Cullen/Frost Bankers Inc (CFR) 2011 Q1 法說會逐字稿

Good morning, my name is Kimberly and I will be your conference operator today. At this time I would like to welcome everyone to the Cullen/Frost Bankers first quarter earnings call. All lines have been placed on mute to prevent any back ground noise. After the speakers' remarks there will be a question-and-answer session. (Operator Instructions). Thank you.

Mr. Greg Parker, you may begin your conference.

Thank you. This morning's conference call will be led by Dick Evans, Chairman and CEO, and Phil Green, Group Executive Vice President and CFO. Before I turn the call over to Dick and Phil, I need to take a moment to address the Safe Harbor provision. Some of the remarks made today will constitute forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, as amended.

We intend such statements to be covered by the Safe Harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform act of 1995, as amended. Please see the last page of the text in this morning's earnings released, for additional information about the risk factors associated with these forward-looking statements. If needed, a copy of the release is available at our website, or by calling the Investor Relations Department at 210-220-5632. At this time I will turn the call over to Dick.

Thank you, Greg. Good morning, and thanks for joining us. It is my pleasure today to review Cullen/Frost's first quarter 2011 results. Our Chief Financial Officer, Phil Green, will then offer some additional details, after that we'll both be happy to answer your questions.

During our quarter call in January, we said that 2011 would be a transition year. Even so, we were cautiously optimistic about the economy and Cullen/Frost for three reasons. More clarity for businesses, our Texas-base advantage, and our unique culture here at Cullen/Frost. Each of these factors still ring true today.

First, we have more clarity than in 2010. We know the make up of Congress an the Texas legislature, the tax package passed in late December provided two more years of clarity concerning taxes and we continue to see more clarity concerning the Financial Reform Legislation adopted last year, and we're still working to improve it.

We're pleased that members of Congress are beginning to listen to the ways that Dodd-Frank bill will have significant negative impact on community banks and the individuals and businesses they serve. Particularly with the proposed repeal of Regulation Q and the Durban Amendment.

Regardless of what rules come out of Washington, however, we want to emphasize that Cullen/Frost will adjust our game plan accordingly. While staying true to our values, we will adapt as needed to serve our customers and to remain profitable for our shareholders. In addition to more clarity in the market, the second reason we gave for cautious optimism was that our business is in Texas.

The economic downturn hit us here in Texas like everywhere else, but not as hard. Texas entered the recession late, and has come out of it at a stronger pace than most States. Unlike the Federal Government, the Texas Legislation and Constitution does not allow law makers to operate with deficit financing.

The Governor and the State Legislature appear to be well on their way to making tough decisions that balance the budget without raising taxes. Our unemployment rate in Texas should remain lower than the national average, while our job growth will continue to out pace the nation, as it has for years. The Federal Reserve expects job growth in Texas to be about 3% this year, compared to 2% in 2010. The Texas unemployment rate likely will fall about 8% to approximately 7% in 2011.

Slowly, but steadily, the US Economy is growing and improving, while Main Street is cautiously expanding. That's great news for Texas, because energy and technology are both strong in Texas, and are leading sectors in the national economic growth. Cullen/Frost continues to be grateful and proud to be a Texas based company.

The third reason we gave for cautious optimism was the culture of our Company, and that remains the distinguishing characteristic that sets us apart in the Industry. At Cullen/Frost we have a clearly defined value proposition. We have great people who execute strategically, prudently and efficiently. Our brand is outstanding. Our reputation has never been stronger. We have tremendous capacity.

Our liquidity and capital are much higher than the national average. We've experienced solid and consistent performance in all market cycles, while other banks were cutting or eliminating their dividends, we were raising ours. Because of our steady and consistent performance, we are well positioned to adapt to any industry changes required by Federal Legislation or Regulation.

Our focus on relationships and growth will pay off as our economy continues to improve. Now let's take a look at our results for the first quarter. We had three key developments in the first three months of this year. Average loan volume increased over the fourth quarter. Asset quality improved to its best level in two years, and our net interest margin improved as we said it would.

Our net income for the first quarter was $51.9 million, or 8.6% from the $47.8 million reported in the first quarter of 2010. On a per share basis earnings were $0.85 per diluted common share, compared to $0.79 per diluted common share from a year ago. Return on assets and equity were 1.19% and 10.11% respectively, compared to 1.17% and 10.07% for the same period of 2010.

For the first quarter of 2011 net interest income on a taxable equivalent basis grew to $157 million, up 4.2% over the $150 million reported for the first quarter of last year. This net-interest margin, or the net-interest margin, was 4.03% in the first quarter, compared to 4.19% for the year earlier period, and 3.93% for the fourth quarter of 2010. Deposit growth continues to be strong.

Average total deposits during the quarter rose to $14.5 billion, up 7.3% or $1 billion over the $13.5 billion reported for the first quarter of 2010. Non-interest income was $72 million for the first quarter, up almost $1 million from the first quarter of 2010. Trust fees increased from $17 million in the first quarter of last year, to $18.2 million in the first quarter of this year.

Deposit service charges were $23.4 million for the quarter, down 5.8% from $24.8 million in the first quarter of 2010. Most of the decrease resulted from new regulation which reduced NSF, and overdraft service charges. Other charges, commissions and fees were, $8.8 million for the quarter, an increase of $1.9 million from the first quarter of 2010.

The increase was primarily due to investment banking fees, and mutual fund management fees from Frost Investment Advisors. Non-interest expenses for the first quarter were $140 million, up 4.1% from the first quarter of 2010. The 3.9% increase in salaries and benefits was mainly due to normal annual merit increases and an increase in incentive compensation.

Turning to loan demand during the first quarter, average loans were $8.1 billion, compared to $8 billion last quarter, and $8.3 billion for the first quarter of last year. The lending environment remains a challenge, but I believe our discipline calling efforts, are building a solid foundation for future growth. Our new loan commitments were up 38%, compared to the first quarter of last year.

Overall, we have 12% more customers with active commitments than last year. Credit quality continues to improve, with non-performing assets at their lowest level in two years, down $10.2 million from last quarter, and down $16.9 million from the first quarter of last year.

Our credit quality improvement is steady and consistent, which mirrors the Texas economy. We expect further improvement over the next few periods, absent any significant deterioration in the national economy. The loan loss provision was $9.5 million for the first quarter of 2011, a decrease of $4.1 million, compared to a year ago. Our improvement in credit quality indicators results in the release of some of our loan reserves during the quarter, while maintaining a healthy allowance.

Our allowance for possible loan losses as a percentage of total loans was 1.55% at March 31st, 2011 compared to 1.53% at March 31st, 2010. And 1.56% at the end of last quarter.

Moving now to our consumer banking activity, the first quarter produced growth in the number of checking accounts and deposit balances. Checking accounts grew 5% from the first quarter of 2010, to the first quarter of 2011, while balances grew 6.7% over the same period. Our capital levels today are even stronger than before the financial crisis began.

Tier one and total risk based capital ratios for Cullen/Frost were 14.22% and 16.31% respectively, at the end of the first quarter. Each ratio is in excess of well capitalized levels. The ratio for tangible common equity to tangible assets was 8.94% at the end of the first quarter, compared to 8.65% for the same quarter last year.

Cullen/Frost posted steady results for the quarter as the economy tries to gain some traction. We expanded customer relationships and managed expenses during a challenging revenue environment, and a period of changing regulation. I am confident in our abilities to meet challenges head on, and pleased with our position in the markets we serve. We continue to see positive results from our strategic calling efforts, which has already produced many new relationships that will be the foundation for loan growth when confidence returns to the economy.

Before I turn the call over to Phil, I'll close with a few comments on the financial industry, and why Cullen/Frost is so unique within our industry. Our nation is still trying to recover from the financial crisis. It was created by a combination of factors, including bad public policy, excess liquidity and a willingness by some of the Nation's largest banks to sacrifice sound lending practices for a quick buck. It wasn't six months ago we were all hearing about banks going back to fundamentals.

I'm not sure what has changed, but now we hear a lot about covenant light loans, which do not contain the standard early warning safeguards for lenders. It appears that some banks are at it again. In a period of historically low interest rates and very high liquidity, they're compromising sound lending practices in search of a higher return. Nevertheless, a day of reckoning will come, and someone will have to pay the consequences of today's wreckless behavior. Unfortunately, that someone too often turns out to be the innocent American taxpayer.

It's still early in this slowly recovering economy, but with high levels of capital and liquidity, plus a zero-rate environment, we see many banks already beginning to compromise credit standards and rates. We take the long-term view and emphasize asset quality. Frost will continue to focus on building relationships, maintaining our credit disciplines, and pricing fairly in a competitive environment for loans. Simply put Cullen/Frost is a lot different from most other banks.

We were different when we turned down TARP bail out funds, we were different when we got out of the residential mortgage lending business 11 years ago. We were different when we delivered steady and consistent performance, quarter after quarter, in up and down market, and we were different when we increased dividends to our shareholders during the recent recession. But the biggest difference between Cullen/Frost and other banks is the way we treat our customers.

Our employees work hard to deliver value for our customers. We recognize and appreciate Frost difference. Continued third party confirmation of customer focus at Cullen/Frost came just last week, when Frost received the highest customer satisfaction ranking in Texas, in retail banking, from JD Power and Associates for the second consecutive year.

I'm grateful to our outstanding employees for delivering on our value proposition to taking care, taking excellent care, of our customers. We often hear from our customers that they would have banked with us sooner if they had only known about us. That's why we're increasing our marketing efforts this year. We want to make sure more people know about our great culture. Clearly defined by value proposition and our customers focused employees.

2011 is a transitional year in the Industry, and at Cullen/Frost requires us to adapt our business model to new rules. But regardless of what legislation or regulation come out of Washington, and regardless of what others in our industry are doing, Cullen/Frost will stay the course. We will be true to our value proposition. We will treat our customers the right way, and we will strive to continue to deliver consistent and superior financial performance for our shareholders. And with that I'll turn the call over to Phil Green.

Thanks, Dick. I'm just going to make a couple of additional comments about our operations and outlook, and then I'm going to give it back to Dick for questions. First regarding the margin, we were pleased that we saw an uptake of 10 basis points for the quarter, and the primary driver of this increase was the growth in our investment portfolio due to bond purchases that were made in the first quarter.

We booked, for example, $300 million in floating JMA arms at a 236 yield, in January we had $300 million in 30 year Ginny Maes, in February had a 403 yield and then $87 million of 18 years Texas municipal's near the end of the quarter, and those had a tax equivalent yield of about 615. All together, these added about eight basis points to the first quarter margin. Another positive in our margin expansion was the average reduction of $170 million in a brokered MMA deposit position, which was four basis points positive to the margin.

These were offset by full quarter impact from the sale of the remaining prime base swap in the fourth quarter of last year, and we discussed the impact of this sale in last quarter's conference call. I also wanted to comment on our loan growth for the first quarter, on a link quarter basis, average loans increased $50 million for an annualized 2.4%,and our growth came from a combination of C&I loans of $55 million, and commercial real estate mortgages of $34 million, and these were partially offset by reductions in most categories of consumer loans and other commercial real estate loans. We experienced growth in almost every region of the company, with the largest dollar amounts coming in San Antonio and Houston.

Looking at our loans on a period-end basis shows that the growth has been erratic early in the year. For example, period-end loans were actually down about $90 million from the year-end due to C&I pay downs. However, as of the 25th of this month, volumes were once again back to year-end levels. Now I would like to take a look at a few non-interest items on a link quarter basis.

First let's look at non-interest income. It was up about 12% annualized for the quarter on link quarter basis, and there was some noise in the numbers because of the seasonal $4 million growth in insurance commissions. Remember that this is always our strongest quarter, and also a drop in other income of about $3 million because of some strong recoveries and unusually good public finance underwriting revenues in the fourth quarter of last year.

But looking at trust revenues, they increased almost 19% annualized from the fourth quarter and two-thirds of the growth came from investment fees. Most of the remaining growth came from strong estate fees and real estate fees, while oil and gas fees from down $158,000 from the previous quarter as continued low natural gas prices has slowed activity in that sector. Additionally, the growth in other charges and commissions in the first quarter was driven by investment banking revenues, which were about two-thirds of the increase, and that was followed by fee growth from annuity sales, RIA investment fees and Capital Markets advisory fees.

Looking at expenses on link quarter basis, remember the benefits cost are always seasonally highest in the first quarter, and also other expenses contained a $900,000 write down on a piece of bank premises as currently on the market. Looking forward, we still have yet to see the impact of the Durbin Amendment, red Q, or most of the additional marketing expenses that we've committed for this year, nor on a plus side, the reduction in FDIC cost from the change in assessment structure. We still expect all these factors to be consistent with what we reported last quarter and with regard to our performance for the year we still are currently more comfortable with the level of earnings a little below the current consensus of estimates for the year. With that I will turn it back over to Dick for questions.

Thank you, Phil. Now we'll be happy to entertain your questions.

At this time I would like to remind everyone in order to (Operator Instructions). We'll pause for just a moment to pile the Q&A roster. Your first question is from John Pancari.

Morning.

Good morning, John.

Morning.

Dick, could you give us a little bit more color on loan demand that you're seeing in the quarter, if you happen to have some production numbers for us as well as some quantification of the pipeline.

Yes. The calling effort is really paying off. I think one thing we got to recognize is just how weak the economy is. We just got some results, I was just looking at them yesterday, from our Greenwich study, and I was surprised by a couple of things.

One is that small businesses, because they've just come off of the de-leveraging of several years and the fear that they have in this environment, quite frankly they're paying for their expansion, and they are expanding. They're buying some capital equipment more than they did the previous year, purchasing some information technology, which we all recognize they got behind in this recession and they're even hiring a few people, but they're using less bank borrowings, and that's at reason why I mentioned that this aggressive calling effort is so important.

They're using their cash and retained earnings, rather than lines of credit and term loans. Which shouldn't have surprised me, but it certainly is, and that's the reason why that our commitments, usage of lines are still bank wide at 45%. You will remember we talked about commitments at some length, that in a recession they get down about 45% and then when the economy gets hot, they are at about 55%.

So we're still, I think that we've got to recognize the fact that the economy is alot weaker and with this tremendous liquidity, in fact, recently I read that banks have $1.4 trillion in excess reserves at the 12 Federal Reserve Banks. So in this 0 rate environment, you're seeing a lot of different aspects than we have seen in some time. So what we're doing, which thank goodness we did all through the recession, and that is to aggressively be building our customers. Had we not been aggressive for three years in calling on prospects our loan volume would really be down, but we have done a good job of bringing new customers in, CNI loans of all different nature, certainly energy has been good, but energy has been so flush with cash, and at these prices, obviously they have not used their lines as much as they have in the past.

So it's an interesting time that we find ourselves in and, again, what we have focused on is staying with our credit standards, fair pricing, but you're seeing a lot of competition, which quite frankly from an overall aspect of the Industry, I worry that the Banking Industry has gotten so aggressive early and a softly recovering economy.

Okay. That's helpful. And in terms of the loan growth outlook, can you give us an idea of when you would expect more of a sustainable turn in the period-end growth trajectory?

You know we're optimistic that we're going to grow loans through this year. You heard Phil say certainly from a period-end standpoint, we were down but already we've gotten back to that level. You also have to remember that in the fourth quarter, you always have some build-up in loans for dressing up the balance sheets which has been going on for years and years, and so some of that drop-off was a result of those lines paying down. But it's still a challenging environment, but we feel good because of our aggressive calling effort and building prospect lines. Building new relationships with prospects.

The other thing, if you look back at history, 75% to 80% of your loan growth came from existing customers advancing on lines. So you don't have that happening yet. Now, to answer your question, when is that all going to turn? I don't know. I think we still got a lot of lack of confidence in this economy and we've got to still be aggressive. When that turns, you will see I think the obviously, the lines go up and loans will certainly go up substantially. In the mean time, we will continue our calling effort and continue to not only take care of our customers, but bring more prospects in.

Great. Thank you.

Our next question comes from Steven Alexopoulos.

Hey. Good mornings, guys.

Good morning.

Dick maybe I will start. A lot of comments on the competition for loans being very aggressive, and you know the Industry already compromising on credit standards and rates, how much of this is a factor today for your loan growth? You know, is that one of the drivers of why period-end might be down this quarter?

It's becoming more of a factor. I don't think it was a big factor in the first quarter at all. I think it's the things that I've already talked about. But I think it's something that we've got to watch.

I was surprised in reading in Bloomberg Magazine, that covenant light loans that I talked about, are coming up significant and, you know, people are starting to lower standards, and I think it's because where else are you going to put your money, what are you going to buy, and so it's not the right thing to lower standards, but we've been able to hit on that strong and people appreciate our value proposition.

In terms of the lower standards, is it smaller banks, larger banks or is it widespread.

Its widespread, but it's mainly the too-big-to-fail that are bigger, and still will not be able to, with all the Dodd-Frank and everything, the American people will have to bail them out again.

Okay. And then, Dick, you mention the that the new loan commitments were up, I think you said 38% year-over-year. How does that compare the commitments, versus year-end? What did we see through the first quarter?

Now, I was talking about the new commitments 38%. Now what are you asking me? I'm sorry.

Was that a year-over-year number?

Yes, sir. That was.

How did that, if you look at the quarter versus year end, did you see any improvements there through the quarter.

Let me see. We've got pretty consistent, although the first quarter typically is a little weaker, because you come off of a lot of activity in the in the fourth quarter, but I would say to you that the year started off a little softer than that. Still growing but softer.

Maybe just a final question. I know you said you added to the Securities book. Could you just give what period-end Securities balances were in the quarter, and I know we will get this with the Q, but also where the yields were for taxable and tax-exempt.

For the end of the quarter our municipal portfolio was about $2.16 billion. It's got a tax equivalent yield currently of 6.62. We've got agencies which are mortgage backed, primarily Ginnie Maes, some floating, some fixed, mostly fixed, which are $2.568 billion with a 424 yield and then we do have a $1.2 billion in treasuries, just under $2 billion, it's a 1.98% yield.

Perfect. Thanks for all the color. Appreciate it.

You're welcome.

Your next question comes from Emlen Harmon.

Good morning. Thanks for taking my call.

Good morning.

Could you talk a little bit about your expectations for the expense firm rate. We did see salaries and benefits obviously increase, well over $5 million in the quarter, and just maybe how much of that was seasonal versus, an increase in the run rate, but then also you talked about marketing being up this year. I am just kind of curious what your thoughts on the run rate expenses are.

Well, I would say there's some things that, some things are going to offset because they're unusual, and some things are going to go down because they're seasonal. The benefits cost are typically a much higher at this point during the year, so we will see that head down some, probably something in the area of $1.5 million to $2 million from the current run rate, just in round numbers and then I think also we did see some, as I mentioned, some unusual costs related to the write down of some bank-owned property that is for sale, which is $900,000, but we are going to see some creep-up related to our marketing costs, so you know you will see some seasonality in those numbers. Sometimes higher, sometimes lower, than the current quarter. So it's hard to pin a number exactly on what's going on, but those are the big factors I think that are seasonal in nature.

Okay. And then I guess my next question was just on the capital front, could you talk a little bit about how you are thinking about just capital deployment priorities at this point, and just thinking about dividend and buybacks going forward.

Okay. Well, first of all, I think we feel extremely good about our capital. If you look at where our capital numbers are today, versus the fully phased in Basel 3 numbers with buffers, we exceed all of those. If you look at the dividends, we are paying out today a little over 50% in payout ratio, which has been pretty consistent the last few years and I think we feel pretty good about the level that we are at, so we don't expect to see a big change in that. The thing about buy-backs, I see a couple of things. We probably would have been more aggressive with regard to that were it not for the recessionary period that we've been in, so we think its good (inaudible) during this period. And then another thing that we're doing is we're of course, always looking for opportunities with with regard to acquisitions that might make sense. That's the first things we like to do with capital, but in the event that those aren't there at reasonable prices, we will look at buybacks.

One of the things that we've got to deal with now , and we are in the process of evaluating the impact of it and I think a lot of banks are, is that the Basel 3 capital rules that are being put in today, require that the OCI included in your balance sheet will have to be capitalized dollar for dollar. Whereas in today's capital rules it doesn't, and so any kind of market-to-market securities portfolio derivatives you know, whatever, have got to be capitalized fully. So we want to make sure that we have a full understanding of that and plenty of capital buffer for that as well, before we determine what level buy-backs might be appropriate. I think one thing to keep in mind, if you look at some of the banks that recently did announce new dividends and buy-backs, I think a lot of their payout in total, including buy-backs and dividends was around 50%. Keep in mind that we're paying that out incompetent dividends

Got you. Do you think about a target in terms of holistically in terms of payout. Relative to other banks, you say they are paying out 50%. Do you guys have a target in terms of where dividends and buybacks combined, you would think of paying out.

Not on a combined basis. We definitely have a target with regard to the dividend, but the buybacks are really more related to what kind of acquisition opportunities we're seeing, and total growth as well, but we generate a lot of capital internally, so I think that's probably the first thing, but the wild card that's been thrown out now is some of the changes on Basel and Industry is going to have to get used to how they're going to deal with that.

Okay. And if I could, just one more quick kind of housekeeping item. You know, the tax rate looked a little bit low, relative to what we think of as a run rate for you guys. Did the purchase tax exempt securities lower that at all in the either how should we be thinking about that tax rate going forward.

The tax rate. I think it's was around just a little about 20 maybe a few ticks under.

Yes. A few ticks under 20.

Yes. I think that's about what we're expecting.

Okay. Thanks alot, appreciate it.

And maybe you're gone now but it was additional tax exempts that affected somewhat.

Your next question comes from Bob Patten.

Morning guys.

Morning.

Morning.

Most of my questions have been asked, but Dick or Phil, in the new world, I mean you made your comments about covenant light loans being the flavor of the day and it's early in the cycle for that to kind of happen especially with the pricing that's going along with it. Where do you see reserve levels for Cullen and the industry being the norm?

Well, reserves are most related to classifications, and certainly we said as we look at all of the factors taken into consideration for the allowance, we feel very good that our allowance is very strong. Or obviously we wouldn't have released some of it this quarter, and we continue to feel that, you heard me talk about the improvement in credit quality and with that, you're not going to need as much reserve.

Do you see Cullen going down to the 130, 140 range at the some point or are you going to keep it at sort of the 150 historic range.

We just look at it every quarter and see what the formula says that we should have.

Okay. And then last quarter Dick, you gave us your thoughts on what's going on with the regulatory environment, and I guess any change or any more optimistic feeling or more negative feeling from where you were on the earnings call in the fourth quarter in terms of Durbin, in terms of (inaudible) and what's going on.

You know how politics are, one day I feel good and one day I feel bad, and it's been too early in the day to tell you how I feel today so I don't know, it's like a yoyo.

Alright. Thanks, guys.

(Operator Instructions). Yours next question comes from Scott Valentin.

Good morning and thanks for taking my question.

Hi Scott.

Phil, you mentioned earlier the ten basis points in margin expansion sounded like it was more driven by the asset side, mostly securities portfolio. Which is a little different than all of your peers, alot of peers are driving margin expansion through lower deposit costs, I was wondering if there's any opportunity there for Cullen to reduce the deposit costs.

I don't think so. To be honest with you. I mean I just think based on what we have seen with pricing, it's been fairly stable in the market over the last few weeks, I'm really happy with our pricing. We're pretty much in the medium of the marketplace, and I think what we're going to see now, we're going to have to see some increases in rates at some pointand that's really what I am expecting going forward. I don't think it will happen for awhile, but I think that's the next move, I don't think we're going it see any benefit on deposit calls.

Okay. And what's the new securities additions during the quarter, any material change in duration of the portfolio?

No. I mean obviously we added some duration. Of course, we do have a fair amount of prepayments that are coming on a regular basis. I will tell you the duration. Hang on. Let me grab a piece of paper.

Sure, and just as a follow up.

Yes.

On the loan growth, you mentioned that the demand is pretty week, but you are seeing a pickup in commitments and your calling efforts. So can we infer that you guys are taking market share, is that a fair assumption given the lack of overall loan demand?

Well, we did increase our 12% more customers with active commitments, so certainly we are growing in our commitments.

You knowthe duration didn't move very much from the previous end of our year-end number and overall the duration of the portfolio is about a 4.2 and that is using the duration of the municipals with expected call to refinance that Bloomberg, has so I could go through the components, but overall it's 4.2.

4.2. Okay. One last question. In terms of loan types, I think you mentioned it was pretty well dispersed among C&I and commercial real estate, but do you see any opportunity many of the smaller banks they are prohibited were doing or unlikely to do commercial real estate, does that provide more opportunity in that area?

Yes, it provides some. You know, you said the keyword, it's smaller banks, so there are going to be some smaller loans but we see some opportunities in that regard. Obviously construction is still quite weak and what we've really focused on is on our occupied and we have expanded our market in that regard and we continue to see opportunities in that.

Thanks very much.

There are no further questions at this time.

Thank you for your support of Cullen/Frost and with no more questions we stand adjourned. Thank you.

Thank you for participating in today's conference. You may now disconnect.