Central Pacific Financial Corp (CPF) 2009 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Central Pacific Financial Corp. first quarter 2009 conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions) This call is being recorded and will be available for replay shortly after its conclusion at the Company's website at www.centralpacificbank.com

I would now like to turn the call over to Mr. David Morimoto, Senior Vice President, Investor Relations. Please go ahead, sir.

Thank you, and good morning, everyone. With us today are Ron Migita, Chairman, President and Chief Executive Officer; Dean Hirata, Vice Chairman and Chief Financial Officer; Glenn Fujimoto, Vice Chairman, Hawaii Market; and Curtis Chinn, Executive Vice President and Chief Risk Officer. Today's call will refer to a slide presentation that can be found on our Investor Relations website at centralpacificbank.com. Ron and Dean will begin by reviewing our first quarter results and then we'll open the call to questions.

During the course of today's call, management may make forward-looking statements. While we believe these statements are based on reasonable assumptions, they involve risks that may cause actual results to differ materially from those projected. For a complete discussion of the risks related to forward-looking statements, please see our earnings release issued this morning and our other recent documents filed with the SEC. I'll now turn the call over to Ron Migita.

Thank you, David, and thank you all for joining us today to review Central Pacific Financial Corporation's financial performance for the first quarter of 2009. I'll be addressing some of the highlights of our Company and the marketplace. Our Chief Financial Officer, Dean Hirata, will follow with the details of our first quarter financial results, and we'll be very happy to answer any questions you may have at the end of our report.

We are pleased to have announced our third consecutive profitable quarter with net income of $2.6 million. In anticipation of decreased loan yields and a compressed interest margin compared to the previous quarter, we're able to maintain relatively stable net interest income through strategic deposit gathering efforts and shifting our deposit composition from time to core. Net interest income for the quarter was supported by record residential mortgage originations in Hawaii totaling $597.5 million, up by 101.1% from the previous quarter. The first quarter of 2009 continued to be challenging, as the adverse economic conditions in Hawaii and throughout the United States have affected both our retail and business customers.

Our state has had its share of business closures, home foreclosures and job losses, fueled by a sharp decline in visitor arrivals and stalled construction activity. Despite these challenges, we have taken and continue to take appropriate measures to increase liquidity, strength in capital, manage credit risks and contain costs. While we cannot control the economy, we have worked diligently to manage the issues that are under our control and prepare for any eventualities. Our employees have truly stepped up to the plate. From taking on new assignments where resources were needed to going the extra mile for our customers, they continue to demonstrate their commitment and dedication to the success of our Company.

With regards to our credit exposure in California, we are continuing to explore options to reduce our credit risk. Although we have no bulk sale transactions pending at this time, we evaluate and remain open to all options, including bulk loan sales, individual loan sales, restructurings, and paydowns.

As we experience credit challenges in the Hawaiian market, we continue to work very closely with our customers, as we have during the past year, to monitor this situation. Loan loss provisioning of $26.8 million was added in the first quarter, bringing our A-LLL to 3.2% of total loans and leases compared to 1.73% a year ago. With increased reserves in personnel redeployment over the past several quarters, we strengthened our resources in the credit management areas of our bank. We are actively managing the situation.

A key component of our balance sheet strategy is sustainable growth driven by core deposit funding. Core deposit average balances for the first quarter of 2009 increased over the previous quarter, and the first quarter of the previous year, by $129 million, or 4.7%, and $271.5 million, or 12.8%, respectively. The introduction of innovative retail checking, savings, and deposit card reward programs in the previous quarter provided much of this lift in core deposit balances, resulting in improved liquidity.

As reported in the previous earnings call, our company met regulatory well capitalized guidelines as of December 31, 2008. We further strengthened our capital position after issuing $135 million in senior preferred stock to the US treasury in January of this year through our participation in a Capital Purchase Program. Compared to the previous quarter, our ratios improved with Tier 1 risk-based capital increasing from 10.44% to 13.93%, total risk-based capital from 11.71% to 15.2%, and leveraged capital from 8.82% to 11.31%. In addition, our tangible common equity ratio has remained strong, at 6.85% for the quarter ended March 31, 2009.

We remain cautious on the state of the economy in Hawaii, where our core business is focused, as well as the US mainland. We will continue to position our company for ongoing economic uncertainty. Our capital position, combined with increased deposits, will allow us to better support the economic recovery efforts in our market for the longer term. Containing operational costs remains top of mind in our day to day management decisions. In addition to the reduction in compensation to our board and executive management announced previously, our operational structure is being streamlined throughout our organization. Capital expenditures are being selectively targeted, with higher return on investment benchmarks and include projects such as items imaging and electronic statements. We also have curtailed branch expansion and are looking at enhancements to our online banking and other electronic delivery channels to better serve our customers' needs.

While we now find some industry experts forecasting an end in sight to this severe recession, recent economic indicators in Hawaii show mixed signals at best. Our unemployment rate reached a 31-year high at 7.1% in March, which is still below the national average of 8.5%. The visitor industry which touches upon almost 75% of the jobs in Hawaii either directly or indirectly declined for 13 consecutive months. The number of visitors arriving in Hawaii by year in March 2009 declined by 16.6% when compared to the same period a year ago. Home foreclosure in our state experienced a spike in March compared to both the previous month and the same period a year ago, primarily due to our unemployment situation. For the first quarter of 2009, Honolulu ranked 150th among the top 203 metropolitan areas in the United States with one foreclosure filing for every 479 households according to RealtyTrac's US foreclosure market report.

However, home values in our core residential areas in Hawaii have been affected mildly. The median sales price for single family homes and condominiums on the island of Oahu where 70% of the island's population reside saw relatively modest declines of 8.3% and 8.5%, respectively, for the first quarter of 2009 compared to the first quarter of 2008. The key to the economic recovery in Hawaii is the rebounding of the visitor industry and construction activity. A projected $1.1 billion in federal economic stimulus funds allocated to Hawaii from the American Recovery and Reinvestment Act will help facilitate capital improvements and related job creation in addition to other major infrastructure projects planned, such as the fixed rail transportation system in 2010. Job creation and restoration will be necessary to instill consumer confidence and spending, just as it will for the rest of the US.

Looking ahead in 2009, we will continue to focus on strengthening our fundamentals and core franchise value, and prepare our Company for the challenges, as well as the opportunities in this uncertain economic climate. We have a positive momentum in core deposit growth going into the second quarter. We originated a record volume of residential mortgages in the first quarter and continue to have a strong pipeline. Our stronger capital position and improved liquidity will support our business development efforts in the coming months. Our new branding campaign, Works For You, was launched in February of this year and has been successful in communicating our commitment to supporting the communities we serve. As champions of small business and the people of Hawaii, we continue to deliver exceptional service and highly competitive products that are expected of a premier community bank.

At this time, Dean Hirata will be addressing the Company's financial performance for the first quarter of 2009. Dean?

Thank you. Turning to Slide 3, this slide summarizes the key financial highlights for the quarter. As Ron mentioned, we reported our third consecutive quarter of profitability with net income of $2.6 million, or $0.03 per diluted share compared to net income of $1.7 million, or $0.06 per share reported in the first quarter of 2008, and net income of $3.1 million, or $0.11 per share reported in the fourth quarter of 2008.

We have made significant progress in improving our liquidity. During the quarter, we grew our core deposits by $173 million, or 6.2%, and reduced our loan to deposit ratio from 103% at December 31, 2008 to 95.4% at March 31, 2009. We originated almost $600 million in residential mortgage loans in our core Hawaii market fueled by heavy refinancing activity. We increased our allowance for loan and lease losses as a percentage of total loans from 2.97% at December 31, 2008 to 3.2% at March 31, 2009. During the quarter, we recognized total credit costs of $29.6 million, primarily consisting of a provision for loan and lease losses of $26.8 million, and increased the reserve for unfunded commitments of $2.3 million.

We also strengthened our capital position. At March 31, 2009, our Tier 1 risk-based capital, total risk-based capital and leverage capital ratios, were 13.93%, 15.2%, and 11.31%, respectively, all well in excess of the capital levels required for a well capitalized regulatory designation. We also increased our tangible common equity ratio to 6.85% at March 31, 2009.

Turning now to Slide 4, this slide depicts our net interest margin compared to our national peers. As shown in the graph, we did experience compression in our net interest margin from 4.02% during the fourth quarter of 2008 to 3.82% for the current quarter. This sequential quarter compression was primarily attributable to lower interest income due to a decrease in loan yields reflecting the broader reduction in interest rates by the Federal Reserve. Our interest income was further reduced by the reverse of approximately $800,000 in interest for loans placed on nonaccrual status. Excluding the impact of these reversals, our normalized net interest margin was 3.9% for the current quarter compared to a normalized net interest margin of 4.09% in the previous quarter. Over the next few quarters, we expect that our net interest margin will be in the range of 3.8% to 3.95%. Despite the current quarter compression, we continue to compare favorably to our national peers.

Turning now to Slide 5, other operating income for the quarter totaled $15.7 million compared to $16.9 million during the fourth quarter of 2008. As shown in the table, the sequential quarter decrease was primarily due to lower gains related to the ineffective portion of a cash flow hedge totaling $2.2 million, lower unrealized gains on outstanding interest rate locks on residential mortgage loans totaling $4.1 million. Partially offsetting this decrease was the recognition of a gain on the sale of a parcel of land for $3.6 million, higher gains on sales of residential mortgage loans totaling $2.1 million related to the record origination volume.

Turning now to Slide 6, other operating expense totaled $37.7 million in the current quarter compared to $43.6 million during the fourth quarter of 2008. As shown in the table, the sequential current quarter decrease was primarily due to first, the recognition of a $3.4 million noncash mortgage servicing rights impairment charge, and a $2.8 million counter party loss on a financing transaction during the fourth quarter of 2008. Secondly, there are lower legal and professional fees totaling $1.2 million. And lastly, lower writedowns of loans held for sale on foreclosed property totaling $1.4 million. These amounts were partially offset by first, higher commissions paid to our residential mortgage officers, totaling $1.4 million, the reversal of certain accrued incentives in the previous quarter totaling $1.8 million, and higher expense related to the increase in our reserves from unfunded commitments totaling $1 million.

With respect to income taxes, in March 2009, we settled a tax contingency item with the state of Hawaii resulting in an income tax benefit of $2.2 million.

Turning now to Slide 7 and looking at our efficiency ratio, our reported efficiency for the current quarter was 57.85% compared to 57.11% for the fourth quarter of 2008. Now, as you can see from the graph, the current quarterly efficiency ratio is comparable to sequential quarters, but remains elevated from historical levels primarily due to increased reserves for unfunded commitments and higher costs associated with the maintenance of certain mainland assets. Excluding the increase to the reserve for unfunded commitments, our efficiency ratio for the current quarter would have been approximately 54%. In the short-term, we believe our normalized efficiency ratio will remain in the range of 54% to 56%, as we still anticipate ongoing maintenance costs for certain mainland assets.

Turning now to Slide 8, this slide provides a breakdown of our total loan portfolio by loan category at March 31, 2009, along with net changes in outstanding balances from December 31, 2008. And as you can see from the table, our total loan portfolio was $3.8 billion at March 31, 2009, down $211.4 million from December 31, 2008. This decrease was due to decreases in our Hawaii loan portfolio of $172.2 million and our mainland loan portfolio of $39.2 million. In the Hawaii portfolio, the $112.5 million decrease in residential mortgage loans that you see in the table was primarily due to a $98 million bulk loan sale at par.

Other changes in the Hawaii portfolio consisted of decreases in outstanding residential construction loans totaling $16.7 million, commercial mortgage loans totaling $11.9 million, and C&I loans of $25.8 million. On the mainland, we saw decreases in our outstanding residential construction of $18.1 million, commercial construction of $6.2 million, and commercial mortgage of $14.9 million.

Turning now to Slide 9, similar to the information we have provided in previous quarters, Slide 9 through Slide 16 provides a detailed breakdown of each category of our loan portfolio. For our Hawaii loan categories on Slides 9 through 13, we provide a graphical breakdown of each category by loan type with summary information for each category, including weighted average LTVs and our largest outstanding loans. For our mainland loan categories on slides 14 through 16, we provide a graphical depiction of our outstanding balances by category and geographic location. I will not be covering these detailed breakdowns in my presentation. However, we would be happy to answer any questions about these slides during the Q&A portion of this call.

I will now skip ahead to Slide 17, which details our nonperforming assets. On Slide 17, this slide shows a breakdown of our nonperforming assets by category at March 31, 2009, with comparable balances as of December 31, 2008. As you can see from the table, total nonperforming assets increased by $16.1 million during the quarter. The increase in mainland residential construction loans was due to the addition of two California loans totaling $8.9 million, and one Washington loan totaling $7.2 million, partially offset by charge-offs totaling $9.5 million. The decrease in Hawaii residential construction loans was primarily due to the charge-off of two loans to one bar totaling $2.8 million. The increase in the Hawaii commercial construction category was due to the addition of a land loan totaling $1.4 million for which we are in the process of foreclosing. Upon foreclosure, we expect to receive full repayment on this loan.

The increase in Hawaii residential mortgages was attributable to the addition of five loans totaling $4 million. The increase in the Hawaii C&I category was due to the addition of a $10 million loan to a national retail mall owner. And lastly, the decrease in mainland loans held for sale of $5.8 million and the corresponding increase in OREO of $5.4 million was due to the foreclosure of a residential construction loan previously classified as held for sale.

On Slide 18, this basically shows the detail of the results that I just went through. So I won't be going over this.

If you would now turn to Slide 19, this slide shows a breakdown of our loans that are delinquent for 90 days or more that are still accruing interest at March 31, 2009, with comparative balances as of December 31, 2008. Now, as you can see from the table, this amount totaled $20.3 million at March 31, 2009 compared to $1.1 million at December 31, 2008. The increase was directly attributable to the addition of two mainland commercial construction loans totaling $6.9 million, and two related mainland commercial mortgage loans totaling $11.8 million. For the two related mainland commercial mortgage loans totaling $11.8 million, we received a paydown of $6 million in April of 2009. The remaining $5.8 million balance was refinanced and is currently performing. The $6.9 million mainland commercial construction loans were for a medical office building in escrow as of March 31, 2009, which subsequently fell out of escrow and placed on nonaccrual status in April.

Turning now to Slide 20, as Ron mentioned in his overview of the local and national economies, it continues to be a challenging economic environment, and as we navigate through these difficult times, we continue to actively manage our loan portfolio and our credit risk. As we have communicated in the past, over 70% of our nonperforming assets are in our mainland portfolio and our current strategy continues to be focused on longer-term workouts and extensions to proactively manage our credit risk. During the quarter, we reduced our total mainland portfolio by $39.2 million. Our mainland portfolio represents approximately 27% of our total loan portfolio. We will also continue to explore options to further reduce our credit risk, including bulk loan sales, individual loan sales, loan restructurings, and/or paydowns. We continued to complete monthly reviews of our commercial real estate and C&I portfolios, including complete risk rating validations.

Our reserve levels continue to reflect our proactive management of credit risk and our goal of identifying and evaluating potential credit weakness as early as possible. Along these lines, during the current quarter, we increased our loan loss reserve ratio to 3.2% at March 31, 2009 from 2.97% at December 31, 2008 and 1.73% at March 31, 2008.

Turning to Slide 21, as I mentioned at the opening of my presentation, we've made significant improvements in our liquidity position during the current quarter. We grew our core deposits by $173.1 million, or 6% from the start of the year. In addition to deposits, we have significant available liquidity with access to additional borrowing capacity of approximately $1.3 billion. We also completed the sale of approximately $100 million in residential mortgages at par. And as you can see from the bar graph on this slide, our deposit costs continues to compare favorably to our national peers.

Turning to Slide 22, and looking at our capital position, again, besides the improvements we saw in liquidity, we also strengthened our capital position during the quarter. During the quarter, we maintained and improved upon our well capitalized regulatory designation for all capital ratios. Again, at March 31, these ratios for Tier 1 total risk-based capital leverage ratios were all well in excess of the well capitalized designations. As we previously reported in January 2009, our capital ratios were further strengthened by our participation in the US Treasury's Capital Purchase Program. And also as illustrated in the bar graph in the upper left-hand corner of this slide, our tangible common equity ratio stood at 6.85% at March 31, 2009, consistently above our national peers.

Turning to Slide 23, and looking at the summary for the quarter and our outlook going forward, in closing, we continue to live the message behind our newly launched branding campaign by working for our customers, shareholders, and our community. The current quarter's financial performance was highlighted by our third consecutive quarter of profitability and improved operating fundamentals, evidenced by the increase in our liquidity and further strengthening of our capital levels. In this challenging economic environment, we continue to support the customers and communities of our core Hawaii market. This is evidenced during the current quarter by our strong deposit growth and record originations of residential mortgage loans.

This now concludes my review of Central Pacific's financial results for the first quarter of 2009 and we will now open up the call to questions.

(Operator Instructions) Our first question is from Brett Rabatin of Sterne Agee. Please go ahead.

Good morning. Wanted to first ask, was curious, I know that the Hawaiian markets are a little bit bifurcated from a construction perspective and that Oahu is stronger than some of the other neighboring islands. Can you break out -- you do a great job in the PowerPoint presentation, but can you guys break out how much of the Hawaii construction portfolio is Oahu-based versus you Maui and other locations?

Yes, Brett, I can do that. This is Curtis. We have roughly $185 million on Oahu, $173 million Maui, $43 million in Kauai, and $106 million on the big Island.

I'm sorry, how much was the Big Island?

$106 million.

$106 million, okay. All right. And then I'm just curious, the comment that you made towards the end there about bulk sales, would that be related to both the mainland and the Hawaiian islands, or would it be just to the mainland portfolio?

Brett, if we were to do that, it would probably be more focused on the mainland.

Okay, and then wanted to ask a question on the deposit growth. It seems like all of the Hawaiian banks had fairly decent results, or at least the larger ones did. Can you tell if the deposits that you gathered were new accounts or if those were existing customers? Can you talk about the deposit growth that you had during the quarter?

That's a good question. I'll ask Glenn Fujimoto to address that question.

Hi, Brett. Glenn Fujimoto. The combination of new customers and existing customers, the bulk of those was probably existing customers bringing money from their other financial institutions into our banks, so it was pretty healthy. We launched several attractive core deposit programs in the fourth quarter of last year and with those products, we were able to bring in some solid deposit growth from other financial institutions.

Okay. And then just lastly, wanted to go back to credit and ask about the mainland commercial construction and the CRE portfolios there. From a construction perspective, you obviously had, a little bit, the 6.9, which I understand -- was that the medical office building that was moved to nonaccrual after the quarter?

Yes.

And what are you seeing generally for the commercial construction portfolio? Can you give us some color? I know you're doing monthly updates on the portfolio. What are you seeing in terms of those properties, particularly the ones that are more retail-oriented?

Slow lease-up. All the landlords are scrambling to fill space, so as you can imagine, lease-up is slow. They are trying to hold lease rents. In our projects, where we've had success, the guarantors are either able to get additional tenants or they are supporting their projects.

And on the CRE side, what are you seeing as many property owners have tenants clamoring for reduced rates on their, particularly their office buildings? How are you navigating that environment?

It's fairly similar to the construction portfolio. Again, you are seeing weakness in occupancy and, again, people are asking for discounts on their lease rates, so cash flows are being challenged, again, for the stronger properties they are able to withstand that and where we have good guarantors they are able to support.

Okay, and then just one last question on the reserve. You have in the press release the amounts that are allocated to each portfolio, but I'm curious, that's the reserve to the portfolio and not the specific impairment reserve for nonaccrual loans, correct?

Correct.

And would you have those numbers? The impairment?

Yes, the reserve allocated for the impaired loans is $10.5 million.

For the entire portfolio?

Yes.

Okay, great. Thanks for all the color.

Our next question is from Joe Morford of RBC Capital Markets. Please go ahead.

Thanks, good morning, everyone. Brett asked a lot of what I was looking for but I guess a couple follow-ups. You talk about exploring bulk and individual loan sales. You haven't done much of that the last couple of quarters. Maybe just talk about that and why that's been the case, just between what the market bids are for these properties compared to what you think they are worth. Any color you can share about what the gap is between those bids and where you've got them carried on your books. Thanks.

Hi, Joe. It's Curtis again. With respect to the question about the gap on the bids on the bulk.

Or individual sales, whatever.

Right, right. There has been a fairly large gap, as you know, in the bulk market. I'm told from the brokers that I talk to from time to time that that gap is shrinking and buyers and sellers are getting more synced up, so that's one element. With respect to individual loan sales, we have historically had more success there in terms of getting values that are closer to our expectations and reserve levels. So that's why we have selectively pursued that. The other issue for us in terms of pursuing individual loan sales, if we view a project or it is in an area where we think things are going to decrease significantly in the future, we would try and move to sell it earlier rather than later.

So would you expect, as we move forward through '09 here that we should see some sales take place or at least some more activity on that front as you work to dispose of some of these assets?

Yes, we may have some more individual loan sales coming in the next few quarters. Nothing similar, I think, to what we did with the residential in Q2 of last year.

Just one followup on the credit. You talked about these monthly reviews and Brett asked about the commercial construction CRE. I was general curious what kind of trends are you seeing in the C&I portfolio? All in all it seems to be holding up pretty well but are you seeing more signs of stress now from the rising unemployment or just broader weakness in the economy?

We have seen some weakness in the broader economy. We started the monthly portfolio reviews for the C&I book middle of last year so that gave us a headstart and we were able to position ourselves a lot better so I'm more comfortable with where we're at on that one. we've been reading all kinds and articles of everything of what's going on down there, so you are getting some lease-ups in the portfolio and though it's slower, you're still seeing in vacancies?

Our next question is from [Jackie Chimera] of KBW. Please go ahead.

Hi, good morning. I wanted to ask a quick question on the commercial construction portfolio. What stage of completion are the bulk of those loans at right now?

The bulk of the construction portfolio on the mainland is completed. There may be some PIs left in the budget.

We've been reading all kinds of articles and everything of what's going on down there. So you are getting some lease ups in the portfolio and that would slower it, you're still seeing vacancies?

Yes, we are seeing some projects where they are leasing up, but it's much slower than originally expected, as you would anticipate.

Okay. And then I also noticed that there was, the held for sale portfolio was a little bit larger and it looked like a lot of that was not in nonaccruals. Is that something to see going forward? Is it more for liquidity purposes that you're looking at that?

I'm sorry, the loan held for sale portfolio?

I noticed your held for sale portfolio was a bit bigger this quarter compared to the fourth quarter, and then in the past know it had been larger when you were looking to sell off some of the mainland portfolios, so I was just wondering where the majority of that was located.

The majority of that is the residential portfolio as opposed to the mainland.

Okay. Okay. Thank you.

Our next question is from Al Savastano -- I'm sorry if I mispronounced that name -- of Fox-Pitt Kelton.

Good morning, guys, how are you? Three questions here for you. First, can you talk about the thought process between selling the $100 million of residential mortgages? Second, if you can comment on maybe the balance sheet size going forward, if you plan on keeping it flat or not. And then third, if you can just address the margin guidance this quarter from last quarter and what your change in the thinking there.

Okay. I'll ask Dean Hirata to address your questions. Dean?

Again, on the first question with regards to the loan sale, the residential mortgage loans, during the quarter we did identify an opportunity to sell nonconforming Hawaii residential mortgages at par, and again, in line with the focus on improving our liquidity, we felt that this was prudent and as a result, we did the sale during the quarter. It also improved the liquidity ratio, as well as reducing just the overall loan exposure.

As far as the margin, again, we, we did give, like I said, we expected to stabilize somewhere between 3.8% to 3.95%. During the quarter, the declining market rate environment did have a slight negative impact on the margin as our assets initially repriced faster than our liabilities. We also have a prime swap of $400 million notional amount where we are receiving 6.25% fixed for five years and paying prime floating. So this is also supporting the margin as we go forward. We also feel that there is going to be some opportunity on our cost of funds in terms of some of the rates that we're currently paying. And like I said, just watching to see what opportunities we may have there to reduce our deposit costs. So all of those, like I say, will normalize at about a range of 3.8% to 3.95%.

On your -- I didn't get the the last question. If you could repeat the last question again.

Just the size of the balance sheet going forward, do you expect it to remain flat or can it compress somewhat?

Again, as you saw, we have been deleveraging the loan portfolio and we expect that that will continue going forward. And then on the deposit side, we have started to see some growth there. So, again, focus on really improving the liquidity as we go forward.

Okay, great. Thank you.

(Operator Instructions) And the next question is from Aaron Deer of Sandler O'Neil. Please go ahead.

Actually, all of my questions have been answered. Thank you.

(Operator Instructions) I show no other questions at this time. I would like to turn the conference back over to Ron Migita for any closing remarks.

Thank you very much. Thanks, everyone, for participating in our first quarter earnings and financial condition review. We appreciate your interest and questions in Central Pacific Financial Corporation. At this time, the key areas of focus at our company include improving asset quality and working closely with our customers to meet their needs in this challenging economy. Although we've made some significant improvement in our liquidity, we plan to continue our strategies to increase our core deposit market share. Operational process improvement on a bank-wide level is also another key initiative to maximize productivity and efficiencies. Overall, we are confident in our efforts to manage the critical issues that may confront us. Again, thank you very much for your participation in our earnings call this morning. And aloha.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.