Enterprise Financial Services Corp (EFSC) 2014 Q4 法說會逐字稿

Good day, and welcome to the Enterprise Financial Services Corp earnings call.

Today's conference is being recorded.

At this time, I would like to turn the conference over to Mr. Peter Benoist. Please go ahead, sir.

Thank you, Stephanie, and thanks to all of you for joining our call this afternoon.

With me on the call today are Scott Goodman, President of Enterprise Bank & Trust, and Keene Turner, our Chief Financial Officer. We've initiated a webcast format beginning with this earnings call and refer you to our corporate website for a copy of the accompanying presentation, which will be the subject of the call. The presentation and earnings release were furnished on SEC Form 8-K earlier today.

Please refer to slide number 1 of the presentation titled Forward-Looking Statement and our most recent 10K and 10-Q for reasons why actual results may vary from any forward-looking statements we make today. Over the past several quarters, we've attempted to highlight the elements of the Company's core performance and focus our discussion primarily around those trends. We believe over the long term, continued attention to our core operating fundamentals will result in significant shareholder value creation.

Our strategy is to steadily improve core earnings by expanding revenues through above average quality loan growth, defending our net interest margin through accelerated growth in higher yielding credit niches, a disciplined approach to funding costs, and managing and leveraging our expense base. We'll discuss each of these elements in detail but let me hit the highlights before I turn the presentation over to Scott and Keene.

Year-over-year loan growth totaled 14% in 2014 and is clearly a highlight for the year. Commercial and industrial loans, our bread and butter, increased 22% during the year with good growth experienced in all of our markets. Our niche lending activities, primarily Enterprise Value Lending, our senior debt product, and Life Insurance Premium Finance, neither of which are solely dependent on local market growth, showed excellent results for the year. We generated $139 million in net loan growth in the fourth quarter as origination activity accelerated and prepayments in St. Louis and Kansas City slowed.

While we don't expect this annualized growth rate of 24% continue, we do believe it's an indication that our enhanced calling efforts and new commercial team staff additions, coupled with a continually improving economy, bodes well for double digit loan growth in 2015. Accelerated fourth quarter loan growth did result in an elevated loan to deposit ratio at year end and while liquidity measures are all well within manageable ranges, and as stated earlier, we don't expect loan growth to continue at this pace, we're very focused on implementing strategies in 2015 designed to accelerate core deposit growth rates.

These strategies include continued expansion of our small business or business banking platform, deploying specialized deposit calling relationship managers targeting deposit rich segments of the market, and enhanced focus and incentives on the deposit generating activities of our C&I calling teams. Core net interest margins were held virtually flat during the year in spite of intense loan price competition in all of our markets. Improved earning asset mix driven by solid loan growth, lower funding costs resulting from prior FHLB debt refinancing, and the elimination of higher cost convertible debt securities, all contributed to stable margins and three consecutive quarters of increased core net interest income.

Tangible common equity increased 15.5% in 2014, and a tangible common equity to tangible asset ratio just shy of 0.7% provides sufficient capital to support current growth rates. Finally, a disciplined expense management is resulting in increased operating leverage for the Company. Core operating expenses for the year just ended were down almost 3% as we implemented strategies to improve productivity levels without sacrificing service quality.

Continual improvement in the efficiency of our operating systems and processes along with continued targeted investments in technology have allowed us to improve our efficiency ratio throughout the year and will be a continued focus for 2015. We're confident that our current business model combined with strong strategic execution will deliver another successful year of solid and improving core operating fundamentals.

Let me turn it over now to Scott Goodman to give you more color on our growth trends in 2014.

Thank you, Peter.

Slide number 3, strong fourth quarter loan activity continues a pattern of quarterly increases, which has produced 14% growth for the year. Fourth quarter was characterized by robust loan growth as we grew portfolio loans by $139 million. The increase resulted from a combination of both strong originations and reduced payoff activity in the quarter.

Originations have trended up consistently throughout the year and were particularly strong in the month of December. New loan originations in Q4 were solid in all major sectors of the business as we experienced net growth in the C&I, commercial real estate, construction development, and consumer sectors of the portfolio.

Slide number 4 illustrates this growth specifically in the C&I segment. The highest concentration of growth for the quarter, roughly 75%, was in C&I loans reflecting continued momentum in our niche businesses, as well as new client relationships and increased borrowing activity relating to capital investing needs of our existing clients.

The remaining growth was primarily construction and CRA categories resulting from an elevated focus on this market segment and modestly lower payoff volumes. We did experience some year-end timing issues that worked to our benefit in the fourth quarter relating to closings of large tax credit-based loan funds that will be reallocated into 2015 as well as several short-term bridge loans which were repaid after the first of the year. These closings represented roughly $20 million in loan fundings.

Overall, a large majority of our emphasis was focused around C& I in 2014 leading to 22% growth in this sector. We continue to expand niche business lines that provide competitive differentiation and pricing advantages and focus on adding new relationships with operating businesses that offer broader cross-sell opportunities and longer revenue life cycles.

The components of our loan growth for the year are detailed on slide 5. Relative to niche lines of business, Enterprise Value Lending, our senior debt offering to private equity for M&A transactions, had a seasonally strong fourth quarter. We see momentum here related to our focus on expanding private equity sponsor relationships outside of our footprint into midwestern markets and steady activity in the M&A space for lower middle market companies.

Life Insurance Premium Finance has also grown steadily, and as we continue to see new policy opportunities from our established network of planning firms and benefit from the funding tail associated with premiums from existing portfolio policies. The niche sectors of Enterprise Value Lending, Life Insurance Premium Finance, Tax Credit Lending, and Asset Based Lending, now combine to represent roughly 26% of the total loan book.

Our market level performance is profiled on slide 6, which demonstrates double-digit growth for the year in all markets. Similar to last quarter, all regions posted loan growth for the current period. Both St. Louis and Kansas City had their best quarter of the year. Growth in St. Louis was mostly attributable to C&I relationships and the niche business line. Loan demand from our existing clients is edging up as businesses add equipment, expand facilities, and restructure their balance sheet positioned for growth.

There was also growth in the CRE construction category to a lesser degree. Kansas City turned in another strong quarter with net growth of $60 million. Activity was well balanced between C&I and Commercial Real Estate construction sectors. Our expansion of Enterprise Value Lending to Kansas City is taking traction with several large new deals in the quarter. There were also several larger relationships added along with increased borrowing from existing clients. An elevated emphasis on our sales process, higher calling activity, traction from talent acquisitions from late 2013 and 2014 are producing positive results.

Commercial Real Estate payouts, while not entirely gone, remain at lower levels than we experienced in 2013 and earlier in 2014. The Arizona region grew modestly in the quarter, but overall for 2014 posted strong loan growth of 42%. Originations for the quarter in Arizona was steady and equally balanced between C&I and Commercial Real Estate.

Several late year payouts relating to the sale of business assets and properties muted net growth. The pipeline in Arizona is good as organic activity in this market continues to improve. We see more opportunities to capitalize on commercial real estate in Arizona in 2015, leveraging our teams' expertise to the PCI portfolio process.

In St. Louis/Kansas City, deal flow is steady in general. Some early Enterprise Value Lending portfolio Company sales and the aforementioned timing issues, which boosted the December fundings, may somewhat diminish near-term momentum. Despite being lumpy at times, our sales activity is still solid and the fundamentals that drove our growth to 2014 remain intact.

Deposits were relatively flat for the quarter and down modestly for the year. We have been focused on controlling our cost of deposits and maximizing net interest income, allowing our loan to deposit ratio to tighten somewhat on a managed basis. Loan funding is a priority as we look forward and our robust loan growth in Q4 reinforces this focus moving into 2015.

We have developed a detailed deposit growth plan in the latter part of 2014, which is taking hold. Components of this plan include teams of commercial RMs specifically focused on new depository relationships, target-rich deposit industries, and specialized product rollouts designed to appeal to depositors. As part of the plan, we developed a recently hired talent onto the platform in St. Louis, specializing in commercial deposit origination. Fee income from wealth management and deposit service charges are primary sources of recurring fee income were stable at $1.8 million and $1.9 million respectively.

Additionally during the fourth quarter, we earned $1.4 million of revenue from our state tax credit brokerage activity due to the seasonal nature of these fees; however, the uptick was slightly mitigated by a decline in other income due to new market tax credit fees, which were earned in the third quarter but not repeated during the fourth. Classified assets declined for the quarter, while non-performing loans rose modestly.

There were three additions over $1 million, two of which are commercial real estate deals that have been on our radar and we believe are well secured. Overall, these asset quality trends remain sound and our outlook does not point to any significant trends that would cause major concern.

Now, I'd like to hand it over to our CFO, Keene Turner, for a financial review.

Thank you, Scott.

Before I provide my comments on our earnings, I want to take a minute and highlight some of the changes we made to the presentation of the results this quarter. Our press release and the accompanying financial summary now include a reconciliation of what we believe are our core results.

To summarize, the core earnings include the income and expense from our portfolio loans, deposits, wealth management and other banking activities, as well as contractual interest income and funding costs for purchase, credit impaired loans. The core results exclude incremental accretion, accelerations, and other income and expense items associated loans covered by FDIC loss share agreements. Additionally the results also adjust for other items which may not be comparable from one quarter to the next.

We've changed this presentation because we believe core results presented most closely reflect our Company's performance from our ongoing efforts to grow and manage our Business. As a result, my comments today will focus primarily on that performance. Additionally, our press release provides a comprehensive analysis of purchase credit impaired loans and assets covered by FDIC loss sharing agreements and guidance as to the size and contribution of those assets for 2015.

As we continue with the accompanying slides, slide 7 demonstrates the driver of the changes in our core earnings per share from 2013 to 2014. We believe that during 2014, we took an important step in changing the momentum of our core fundamentals. Despite that our core earnings per share declined to $1.29 for the full year, we believe the quality of our earnings is continuing to improve due to growth in core net interest income dollars from our portfolio loans, the improvements we have made in our operating expenses, and the fact that core EPS included less benefit from credit leverage during 2014.

The next slide depicts the items that adjust our $1.35 per share of 2014 reported EPS to the $1.29 of core EPS for 2014. There were two items that affected both the fourth quarter and full year that I'll highlight before we discuss our core earnings trend. The first was the pre-tax loss of $2.9 million or $0.09 per common share as we extinguished the remaining $50 million of fixed rate term borrowings with the Federal Home Loan Bank.

The terminated advances had a 3.17% blended interest rate and a remaining maturity of approximately three years. The borrowings were terminated to help manage our interest rate risk profile, which has become increasingly asset sensitive during the past several quarters. This has emanated from strong growth in commercial and industrial loans but generally variable rate. It is our intent to continue to manage our balance sheet to maintain a modestly asset sensitive interest rate risk position while maximizing and growing net interest income dollars.

Given our expectations for loan growth and how that growth is likely to occur, we determined that prepaying these advances was a prudent action for managing our balance sheet. The impact of the extinguishment due to its timing had a negligible impact on net interest income and net interest margin during the fourth quarter and for the full year, but it will increase net interest income by approximately $1.4 million annually and net interest margin by approximately 5 basis points.

Additionally, we incurred a $1 million pre-tax loss of $0.03 per diluted share on the disposal of a building during the fourth quarter. The elimination of this owned facility will allow us to consolidate a nearby location in our headquarters, and it will result in a modest expense -- annual expense savings of approximately $0.01 per share.

This was an opportunity for us to consolidate a facility as both expenses and did not provide additional benefits from its physical location as it was only a block away from our headquarters. Without these two items, our consolidated fourth quarter earnings would have been $0.42 per common share and would have resulted in a 1.03% return on average assets, up $0.01 compared to the third quarter.

Turning to the next slide, number 9 indicates the progress we are making in growing core earnings per share, which was $0.33 for the fourth quarter. You will note that our third quarter results of $0.37 per share were higher due to the benefit of net recoveries experienced during the quarter.

Link-quarter earnings trends are summarized as follows. Growth in net interest income dollars increased core EPS by $0.03 per share. Robust loan growth, combined with modest net charge-offs, decreased core EPS by $0.06 per share from the related provision for loan losses on the portfolio loans. Stable and seasonally higher fee income increased core EPS by $0.01 per share, and operating expenses decreased core EPS by $0.02 per share.

Peter mentioned in his opening comments that we believe that throughout 2014, we executed on our land strategy, which was to steadily improve core earnings by growing revenue, defending net interest margin, and leveraging our expenses. We have achieved consistent progress on all fronts and demonstrated incremental progress during each quarter of 2014. For the quarter and throughout 2014, we are pleased with improving trends in core revenue, and slide 10 depicts the progress we have made in growing core net interest income as primary contributor.

Clearly, the nearly $300 million of portfolio loan growth that Scott discussed is a major driver. Additionally, 24% loan growth for the fourth quarter was exceptionally strong, and as a result, we have not modified our expectation on average; we expect to achieve a portfolio loan growth rate at or above 10% for 2015. Net interest income on a core basis was $25.7 million and expanded compared to the link quarter due to earning asset growth as well as $200,000 of additional loan fees which contributed 3 of the 4 basis points of net interest margin expansion at 3.45% for the quarter.

We are also encouraged the yield on portfolio loans held relatively stable at 4.19%, despite the level of growth during the quarter. Also our efforts to manage deposits and funding costs throughout the year and the quarter continue to help us defend against downward pressure on net interest margin. From an earning asset perspective, we have grown loans in each of the last six quarters, resulting in demonstrated improvement in the run rate of core net interest income.

The current quarter daily run rate of core net interest income compared to the first quarter of this year is $15,000 higher, which equates to approximately $0.17 per diluted share on an annual basis. The growth in net interest income was achieved in the context of managing our balance sheet to preserve the mix of variable rate loans, maintain and increase the proportion of commercial and industrial loans to portfolio loans, and maintain modestly asset sensitive interest rate risk position.

Additionally, our credit performance during the year evidences that our loan portfolio is comprised of relationships that we believe will help us to maintain an already favorable credit risk profile, which is depicted on slide 11. Our asset quality levels and in particular our level of and coverages for outperforming loans and assets are favorable to peers and remain at relative low levels at 0.91% of portfolio loans and 0.74% of total assets respectively. The allowance for loan losses covered non-performing portfolio loans at December 31 was 135%.

Charge-off trends on portfolio loans also continue to be favorable to close out 2014. Net charge-offs for the fourth quarter were $600,000, compared to net recoveries of $300,000 in the third quarter, and net charge-offs for the year were 7 basis points of average loans. You could see on the slide that our provision for loan losses for portfolio loans follows closely with the trends for portfolio loan growth and charge-off trends each quarter.

As a result, the provision increased to $2 million for the current quarter compared to less than $100,000 for the third quarter due primarily to the $139 million of loan growth. Operating expenses which are depicted on slide 12 were $20.2 million for the fourth quarter compared to $19.3 million for the third. The increase was driven by additional loan legal expenses of approximately $500,000 that were slightly elevated during the quarter partially due to seasonal tax payments and other similar items.

Additionally, we recorded expenses of approximately $300,000 for professional fees associated with negotiations of savings and some contracted services that will help us manage expense levels during 2015 and beyond. This is an example of our efforts on the expense initiatives we discussed last quarter and it reflects our focus on managing expenses where it's prudent. That means our focus is on keeping existing expenses stable and managing them lower whenever possible while growing revenue.

Our efforts have resulted in improvement in core efficiency during 2014 and although it may vary a bit by quarter, moving the core efficiency from the high 60%s in early 2014 to the low 60%s at the end of the year, a result that it's encouraging to us. As such, we expect to continue to generally maintain this trend during 2015 as we continue to target quarterly expenses to be between $19 million and $21 million. Our target expense levels reflect both the progress we have made in lowering expenses during 2014 and additional expense savings we expect to achieve during 2015.

That being said, slide 13 summarizes our financial priorities and is a continuation of the trends we have demonstrating during a successful 2014. It should come as no surprise that our highest priority is growing core earnings per share. To do so, growing net interest income dollars is our top priority. We expect growth in portfolio loans to continue and in this context we intend to take care of the balance sheet by maintaining our credit standards, preserving an asset sensitive interest rate risk position, and managing capital levels over the long term.

With tangible common equity and tangible assets at 8.7% to end the year, we believe we have sufficient capital to support robust organic growth and see the other opportunities that may arise. We understand that delivering increasing long-term shareholder returns requires a consistent and demonstrated progress throughout growth in core EPS. To do so, we need to continue to gain additional operating leverage through improvements in both revenue and expenses and to work to enhance our deposit funding capabilities to support our expected loan growth.

In many ways, 2014 results reflect the beginning of those trends. We're proud of the growth that we have achieved and the progress we have made as the result of our strategy have begun to be reflected in our performance. For 2015, it is more of the same as we work to continue to deliver demonstrated progress and further improvement of our core financial performance.

Thank you for joining our call today, and at this time, we'll open the line for any questions you have.

(Operator Instructions)

We'll take our first question from Jeff Rulis of D.A. Davidson.

Thanks, good afternoon.

Hi, Jeff.

A question on the -- I guess the loan growth guidance of at a minimum I guess to double digit, given the late fundings in Q4 and expected payoffs, did I read it right that you might start off the year slower than that base and then accelerate or if you could add a little more color on the pace of growth throughout the year?

Yes, I would say typically the first quarter is our slowest quarter and we had an extremely strong fourth quarter, so it is 10% overall for the year, and I would say that that's a correct observation that it will likely be a little bit slower to come out of the gate for the first quarter.

Okay, and Keene, are there expiration of loss share agreements in 2015?

There are. I think we had one that came off at the end of this year and then -- I'm grabbing that information right now. We have one that expires in the third quarter and then in 2016 we have one in the first and one in the third, and that's the non-single family.

Got you. And I guess that all included in the guidance for this year of $6 million to $8 million in income benefit?

Yes, that's correct. We have that baked into all of our guidance that we're expecting and that's the number we put out in the earnings release.

And that's a net figure, right? That's against expected expenses?

Yes, that figure correlates to the table that we put out there so that's the pre-tax contribution that we expect from the purchased and covered assets.

Got it, okay, net of the qual back and other?

Net of expenses but before taxes.

Right, okay, thank you.

We'll take our next question from Chris McGratty of KBW.

Hi. Good afternoon, guys.

Hi, Chris.

In terms of the balance sheet, if you kind of think about the mix that may evolve over the course of the year, 10% loan growth, how should we be thinking about whether you'll be funding it from cash flows in the securities book given where rates are or how should I think about the size of the investment book, I guess, is what I'm asking.

I think we would expect that we aren't going to shrink the investment portfolio any further. We need that for liquidity purposes so I would expect it to be about the same or to grow proportionately with the balance sheet, and we're going to have to raise the funding with deposits and other sources to be able to fund the growth we're expecting.

Okay, on the basically one more on the liability debt restructuring in the quarter, is there anything else on the table or do you have the opportunity to kind of look at over the course of over the next few quarters?

No, that was the remaining term advances that we had so everything you have now is relatively short term Federal Home Loan advances and other borrowings that I don't think we have the ability to restructure.

Okay. Just one last one. We're seeing a pick up in M&A, clearly kind of across the country, big and small. With your capital levels building, I assume the answer is first organic growth but is there any situation, Peter, where you may look at M&A kind of either way in the next 12 to 24 months?

Yes, I think I'll just indicate what I said before. On the buy side, the answer is yes, provided we could find an opportunity that makes sense for us. And we could find that as organizations that have a similar business model to us and a really good understanding of commercial and industrial lending. And in that context, generally within our geographies.

We're not really looking to go beyond our current geographies so that just becomes a question of limited potential, although there are some of those opportunities and we're very aware of them. In that context, if any of those opportunities became a reality, we'd probably move on them.

On the other side, as I've said a million times, we're a public company. We're for sale every day of the week. We are aware that there is interest generally speaking in the market, and we tend to be open in that regard and from the Board's perspective, we're going to do, obviously, what's the right thing from a shareholder perspective.

Okay, thanks a lot.

We'll take our next question from Andrew Leisch of Sandler O'Neill.

Hi, guys.

Hi, Andrew.

Just one quick question on the expenses. Just looking at the other line, I'm just kind of curious like what bounces around there. This quarter looked like it was $7.8 million, last quarter, $6.5 million, the quarter before that, $6.8 million.

This quarter I think as we referenced, we had some of those fees that I referenced in my comments and that's primarily where we're seeing those. There were a couple more smaller items that contribute, so my comments summarized about $800,000 of that increase.

Okay, and then, also your comments on loan growth, it's early the pay downs anyway, it sounds like they're slowing across the board. Do you think -- I guess it's kind of difficult to tell looking into the coming year, but are there any larger loans that can pay off; because I think if not, then growth could be better than the 10% you're forecasting.

Andrew, this is Scott. Never have perfect vision on this, obviously. I think the slowdown that we really saw from a category standpoint came on commercial real estate when we were seeing extended long term fixed rates that we had decided not to play that game. That's really the category that slowed down. Some of the paths that I alluded to earlier that were creating some lumpiness early this year are really sales of portfolio companies, asset sales, so I don't see that as a trend per se. I don't see anything looking forward that would say we're going to see major changes relative to the pay downs.

All right, thank you.

We'll take our next question from Brian Martin of FIG Partners.

Hi, guys.

Hi, Brian.

Just on that last question, the payoffs in the pay downs you expect in 2015, you're saying that this quarter's pace is more realistic or representative of what you would expect heading into 2015?

You know, I don't think so. I think December had some seasonal issues and M&A is seasonally hot in the fourth quarter typically. The first quarter probably is slower on a seasonal basis, so I wouldn't say that what we're seeing early this year is kind of reflective of what we expect longer term. I think that the 10% guidance has built in our expected payoff activity, so.

And I would just only add to that, as it relates quarter to quarter, to get the loan growth that we had in the fourth quarter was quite a bit although we cited some lower pay down activity. The origination in the loans coming in were quite a bit higher to fund that activity. So we just don't want to give you the wrong impression there, that because pay downs might be similar to the fourth quarter, that we're expecting that kind of growth.

Okay, understood, and the focus on deposits and kind of loan to deposit ratio, what are the expectations or parameters of where you'd like to have that ratio?

We'd like to drive it down below 100%. We've gone away from the use of brokered CDs and they are about half the level they were at the end of last year, so that's an opportunity that we have if we want to just manage the loan to deposits down in and of itself.

We're mostly focused on making progress on core deposits and Scott outlined some of the strategies we have there. And additionally, as Peter noted, we're focused on our other liquidity ratios and it relates back to some of my comments on the size of the investment portfolio, et cetera.

So that would be the ratio that we'd be comfortable operating a little bit higher on but we know longer term that we need to drive that down a little bit more so that we have some room to grow. We need to make some progress on the deposit side but we have some avenues on the wholesale front if we need to let our core deposit activity generate in and cancel that.

Got you, okay. And then you talked about the efficiency improvements you guys have made with the revenue growth and the expense discipline this year. It sounds like there's expectations that the operating leverage continues and the efficiency ratios gets into the high 50%s. Is that kind of what you guys are suggesting from the comments in the release and prepared remarks?

Well, as we continue to see the kind of loan growth we have, we expect revenue to continue its upward trend and to the extent that we're able to hold expenses down or manage them appropriately. I think the math would bear out that if we get the kind of growth we want to achieve that you could see that in the later part of 2015.

But I would just caveat that with our expected guidance for expenses of $19 million to $21 million is still where we expect to be. From a revenue standpoint, wherever you determine it as your modeling that out and what the trajectory shows, certainly the fourth quarter substantial loan growth will help that.

Okay, perfect, and I think that's all I had. I appreciate it. Thanks, guys.

Thanks, Brian.

We'll take our next question from Daniel Cardenas of Raymond James.

Good afternoon, guys.

Hi, Dan.

Could you give some color as to the competitiveness of the deposit market right now and given your strategy of growing deposits, what kind of impact do you think that's going to have on your margin?

Yes, I think we're probably seeing deposit [conditions] slowly ramp up maybe from the smaller banks. Obviously, I think we see potential opportunity for deposits coming out of the larger institutions. I think I mentioned where we added some talent specifically focused on deposit origination coming off the larger bank platforms, US Bank and UMB in particular With the issues some of those larger banks are going to have relative to the capital requirement on excess deposits, we think there's some opportunity there, which we really have given some good strategic thought to, particularly (inaudible) we are going to focus on.

Some of those that we're already lending into so we know those folks from healthcare perspective, Enterprise Value Lending, correspondent banking. So while we don't really see an issue from a competition standpoint, I would say the smaller banks are more focused on it than the larger markets.

Okay, so assuming if you're not able to meet your deposit goals, would that mean you would slow down loan growth?

I don't think that would be our expectation in the near term, as I noted in my previous answer. I think we have some capacity to be able to use the wholesale deposit funding to some level, but ultimately our ability to generate core deposits on a long-term basis will put a constraint on us to the extent that we're not able to achieve it. I would turn around and say we have a variety of strategies that Scott outlined that we expect to be able to over a longer period of time generate additional core deposits that we'll need to fund the kind of growth that we expect to achieve.

Okay, great. Thanks, guys.

Thanks, Dan.

(Operator Instructions)

There are no current questions in queue.

Stephanie, I think we're good at this end. I'd just like to thank everybody for joining the call this afternoon. We appreciate your interest in Enterprise, and if there are any follow-up questions, we'd obviously be happy to take them. So with that, again thank you very much, and good afternoon.

This does conclude your teleconference for today. Thank you for your participation. You may disconnect at any time.