo concept that says that they did a lot of mortgage banking.

They did other stuff, too that we didn't do, like second mortgages.

But they did a lot of mortgage banking; and to some degree, the wholesale division is being put in the position where it stands, we're not really looking to produce as much assets for the bank in the wholesale area.

We're really looking to have earnings gains from sale, primarily in conforming products.

Okay.

Thanks a lot.

Your next question comes from the line of John Pancari of JP Morgan.

Hi.

Just a quick follow-up.

Can you give us an update on your non-resident alien portfolio in terms of the size of the portfolio right now as well as the recent credit trends?

Thanks.

John, it's still running about 18%, 19% of the portfolio.

That really hasn't changed much over the last couple of quarters.

In terms of credit, we haven't seen a disproportionate amount of credit concern there.

Remember those are also underwritten at very low LTVs, usually about 68%, 69%, so that continues to perform pretty well.

And our final question comes from the line of Gary Tinner, SunTrust Robinson.

Thank you.

Just a follow-up, Bert.

I just want to make sure I heard your number right.

You had suggested that your budgeted expenses for fiscal '08 were 9% below the '07 number?

Yes, excluding our asset disposition cost, and those are running about $25 million, $26 million.

So excluding those, when you look at the core bank, that's where we're showing a decrease of about 9%.

Okay.

And that's -- and that's including the fully loaded $55 million from this quarter?

Yes.

Okay.

Can you give us any -- any more of kind of a blueprint or map on which -- on where that's coming from?

Because it's obviously about a - what, $13 million or so delta to this quarter's expense run rate?

Yeah.

The major portion of it, as we pointed out in the slides, is really coming from the FTEs.

I know we dropped FTEs from 1500 to about 1340 just in this last three-month period.

Not to say that trend's going to continue; obviously, we're looking at reallocating resources where we can, and we've limited our hiring.

And then, quite frankly after that, it's a line by line look at the expense base of the company and looking for some of the typical things you'd think of in terms of cutting expenses.

But again, looking through every line and finding ways to get more efficient in each and every area.

The reality is that these last several years, we obviously grew very rapidly.

We added on a lot of people doing a lot of jobs.

We had so much growth that even though -- there's no question that to some of you we promised to control expenses.

Our control expenses resulted in increases, and it was the nature of the growth that was going on.

Well, we're going in the other direction, and there's going to be quite a bit of cost-cutting in this process because we know that we will lose some revenues from shrinking, but at the same time, we expect to have significant cost reductions occurring, and there are a lot of ways of achieving that.

And on the other hand, we want to allocate resources towards some areas that we believe could be very good moneymakers for us in the normal concept of a retail commercial bank.

Great.

And Bert, you said the asset disposition cost was running -- you expected $25 million for the full year, was it?

About $25 million, $26 million for the entire fiscal '08.

And was there any of that in the current quarter, or in the December quarter, rather?

Yes.

We had a portion of that in the December quarter.

I think we had about $4 million of that in this -- $3.8 million of that in this quarter.

But obviously, that's going to increase as the assets we need to dispose of increase and we actually execute that disposition.

Okay.

Thank you.

Ladies and gentlemen, we have reached the allotted time for our question and answer session.

At this time, I would like to turn the conference back over to our presenters for closing remarks.

Yeah, I want to thank all of you.

We have clear concept that we are looking for a redirection in terms of the company, so that we can align ourselves in an appropriate way and gain greater ultimate shareholder value.

In the process, I want to stress to everyone that while we have NPAs, we've indicated that we have been in position -- and this to us is somewhat different from others.

There are losses overall, given the amount of NPAs, have been moderate.

We expect them to continue to have a moderate tone to them.

It doesn't mean they won't increase; they will increase, but we expect in view of these that they will be moderate.

And we really need you all to be looking at our book value, and understand that our price of our stock is extraordinarily understated, and you can go through any number of severe scenarios, and you cannot get anywhere close to the book value where we are right now on our price of our stock.

Our book value presently is -- after this reserve, and significant reserves, is $21.50.

And our tangible is $20.72.

I appreciate it.

Thank you very much.

This concludes today's teleconference.

You may disconnect at this time.