Brookline Bancorp Inc (BRKL) 2007 Q3 法說會逐字稿

Good morning. My name is Shwana and I will be your conference operator today. At this time I would like to welcome everyone to the Bancorp Rhode Island Third Quarter 2007 Earnings conference call. All lines have been placed on mute to prevent any background noise. (OPERATOR INSTRUCTIONS)

It is now my pleasure to turn the floor over to your host, Ms. Merrill Sherman, President and CEO. Ma'am, you may begin your conference.

Well thank you and good morning. As indicated, I'm Merrill Sherman, President and CEO of Bancorp Rhode Island, Inc. I'd like to welcome you to our third quarter 2007 Earnings conference call. With me is our company's CFO and Treasurer, Linda Simmons. Linda is going to take you through our third quarter financial results. I will then briefly discuss those results and make some comments. After that, both Linda and I will be available to answer any questions you may have.

During this call, we may make forward looking statements within the meaning of the Securities and Exchange Act of 1934. These statements are based on our present beliefs, and are necessarily based on certain assumptions which are subject to risk and uncertainty. Actual results may differ materially from those discussed here. More information on these risk factors can be found in the Company's filing with Securities and Exchange Commission.

With that, I'll turn the call over to Linda Simmons.

Good morning. Bancorp Rhode Island reported earnings of $2.3 million, or 46 cents per share for the third quarter of 2007. On a link quarter basis, this was up $84,000 or 3.8%, and up $635,000 or 38.6% from Q3 2006. In the third quarter of 2006, the Company's earnings were impacted by the restructuring of its investment portfolio, which resulted in pre-tax losses of $858,000, as well as an additional $228,000 of pre-tax income, due to the FHLB amending its dividend schedule in the second and third quarters of 2006.

In the third quarter of 2007, the Company's earnings were impacted by pre-tax gains of sales and securities of $254,000, as well as the write-off of $137,000 of pre-tax expenses related to the redemption of the trust preferred securities. While the total loans were virtually unchanged quarter-over-quarter, the composition of those loans continue to improve.

Commercial loans increased by $12.2 million or 2.2%. Consumer loans were up $2.9 million or 1.3%. And residential loans were down $13.5 million or 5.1%. On a year-to-date basis, commercial loans are up 6.8%. And we expect to finish the year with a growth rate between 9 and 10%. We have experienced very strong originations during the year. But we have also had higher levels of CADO.

On the funding side, total deposits decreased by $6.6 million, 4.6%, and up $31.5 million or 3.2% on a year-over-year basis. Core deposits, which we define as DDA transactions and savings accounts, CDs and broker deposits remain flat quarter-over-quarter. Core deposits remain virtually consistent as (inaudible) of total deposits.

Credit quality remains strong. Non-performing loans are 930 or $4 million. This was up $1.7 million from June 30. The primary drivers we'll change are residential loans were down $1 million, and CNI loans were up $2.4 million. Net charge-offs for the quarter were $273,000, and year-to-date net charge-offs are $305,000. This compares to $490,000 for fiscal year 2006.

On September 30, 2007, the allowance for loan offers stood at $12.6 million, and represents 1.22% of total loans, and over 310% on non-performing loans. The (inaudible) ratio was flat year-over-year. During the quarter, we repurchased 37,200 shares of stock, bringing the total to 52,200 shares. The average cost for the quarter were $34.12, and overall the average cost is $35.91. We expect to continue to execute this program in the fourth quarter.

In addition to the buyback, Bancorp Rhode Island redeemed $5 million of trust preferred securities, which was priced at LIBOR plus 345 basis points. The margin for the quarter was 291 basis points. Without the one-time charge of $137,000 related to the trust preferred, the margin would have been 295 basis points, down two basis points quarter-over-quarter.

The growth in the commercial and consumer loans responded by the decline in the lower-yielding residential loans. This results in a five basis point increase on the yield on our earning assets. But this was more than offset by our increase of cost of deposits, which was up by nine basis points, and the increase in the FHLB advances, which was up eight basis points for the same quarter.

We are happy that the Fed has started to lower short-term rates. But the shape of the curve, the credit condition and the LIBOR curve continue to put pressure on the margin. We have already seen lower cost of FHLB advances and consumer CDs. But this will take time to bleed into the overall cost of funds.

As for pricing on core deposits, the Providence market remains fairly competitive. We are looking for the market to give us the opportunity to lower these costs, and we believe that we are starting to make progress in this area. Non-interest income was $2.9 million for the third quarter of 2007, and this compares to $2.7 million on linked quarter basis, up 7.2%. On a year-over-year basis, we are up $1.3 million.

In 2006, the bank received restricted B shares in Mastercard International as part of their IPO. In August of this year, Mastercard offered the holders of these B shares to convert to A shares. As part of the transaction, we were required to immediately sell those shares. The gain on the sale of these securities was $254,000. This gain was offset by decline in loan related fees of $75,000, and a decline of commissions related to the sale of leases of $41,000.

On a year-to-date basis, I think we can start to see some positive traction on several initiatives underway at the bank. In late 2006, we implemented a deposit fee enhancement program. On a year-to-date basis, our service charges related to deposit accounts are up $313,000 or 8%.

Beginning in January '07, we modified the business model for our leasing subsidiary, Macrolease. To date we have sold over $15 million of lease production, and we have generated $860,000 worth of commission. This compares to $222,000 on a year-to-date basis to 2006, a 280% increase. Also in 2007, we initiated a 1035 exchange of our BOLI assets, this resulting in a year-to-date increase of $137,000 or 24% increase.

Non-interest expenses declined by $132,000 on a linked quarter basis or 1.4%. We expect to finish this year slightly down from 2006 actual. During the quarter, we transferred our rights to develop the Narragansett branch site. This resulted in a small loss which we recognized in the third quarter. More importantly, we will no longer have expenses related to this site.

Our year to-date expenses for 2007 were approximately $130,000. Our efficiency ratio for the third quarter of 2007 was 72.3%, down from 77.8% in the third quarter of 2006. Our management retains very focused on the growth of quality commercial and consumer loans, the growth of core deposit accounts, new and better ways to create the income, and finally to control and drive down expenses. I believe the results of this quarter demonstrate our ability to make progress to these events.

This concludes my comments. And at this point I'd like to turn the presentation back to Merrill Sherman.

Well thank you, Linda. And I'd just like to comment. I think that we put up a really solid quarter. I was very pleased to demonstrate continued core deposit stability, which I think represents good performance in New England and nationally. If you take a look year over year, our DDAs and savings are up over the third quarter of last year and up on an average basis as well. And finally our core deposit percentage has remained relatively stable in the 62 to 63% range by core deposit -- I mean checking, savings and other transactions as accounts.

So we're pleased about that. The other thing I would indicate to show the ongoing vibrancy and strength of our deposit gathering ability, is our growth in retail WEPOS. Now retail WEPOS are consumer funds. It's to that consumer that are usually business funds. But they are customer funds that we sweep on an overnight basis.

And at the year-end we had just under $34 million in those WEPOS. We have just over $50 million -- $51 million that we see today, and that also compares very favorably to year-end -- not year-end, the end of September from '06 when we had roughly $36 million. So that more than (inaudible) $15 million in growth really represents the increase in our customer base, and the funds that they have with us.

Asset quality is another area of continuing focus. I would say that it remains strong, despite what you see as an increase in our non-performing assets. The portfolio quality is strong overall. We've got no sub-prime loans. And despite the increase in non-performers, I can tell you that our negatively rated assets have declined over the last several quarters, and in fact lower than they were at this time last year.

The modest increase in the non-performers is still very low, 27 basis points on asset. And it's likely the result of one secured credit that has gone to non-performing status. And that is a like a long-term customer of the bank. It's not a recent credit added to our books.

Cut back with commercial lending front for a minute -- historically the growth rate has been higher. We are still market leading in that high single digit, low double digit growth range. And we're very pleased with the kind of business we're seeing. Part of the reason that the growth rate has slowed down a bit is the CRI portfolio. And I'd like to talk about that for a second, because I think it illustrates why higher growth rates are challenging.

We have booked just under $60 million in new CRI commitment since year-end. But the results have been very modest portfolio growth of just under $10 million. And what you can see is our customers sometimes can sell properties and pay their loans off. But more than that on the construction lending side, our condo projects are likely selling.

Our houses and our stable of developers who do that are experiencing decent sales in moving their properties. However, I think they're very cautious about going back into this market, so that as those construction loans pay down, we are not seeing quite the same high point of new construction loans.

And frankly I don't want to say that's okay with us. We'd prefer to be out there lending aggressively. But we are just not aggressive in this market. And I think you will find that the better developers on the residential side are less than aggressive. At the end of the day, what it means is we have to work twice as hard.

On the retail front, we told you last call that we would be opening the Pawtucket branch. That's slated to open next week. We've had some ceremonies around it and gotten some nice publicity. We mentioned also that that would be done in a cost neutral manner. We have skinnied down our hours in other locations, allocating those hours to Pawtucket.

We will close our -- we've had a kind of what we call a branch in a box, a 600 square foot facility. We will no longer -- people in that branch would rather have it just be a fully automated facility. That's our small branch on Plainfield Pike. And finally as Linda indicated, we also will be -- we've transferred our development rights to the Narragansett site, and don't anticipate opening a branch in Narragansett. So that will result in a phase going forward, and I think enable us to focus more on our core franchise.

Universal Bankers continues to get a positive reception. The customers like it. Our employees like it. And that single touch point we are hoping will also cut down on turnover, as well as make us more efficient. And finally Linda began to comment about the Fed easing. And we are doing everything we can to make it positive, and have it a positive impact over time on our margin by really watching our core deposit cost. But it's a little bit too soon to count when the benefits will kick in.

With that, I will open it up for questions.

(OPERATOR INSTRUCTIONS) Our first question comes from John Palmer with PL Capital. Please go ahead.

Good morning. Morning, Merrill. Morning, Linda.

Hello, John.

Hello, John.

Just taking a look backwards, and then trying to get you guys to look forward. I looked back over Q3 of last year through Q3 of this year. And essentially when you come to the earnings, and you get to a core run rate. It's around 44 cents a year ago, 41 cents at 12/31, 44 first quarter, 44 second quarter. And now we're at 44 again approximately this quarter.

How do we move the needle higher? What are we going to do to get the number off this mark, and move the efficiency ratio down -- first question. The follow-up to that is where would you expect to get the efficiency ratio? Where are you comfortable estimating a reasonable efficiency ratio for the company?

Let me talk about improving the earnings on the first side. As you know, this is a difficult environment for most institutions. We are one of the few institutions in this area that is posting an improvement over last year. So I am pleased about that.

The areas of focus are threefold. First you can see that some of the cost controls have begun to kick in. And we are continuing to try to drive those home and exploit those. We've got a number of process management reviews underway yet again. And hopefully we can see better results over time there.

The second area is the emphasis on our non-interest income. Linda, you said you found the results we're producing from Macrolease is a good example of a company that we bought -- what, 2-1/2, 2 years ago? And we're beginning to ramp up the production there, as well as further that.

The third area, and it's sort of a tie between cost controls and exploiting the investments we made, is the branch franchise. And Linda can talk a bit if -- later about some of the improvements we've seen with the newer branches. But we've had three branches that we brought online, in what turned out to be one of the most difficult environments from an earnings standpoint.

You end up with high short term cost of funds, which increases your funding costs. And then you couldn't deliver the money you were bringing in because of the shape of the yield curve. So the expense carry with those branches is going down naturally. And then it also helps to expand our footprint and grow our quality assets and our quality deposits, which really is the third point in this story.

So we're looking to continue the kind of growth we are experiencing. And I think you'll also see that for the most of banks in this area, we're a different story, and that our core deposit percentage has grown modestly. The percentage has remained constant. But we've managed to grow both DDAs and savings in a healthy way, that I don't think other institutions are showing at this point.

And the commercial lending story remains a very, very good one, kind of taking a conservative viewpoint and putting less on the books, in order to maintain the asset qualities that have traditionally enjoyed. So I think that's kind of where our focus is. And then if you're talking about the efficiency ratio, it's still nothing to -- it's improved. It's going the right direction. But it's not anything to write home about.

And there are different views on what high cut, high quality franchise can have in efficiency ratio. I would say that our target is probably in the -- over a couple year or two is in the 55% range. But what I really want to focus on is the ROE. If you can post a strong ROE, and our issue is going to move in the right direction if we continue to improve the earnings. I think the efficiency ratio is just a statistic. So we don't think it's what is usually trading on equity. And we'd like to get back to where we were.

I'm sorry. I didn't hear. What did you say was acceptable efficiency ratio?

I think something in the 55% range for an institution like ours.

And what kind of ROE would you expect to have there, Merrill?

Really if we get back to the 12% range for an ROE in the foreseeable future, I think that would be incredibly strong performance.

Okay. Thank you.

Thank you. Our next question is coming from Tom Goggins with Fontana Capital. Please go ahead.

Morning, Merrill. Morning, Linda.

Good morning, Tom.

Good morning, Tom.

Hey, what capital ratio do you target and what is that target?

I think when we take a look at overall total risk base capital, we're in excess of 13% right now. And that is high. I think somewhere between 11-1/2 and 12% on the total risk base is a comfortable range for us to be in.

And then did -- I'm not sure if I missed it. Did you say how many shares repurchased this quarter?

37,200 shares, Tom.

37,200. And just philosophically, how do you feel about the outlook on share repurchase going forward?

We continue to execute on our program, Tom.

And how much do you have left?

We have over 180,000 shares left that we can buy under the program.

Right. So at these levels, I assume that your stock is near its three year low. You would be pretty aggressive in there?

We indicated that we intend to continue to execute on the program. Bear in mind that sometimes are absent lots be coming available. We are subject to all kinds of restrictions. And we have the window to deal with. So some are -- had quite a few come to the numbers in the range that they are.

Right. And then, Merrill and Linda, you mentioned the Pawtucket branch location was going to be cost neutral. And you were saying that you were going to shut down that one bank in the box. So is that going to be profitable day one then?

I would doubt it.

No.

No?

It will not be profitable day one because of the margin. We intend to bring in higher yielder acquisition type of accounts. But over time we will migrate them to a more core environment.

And what's the break even records on that, either deposits or loans, and the timeframe that that would happen in?

Tom, what we have said is that probably in a four to five year range for a branch to be truly profitable in this environment. And so in the old days, it used to be very simple. You'd say if you hit $20 million in deposits, you broke even. Clearly it depends on the mix. And if we could bring in 30% DDAs, the branch becomes much more profitable much more quickly. We don't anticipate that happening in this environment, given what the marketplace --

Right.

So Linda, when you did your penciling out on the projections, you penciled in kind of a four year timeframe for break even?

Yes. It's going to be about three or four years, Tom.

Okay. And --

I will tell you we are very actively out there selling Pawtucket right now, before even the branch opens. So we're hoping to get some good commercial type deposits, and some lending activity already there when we open those doors. So we're very conscious of that. And we are actively pursuing it.

Okay. And then my last question is on the MTAs picked up a bit.

Yes.

Yes. Can you just give a little description -- is that one, two, three credits? And what kind of credits are we involved -- are those involving?

Basically it's one, roughly $2.5 million commercial credit that went to non-performing status. It is a secured credit. And we're in the process of working it out now.

And is it secured by real estate?

In part, yes.

Okay. And you expect that to be resolved within one quarter? Or is it going to be something that you'll need to take possession of and sell?

Really, Tom, it's so onesie, twosies on this. I don't want to comment any further except to say the natural life cycle of a (inaudible) is about 18 months. So --

All right.

But it is what it is that way.

Yes.

And kind of go back to the overall portfolio quality remains strong. The charge-offs year-to-date are something like $200,000.

Oh your charge-offs are really good. And was this on your watch list like last quarter?

Yes.

It was on your watch list then. Okay.

And what I also understated is that we have a watch list. This credit had been on the watch list earlier. But the number of credits on that watch list, if I had to say what are the overall negatively rated credits are actually lower at this point, than they were a year ago at this time. So we're comfortable with the credit quality. That doesn't mean that we can have $1.5 billion bank with no non-performing --

Oh no. I recognize that. I just was trying to get a handle, because a lot of people or a lot of other banks are also seeing some deterioration credit. And then my last question -- I apologize for saying the last one if it wasn't. Your NIM in terms of improvement with the Fed dropping rates 50 basis points, and probably going to drop rates again next week. What type of NIM improvements do you think we could see in the fourth quarter and '08?

Tom, it's very much controlled here, as I said before, by the marketplace on the core deposit pricing. When citizens own 50% of the marketplace, we're really a market taker, not a market maker. The FHLB advances and the consumer CDs we have seen -- the price has come down. But again, that takes time to bleed into the cost of funds.

So I'm looking to start open my own here in the fourth quarter, and looking for improvement in 2008. But it will play out in the competitive marketplace as people are -- want that core deposit. And if they become scarcer and scarcer in the marketplace, it gets very competitive.

Right. So you're basically saying flat NIM for fourth quarter, and then some improvement in '08?

We will talk more about that in our January call. We have to present to the budget processing. I think everybody is watching the market very carefully here, and looking to see what the Fed is going to do next week, whether it's 25 or 50 -- I don't know. But I think it will -- it's very volatile at this point. And we will have a better number for you in January.

Right. Thanks for your time.

Thank you.

Thank you. Our next question is coming from Richard Lashley with PL Capital. Please go ahead.

Hi. Good morning.

Good morning, Richard.

Good morning, Richard.

A couple of my questions got answered already. But drilling down a little further on the stock buybacks --

Yes.

What's the holding company liquidity? Because I guess you redeemed the trust preferreds, so that comes out of the holding company I assume. So you have the capacity under the authorization. What's the liquidity to do it?

I think there's plenty of liquidity at the holding company.

Is it taxable liquidity sitting there now? Or would you have to dividend up from the bank?

No. There's actual liquidity sitting at the holding company.

Okay.

I think you can see that, and it's just between the ratios of the bank and the court. We still have capital up at the holding company.

And don't take this as a criticism. It's really a question that I struggle with. The 2007 deposit data came out. And six of the 16 branches you have have lost deposits year over-year. And ten of 16 have increased. The new branches -- some are feeling better than others. East Greenwich is still only a $17 million branch. And I guess that the $64,000 question is -- is there a payoff for the Universal Bank or model, with the extended hours and the high touch?

The answer is yes, that then they'll go onesie, twosies through the branches, because there are different stories for each of them. The bottom line is that if you look at overall deposit marketplace, there are some distortions in it, with the headquarters branch is for both citizens and Bank of America.

But you remove those distortions. We're one of the few banks that has grown in absolute dollar amounts in this marketplace, number one. And number two, you look at it as an overall system. The second point I would make is we retain the core deposit percentage. And I think if you see the growth in some of the other institutions, and then look at what their checking and savings deposit looks like compared to their CDs, we would compare very favorably.

So I'm comfortable with that. Some of the other branches that you take a look at -- Lincoln has really done terrific. I think we're over $25 million there -- $30? We're over $30 million. And that's just in interest. It's been a real gem. And East Greenwich is okay. It's only been open for what, it's just -- it's about two years at $17 million in a very tough environment. So we're really focused on trying to get more business, and drive more business deposits into that branch, which we think will help.

Economically there are things happening around that branch that should benefit that branch as well. We have identified better leadership for that branch. And we are working very hard with our DDOs to bring deposits into that location. We are very much aware that we need to get that branch into the black.

I agree that the one hopeful benefit of the high touch model is higher DDAs, and a larger number of DDAs. You publicly released the number of accounts you have, and then the number of DDA accounts that you have over time?

I don't think we ever have. That doesn't mean we can't. But I don't think we ever have.

Hey, you might want to consider that if it's easily obtainable.

I will tell you the other advantage for the Universal Banker is the fact that the turnover is starting to decline in a material way for us. And that is a drain on earnings and expenses as well. The teller position has turned over historically on a very high level. Now that we are getting a better quality work force in the Universal Banker, we're seeing that turnover decline.

Good. Two more quick questions. The Slade-Surrey acquisition -- Independent Bank acquired them. Did you look at it?

I don't think we're going to comment publicly on it. And Richard, you would know that if you looked at something like that, you would've signed a non-disclosure agreement.

I'm not sure if that would cover whether you looked at it or not. But I hear you. And then the last question is the Chief Operating Officer left during the quarter. I guess any public comments on the reason, or if not on the reason do you plan to replace him, or is that a permanent change? And then was there any financial impact on the quarter?

There would not have been any real financial impact on the quarter. We don't plan any further comment on that beyond the filing. And we do not plan to replace Jeff, and have reorganized the responsibilities.

Thank you.

(OPERATOR INSTRUCTIONS) Our next question comes from Bret Ginesky with Stifel Nicolaus. Please go ahead.

Hi. I have a question for you guys just regarding the full-time employees for the quarter, of what that number was at, and if there'd be any change to that in the fourth quarter? I know you opened a branch. You think you guys are reallocating from your resources. But where would that number actually be at?

Bret, that's one piece of paper I didn't bring in with me. Not related to the branches, but I expect that there might be a one or two FTE increase in the fourth quarter. For open positions that we have out there, and whether it be accounting or HR. But other than that I don't see a big increase in the fourth quarter.

Okay. And then could you talk about the income tax expense, and just where you see it going from here? It seems to have been going down on a quarter-by-quarter basis.

I'm sorry. I didn't hear what you said. I'm sorry?

We expect it to be about 32% for the fourth quarter.

Okay. Then just I guess regarding the Narragansett fight. And you may have addressed this before. But what were the -- and at one point you were looking at opening this as a branch. And I know between Pawtucket and Narragansett, you were saying it was about five years break even over -- I think that was the 2006 fourth -- I'm sorry -- 2005 fourth quarter call when you decided you're going to hold off on these.

And now at what point did you guys decide, or what negatives came in to make you decide that Narragansett was worth selling, and it wasn't worth opening up a branch at? And also parlaying that, but Pawtucket and how you're going to be break even within three to four years, instead of the five years that you were looking at before?

I think that Linda just commented that our suggestion, given the business that we were hope -- we are hoping to bring in in Pawtucket, would put us in that three to four year range. And so it is what it is that way. The second aspect is during the course of the year, the opportunity -- we created an opportunity, instead of looking for an opportunity, given the protracted period to get branches to profitability, and given that we still have some relatively young branches to part with the Narragansett site.

And we elected to do so. It's not core type to franchise. I'd say it's a great location. And someday, if the environment changes, and we're looking for the sand on the retail on the touch point side, we can go back to Narragansett. Like I said, it was a wonderful site. But given the slowness to come to profitability of branch locations, we thought it would be prudent. I know if Linda said it, but I will say it was about $130,000 a year --

More than that. We spent $130,000 year-to-date at that site. And at some point you say, "How much more am I going to spend?"

And so it just seemed like a reasonable decision to make. Again --

Okay.

-- but just to refresh your recollection. When we undertook the branch expansion plan, it was on our books really in 2003 into 2004. It was a different world at that point. And at the time it seemed like the reasonable plan. Now we're tweaking it.

Okay. And on the increase in the provision of the quarter to 290,000 -- just are you looking at possible more credit issues going forward? And I know you guys are pretty low levels on the non-performing. But what was the rationale behind this? Is it because the loan portfolios just continue to become more commercial and consumer oriented? Or what's driving that?

I just think that it's a combination of factors. We make an evaluation each quarter, based on the combination of factors. And it's still lower than it was, I believe, for the third quarter of last year. And this is what we believe to be an adequate reserve. And I've already commented several times on our perception as to the strength of our portfolio.

And what about just the change in your watch list on a quarter-to-quarter basis, based on the second quarter? Has that gone up or down?

(inaudible)

Let me say what -- I think it's down on from the second quarter as well.

Okay. Great. Thank you very much.

Thank you. Our next question is coming from Anton Schutz with Mendon Capital. Please go ahead.

Hi. I just wanted to chat on your buyback program a little bit. And obviously you won a proxy battle back in May. And the stock price was significantly higher than it is today. And your capital ratios have grown substantially. Obviously the market believed in May, before the proxy battle, that your stock was worth where it traded for probably multiple reasons, including the potential takeout value of the franchise. I'm glad you bought some stock back.

But I guess my question is have you considered implementing a buyback program, that would allow you to repurchase stock even during quiet periods? There are plans that exist like that, so you can be in the market on a constant basis, and clean up some of the retail flop that goes on out there. And I just called 100 shares on the tape today, and your stock is down over 2%.

There's no reason for that to happen. And obviously it'd be very accretive to the value of the franchise for you to be in there buying stock. So I'd like to ask you if you'd consider that kind of plan, and I'd like to ask why you let the capital levels build so much, when your stock is what most institutions would think -- at very attractive levels, whether it's a terminal value or even an operating value.

Well thank you for saying that we are an attractive stock. I think that's a good point on expanding the buyback. And it's certainly something that we are considering. And so that's a legitimate comment. And there was a second point in there? I think that's a reasonable thing.

The other thing is -- yes, I know what the other comment I wanted to make when you noticed 100 shares you can buy at the price. We have -- what, maybe 5 million shares outstanding. The reality is that we will -- we are more liquid than we have been, but not the most. We're just not the most liquid stock in the world. And I think that that's just one of the things that happens when you're, in effect, a micro cap to small cap stock. So we'll take a look at -- and I think it's legitimate -- correct to be in the market longer term. And it's a point well taken.

Great. Thanks. Appreciate you considering that.

Thank you. (OPERATOR INSTRUCTIONS) I am showing that there are no further questions. I would now like to turn the call back over to Ms. Merrill Sherman.

Well thank you much -- very much for joining us this quarter. And I will look forward to talking with you all in late January, when we release our annual results. Thank you.

Thank you. This does conclude today's Bancorp Rhode Island Third Quarter 2007 Earnings conference call. You may all disconnect and have a great day.