First Commonwealth Financial Corp (FCF) 2011 Q1 法說會逐字稿

I would like to welcome everyone to First Commonwealth's first-quarter 2011 earnings conference call. At this time I will turn the call to Rich Stimel Communications Manager at First Commonwealth.

Thank you. As a reminder, a copy of today's earnings release can be accessed by logging on to FCbanking.com and selecting the Investor Relations link at the top of the page, and then selecting News on the left side of the page. We've also included a slide presentation on our Investor Relations page with supplemental financial information that we will reference throughout today's call.

With me in the room today are John Dolan, President and CEO of First Commonwealth Financial Corporation; Mike Price, President of First Commonwealth Bank; Bob Rout, Executive Vice-President and Chief FInancial Officer; and Bob Emmerich, Executive Vice-President Chief Credit Officer. After brief comments from management we will open the call to your questions. For that portion of the call we will be joined by John Previte, our Senior Vice President of Investments.

Before we begin, I would like to caution listeners this conference call will contain forward-looking statements about First Commonwealth, its business, strategies and prospects. Please refer to our forward-looking statements disclaimer, on page two of the slide presentation, for a description of risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements.

Now I would like to turn the call over to John Dolan.

Thank you and good afternoon, everyone. Thank you for joining us on today's call. Yesterday we released our financial results for the first quarter, and we were pleased to report positive net income of $6.8 million, compared to a net loss of $13.2 million for the first quarter of last year. We are maintaining our focus on building for the future while addressing challenges at hand.

The first challenge is credit quality. We made good progress on managing our larger exposures in insuring appropriate loan concentration levels in our portfolio. Specifically, we reined in CRE levels and we've successfully gone after new C&I business. The number of credits exceeding the $15 million continue to decline. It stood at 46 at the end of the quarter, compared to 49 at the end of 2010. Our provision for credit losses for the first quarter came in at $11.7 million, compared to $45 million for the first quarter of 2010. And $8 million in the fourth quarter of 2010.

The volatility and the loan loss provision has noticeably improved and we continue to address our credit issues. This improvement reflects the impact of numerous enhancements made to our credit infrastructure over the past 24 months. In the first quarter the largest single provision was a $1.6 million provision in Western Pennsylvania based CRE loan. We continue to pay particular attention to our commercial real estate portfolio. Bob Emmerich will address a little more details on credit.

The second key challenge we continue to address is a reduction in loan volumes. But demand and loan approvals are up for small business and consumer loans over the last year, despite the decline in the commercial real estate volumes, so there are pockets of opportunity, and Mike Price will address some of those.

On the corporate banking side, loan runoff continues to outpace improved first quarter loan approvals, which hit their highest mark since 2008. We are also experiencing sizable payoffs as a result of the freeing up of the conduit market, so there's ground that needs to be made up. We continue to see results from aggressive blitzing and calling activities, with a significant volume of new business in the pipeline. Despite the challenges to grow earning assets, our net interest margin remains strong as non-interest bearing deposits continue to grow, and pricing discipline on the loans in the deposits has proved to be effective.

Operating efficiency remains a focus as well. We made good progress offsetting additional expenses associated with regulatory compliance and credit cycle challenges. We have done this by beginning to implement continuous improvement programs that enhance our delivery system. We are paying particular attention to work flows in upgrading technology that supports the delivery process. Rollout of our new sales and service platform will allow us to replace the manual back office process.

We are in the midst of outsourcing our print and mail processing, which will significantly upgrade a key point of contact with our customers. And we are preparing for the launch of our mobile banking channel. Finally, we announced plans to streamline and consolidate our operations, which will result in the closing of three branch offices, which have not produced the client traffic and ongoing transaction levels that we would expect to see.

We are committed to enhancing efficiencies throughout the product and service delivery cycle, and we believe by doing so we will simultaneously improve customer service and our ability to generate revenues as we attract and retain customers, at the same time reduce operating expenses. We feel that there are more opportunities from an efficiency standpoint.

Looking ahead, many experts are anticipating meaningful growth in the gross domestic product and improve momentum in economy, recovering despite a stagnant housing market and in the lease turmoil, and the repercussions of the earthquake in Japan. The outlook appears marginally brighter for the label market.

Regional employment is increasing greater than most major metropolitan areas. In assessing these factors, we believe our capital levels position us extremely well to take advantage of the upcoming opportunities throughout the remainder of the year. When you add this to the increase potential in our geographic footprint, generated by the Marcellus Shale activity, we believe we have a strong foundation from middle market growth. And that is consistent with our vision of delivering locally as responsible community bank.

With that, I will turn it over to Bob Rout to discuss our financials.

Thank you, John and hello, everyone. As John just mentioned and as you can see from your copies of the earnings press release, as well as the slide deck that was released for the conference call, net income for the first quarter of 2011 was $6.8 million, or $0.07 earnings per share, as compared to a net loss in the first quarter of last year.

Walking through the income statement line items, we can highlight some of the more significant factors in this period's performance. Our net interest income is down by $6.5 million compared to the first quarter of 2010. That shift is primarily caused by the balance sheet restructuring that we have done over the last 12 months. That restructuring significantly reduced the risk profile of our balance sheet. But it did result also in a decline of $668 million of average earning assets that we determined were incompatible with our risk appetite.

These targeted assets include out of state construction loans, inappropriately sized loans, and other credit relationships, leveraged security positions, and municipal securities portfolio that was starting to make us just a little bit nervous. There is still work to be done on the loans, but we are much more comfortable with the balance sheet composition and believe it's a foundation for going forward, despite the revenue shrinkage here in the interim.

Our net interest margin rate continues to hold steady and at 3.87% range, despite increasing price competition in the market for quality commercial loan deals. Our corporate cash management initiatives and retail promotions for transactional accounts have been a big help in that regard by providing good core funds. Provision for loan losses were $11.7 million this quarter. Certainly, that's an improvement over the $45 million last year, but not where we need to be.

For the most part, credit issues this quarter appear to be one-off type issues and not something we see as a trend for the organization, or the Western Pennsylvania region. As John mentioned, Bob Emmerich our Chief Credit Officer is with us here today and will be discussing these issues in detail following my presentation.

For the second quarter in a row we have had no pulled trust preferred securities impairments. That is making us cautiously optimistic concerning our recorded value on these securities. And we had approximately $600,000 of realized security gains from the clean-up of our municipal securities. And also some single issue corporate debt securities that were still remaining in our investment portfolio.

We, like most banks, continue to feel the effects of the NSF regulations, and those revenues were down by $700,000 compared to the same period last year. This line item is not only affected by the new rules, but we are definitely seeing a shift in behavior, our consumer behavior, with respect to NSF activity. Card interchange income increased $500,000 between the two periods this year and last year. As you all know, there is a huge political and regulatory battle going on over these fees, and one that we will be watching very closely.

As discussed in previous calls, wealth management was another area that has undergone significant restructuring and new leadership. This quarter's results are indicative that some of those efforts are starting to have a positive effect. Non-interest expense continues to trend downward. We believe that there are plenty of opportunities still throughout the Bank to get even more efficient. Our full time equivalent staff levels are down almost 100 positions since last year. Yet, we continue to recruit very heavily for quality lenders and other business development and relationship staff.

Credit collection costs remain elevated as we work through the resolution of some very complex troubled loan relationships. And we did get some relief this quarter, as credit reserves for unfunded construction loan commitments decreased $600,000, as many of those loans have converted to permanent financing. And we don't have a whole lot of new construction loans coming into the pipeline. Our construction loan portfolio is down by $242 million, or 57% over the last 12 months.

So with that, I will turn over the discussion to Bob Emmerich, our Chief Credit Officer.

Thank you, Bob. In the first quarter we experienced a $23 million increase in our nonperforming loans after having worked that number down over the last year from a high of $167 million, to $117 million at year end. It was a great disappointment to see this change in direction and I am sure it is of concern to all of you.

First Commonwealth has three main portfolio segments, Consumer Lending, C&I, and Commercial Real Estate. The $1.6 billion consumer portfolio performed very well through the recession and continues to have strong credit metrics for delinquency and loss rates. The $900 million C&I portfolio performed well through the recession, with very little in credit costs and nonperforming loans. The bank did downgrade a $15 million C&I loan from OEM to substandard in the first quarter. However, the average weighted risk rating for the C&I portfolio has improved with a recovery, and is now better than our target level.

Please remember that the one large, unsecured loan to a real estate developer that we charged down in the fourth quarter of last year, is reported as C&I because it is unsecured. That loan has a remaining book balance of $20.5 million with the reserve of $3.8 million. The borrower has continued to make its contractual, interest-only payments. The main credit issues for the bank have been centered in commercial real estate, particularly investment real estate.

In 2009 and 2010 it was primarily the out-of-market construction loans that were the sources of the credit costs. In the first quarter those remaining assets continued to be a drag on our performance, resulting in elevated collection and OREO costs, and write downs aggregating $3.4 million for continued valuation adjustments on three of those loans.

We have also seen softness in some sectors of our Western Pennsylvania investment real estate portfolio, due to continued high vacancy rates. Generally, apartment and hotel vacancies have returned to normal levels. Vacancy rates for office and retail properties have been slow to normalize, and this is having an impact on our NPL's. Additionally, demand for new housing stock is very weak. The bank has a handful of smaller lot development and condo development loans that are floundering. In many cases the developers can carry the interest but they cannot make meaningful principle reductions. Bank has become proactive in pursuing repayment on those assets.

The $23 million increase in NPL's in the first quarter was primarily composed of four credits that were detailed in our press release. Obviously, the level of NPL's is impacted by both the inflow and outflow. We continue to work hard at having these credits exit the bank. However, since the preponderance of the problem assets are real estate, timeline's are extended by the back log of foreclosures in our legal system.

Total charge-offs for the quarter were $8.3 million, compared to $22.4 million reported in the fourth quarter. And $7.9 million in the first quarter of last year. One of changes we made to loan policy in 2009 was to reduce the bank's hold limit to $15 million, and we have been working down many of our larger credit exposures. As we have previously reported, we had 62 customers with exposures over $15 million at the time we made this policy change. And we reduced that number to 49 at year-end 2010, and have continued to reduce that number down to 46 at the end of the first quarter.

You may have noticed the bank reported in the 10K that the hold limit was increased to $25 million. We found the $15 million hold limit did not work for our corporate finance business line, and that we needed a higher limit to be effective in that segment. The bank is still focused, however, on increasing the granularity of the portfolio. The amount of excess exposure over $15 million continues to be an important metric for the bank, as measured against risk base capital. At March 31 it stood at 64% of capital, and we have a goal of continuing to move that down, over time, to 50%.

We've also reported on the number of relationships that we have over $50 million. At one point the bank had five relationships over $50 million. And as of March 31 we reduced that to only one. That one relationship is just under $70 million. It consists of about $52 million that finance two apartment projects, $14 million that finance three lot development loans, and three small lines of credit. Two of those loans in this relationship were placed on nonaccrual in the fourth quarter. An $8.5 million lot development loan and a $1.25 million line of credit.

Some have asked why the entire relationship was not placed on nonaccrual. The bank assesses the risk separately for each loan in the relationship. There is one individual that ties the loans together, however the loans all have distinct primary and secondary sources of repayment. They have different partners with different ownership interests as well. The bank assesses, and risk rates, each of the loans based on their individual characteristics.

I will now turn it over to Mike Price, who will discuss the portfolio growth objectives.

Thanks, Bob. I'm going to address one challenge in opportunity, and that is loan growth, and as of quarter end we were off $521 million, versus the same period last year. The decrease was a function of first tepid demand and being capital constrained in the first half of last year. Second, almost $100 million in planned runoff and a liquidating residential real estate portfolio.

Third, $300 million from managing down our large credit relationships. You've heard a couple of the speakers talk about right sizing the 63 to 43 -- 46, excuse me. Fourth, we've also been mindful of our CRE exposure as we set concentration limits in that portfolio. Fifth, increasingly through last year, and we feel it's bottoming out, lower utilization of commercial lines of credit. And then last, sixth, really selectively exiting some relationships of lesser quality.

As we've shared, in credit we are taking smaller positions, we're setting concentration limits and we've refocused on our geography. In creating some additional first quarter head winds, we had roughly one-half dozen quality commercial real estate loans paid off by the conduit markets with non-recourse, longer term, low-rate financing. If we annualize the number, it would be the highest dollar amount of payoffs in recent history of the Company.

We do feel that we are at the end of this appropriate right sizing and that commercial real estate payoffs will slow. Also, in the last two quarters we've seen the strongest new commercial loan bookings in two years. It's been a solid climb, built predominantly on C&I originations. Over the same period, as John mentioned, we now have a commercial loan pipeline that is appreciably higher. Importantly, we're also seeing advances on lines of credit to quality borrowers begin to outpace pay downs on a week-to-week basis, reversing the trend we saw over the last year.

Lastly, we've marketed to Marcellus related companies, and a growing portion of our approvals and our loan committee are either directly or indirectly related to the Shale. These are all encouraging signs. In fact, absent the very high level of payoffs -- paid off loans and commercial real estate, we believe we are putting enough on the books, and there is consistently enough in the pipeline to begin to grow.

The formula is not complicated. We are indeed adhering to our new underwriting policies and guidance, which has changed the mix of new loans for C&I from several years ago. We've hired some talented people in Pittsburgh to focus on the middle market segment. Our calling activity and sales infrastructure continues to improve in the corporate bank, and we are doing sustained week-long blitzes one market at a time. We're leveraging our relatively new cash management offering and talent to win business, and we are also leveraging our corporate finance capability to bank some, mostly in-market, industry leaders. With that, I think that we are in a position to compete and win in the marketplace, in particular with a business customer.

And I now would like to turn the call back over to the operator to answer questions.

Thank you.

(Operator Instructions).

And, our first question comes from Damon DelMonte of KBW.

Hi, good afternoon, guys. How are you?

Good, Damon. How are you?

Good, thanks. Quick question for you -- this goes back to Bob Emmerich's points of discussion when he mentioned the commentary you had in the (inaudible) about the hold limit increasing up to $25 million. Are you still trying to get those other 46 credits below $15 million?

Damon, this is Bob Emmerich, we are not going to be focusing as much on the units and numbers. Obviously, it's a big difference between whether or not you have a credit at $30 million versus $16 million. They are both over $15 million. So, that's why we focused more on the excess over $15 million as a percentage of capital with the goal there. And, right now, the excess over $15 million is $435 million. And, we want to work that down to 50% of the space capital. That's the target that we are going to be looking at going forward. Not so much units.

Okay. So, that $435 million has to get down to -- what's the 50% of the space capital?

Hold on just a second. We'll have to get the calculator out for that one, Damon.

Okay, fair enough.

We will have to get a calculator and get back to you.

Okay. Perfect. And, I guess, Bob Rout, for you, with regard to the FDIC assessment, change that went into effect in the beginning of this month, what are you calculating as a potential impact?

Well, it's going to be less than what we have been paying, but we're not ready to release that final number yet.

And then --

Damon, the risk base capital at 50%, would be about $329 million, which will be the excess. So, it's about another $100 million.

Okay, thank you. I guess this is my last question. Regarding the provision expense, going forward. We saw the middle part of 2010 much lower provisioning and then a little bit higher than the fourth quarter and then a spike in the first quarter. How do we think about the provision over the next two or three quarters?

Damon, this is Bob Rout. I think, as I mentioned in my comments, we think this quarter is a one-off for us and clean up, so we're hopeful that this isn't a trend for us.

Okay, that's good. I'll go back in the queue. Thank you.

Thanks, Damon.

Next question comes from Bob Ramsey from FBR.

Hello, good afternoon, guys. I know you mentioned growing proportion of lending activity around the Shale. Is that directly related to the new energy lender or is this existing borrower's have seen more activity and demand in their own businesses? Could you give me more color on what you are seeing?

It's probably more related to the other lenders. The Marcellus Lender has been on just about 90 days. He has some good things in the pipeline, but it's really -- and I think he's had a deal or so, but it's really the rising tide for other lenders. And, they are focusing on, there is just a lot of wonderful networking events and calling specifically on the welders, the fabricators, the service providers, the waste water haulers and the supply chain of the Shale.

And, you also mentioned that the overall commercial loan pipeline was appreciably higher. Can you quantify it -- what it is, going into the second quarter versus going into the first or otherwise?

I don't think we want to give a number, Bob. But it's probably fair to say that it's about 30% higher than normal -- a normal pipeline.

Okay. That's helpful. Thank you.

The next question comes from Collyn Gilbert from Stifel Nicolaus.

Thanks. Good afternoon, guys.

Hi, Collyn.

Bob, just to go back to your comment, well, both Bobs, the provision you said was one-off. You said the credit issues were clean-up. Maybe just delve into that a little bit more? My thought is, if it was if it was a clean-up, then the downgrades would have already been in place. I don't know. I just thought with it having been a clean-up, there would have been more visibility going into the quarter that there were some of these credit issues. So, maybe, just give a little more color to that.

Collyn, it's Bob Rout, I don't know if clean-up is the appropriate term. But, what I did want to get across is that we don't believe it's a trend either for our Organization for Western Pennsylvania. We've said that the Western Pennsylvania real estate market has held up relatively well through this credit crisis as compared to the rest of the country. And we've also talked about the rising tide of the Marcellus. So, we are not seeing this particular quarter as being a trend for us going forward. With that, I will let Bob Emmerich walk you through some of the particulars on each of the credits we're putting in nonperforming in this quarter and some of the larger charge-offs.

I think part of it would be, we still have these legacy out-of-market assets that have been written down a couple of times, and they still have not been disposed of yet as we are working through foreclosure and so forth. And, as we get updated appraisals, that resulted in credit costs, and you've got the accruing past due taxes, those sorts of things, that can be taken into account in evaluation. So, in the last quarter we had $3.4 million of that. If it weren't for that, it probably would have looked a whole lot more like a normal quarter. And, again, we've had some small lot development loans. And we've been patient maybe for a year or so with them, waiting for the market to recover. But, the market hasn't recovered, so it was time to start addressing those proactively and trying to get amortization. And, again, the developers could pay the interest but couldn't make a meaningful dent on the amortization. That was another factor. And, aside from that, it was, as Bob would say, one-off transactions. We've had one new office building that's had some vacancy that we have been negotiating with the customer quite a bit and not making headway. We placed that on nonaccrual.

We've had another smaller retail strip center that we did an extension on and did not raise the interest rate, and under the new TDR guidance we've been getting that would constitute a TDR if it was not at a market rate. We've had a couple of small shallow gas well operators who, because of the abundant supply of Marcellus Shale and gas and the cheap prices have been shut in by the pipeline companies, and, so, one of those went nonaccrual and one went TDR. So, it was just a number of different things, none of which together seemed to constitute a trend or anything that would give us particular concern about any one sector.

And, we had that one -- that manufacturer who --

And -- we've had a manufacturer that filed bankruptcy because he lost a lawsuit that really wasn't connected with the bank at all. So, just a number of different things.

Okay. That's helpful. And, finally, Bob, could you give your thoughts on the outlook for the margin and maybe some of the dynamics going on in the loan repricings?

Yes. For some of the good quality assets coming on, particularly in corporate finance, we are seeing some pricing compression. We, like all the other banks, are out there trying to rebuild the balance sheet. So, the competition is getting pretty tough on that end. But, we were just talking here before the call started, looking at some of our CD repricing over the next couple of quarters and also next year, and believe that along with some of our money market and savings rates, we still have some room on liability side to counteract that.

And, of course, we couldn't be more pleased with how quickly our DDA balances are growing through cash management and also some of the retail promotions. So, those are counterbalances in and of themselves. So, we don't see any strong head winds at this point that would cause that rate to expand with the exception of rates rising in general. But, we also think that any downward pressure's still relatively manageable here over the interim. This is really -- interest income is really going to be a story of volume. How quickly we can put the volumes on.

Okay. That's helpful. That's all I had, thanks.

Thanks, Collyn.

(Operator Instructions).

And, the next question comes from Andrew Stapp from B. Riley & Company.

Hi, guys.

Hi, Andy.

What was driving the lead quarter decrease and other non-interest income? Was it mortgage banking income?

No. It was more the benefit we had in the fourth quarter concerning the credit on back-to-back swaps.

All right. And, do you happen to have what early stage delinquencies were at quarter-end?

We do have that. The 30 to 89 day delinquency was $20.5 million or 50 basis points of the portfolio.

Okay.

That's down from end of the year.

I believe it is, yes.

Okay. And did you say that you have closed or you will close three offices?

We will close.

Is that going to be a Q2 event?

Yes.

Okay. All right. Thanks.

Thanks, Andy.

Thank you. And, the next question comes from Mac Hodgson from Sun Trust Robinson Humphrey.

Hello, good afternoon.

Hello, Mac.

On the expense topic, what should we think of a good run-rate on expenses, given some of these efforts to close offices and decline in FDEs and things like that?

We think we have more downward movement with this first quarter as a base. We're going to see -- we were going to shoot for downward trends office $41.4 million we had here in the first quarter. And, I'm not real comfortable giving specifics at this point.

Sure. And, have you made any changes to the fee structure? You may have talked about it before, of your deposit products, change in pricing and things like that to offset some of the regulatory head winds.

We have not. We have -- just in the net interest margin, we've been very mindful of our deposit pricing and routinely or in the bottom quartile of rates for a -- from a competitive standpoint. But, we haven't -- we did increase some cash management fees at the beginning of the year.

And, we looked to make up some of that difference just with volumes of deposits, as well.

Okay. And, on loan growth, and I know you've hit on this, it sounds like you had some payoffs to the conduit market that you think will slow, and the pipeline seems pretty good. When would you expect for us to see loan balances start to increase? Is it a 2Q event?

I am hopeful by the end of the second quarter, but I think I probably told you that last quarter. But, I think certainly by the second half of the year and hopefully in this quarter.

And, just two more questions. On credit, do you have data on special mention loan trends or potential problem loans, how those trended in the quarter?

Those are going to be disclosed in the queue.

Because we're not prepared to give those numbers right now.

Sure, I'll just wait for that. And, lastly, a big picture question on M&A, but from usually the different perspective. It seems like M&A is picking up in the Northeast market first. And, there's a lot of potential buyers out there with a lot of capital and you guys are sitting in a unique market in that you have the Marcellus Shale and some better economic dynamics going on. Just curious how the Management team and the Board thinks of FCF and its attractiveness to a buyer? How often that's evaluated and the process you go through to look at that alternative.

I guess I should answer that, Mac. This is John. I think that we're looking -- when I got to talk to somebody about considering coming together with First Commonwealth, I look at two things -- is there something that we can do that they can't do on their own? Or is there something that they may be able to do on their own but we can help them accelerate that and they can leverage their investment by coming along with us? At this point in time, I think that the Board would be considering the same thing if we were looking externally on the other side. And, right now, I think that we've got a team established that is doing some things that perhaps we're not going to get the value added if we would look elsewhere.

We're also under no illusions that independence is an earned status. And, it all comes down to performance.

Yes, it seems like, given where you guys are trading on tangible book value really cheap relative to peers, it seems like the earnings picture has been more of a challenge to really get the stock going. And, it does seem like there would be a lot of attractiveness there from a buyer's perspective. So, I was just curious in your thoughts.

Yes, that pricing helps or hinders us from competing anywhere else, as well, for anyone else.

Sure. Great. Thank you.

Thanks.

Thank you. And, the next question comes from John Moran from McCrory Capital.

Hi there, thanks for taking my question, guys. How is it going? In the slides on the large nonperforming loans, on slide eight, credit 2 looks like it was up about $700,000 linked quarter in the landfill. Are you still advancing money there, and, if so, how much is still to go?

We are advancing money. We granted them a new loan of $2 million to expand the sell. This credit is continuing to perform very much better and is really benefiting from the waste generated from the Marcellus Shale drilling. It's been one of the benefits or the beneficiaries of that. And, it made sense to give them the funding to expand the sale, so that they can continue their improvements.

Okay. Thanks. And, then on two of the other larger nonperforming loans, it looked like you guys backed out some specific reserve on credit one and credit three. And, I was wondering if you had any detail there?

Yes. Every quarter we update the analysis for our impaired loans, and on credit number one, our ultimate source of repayment is going to be some real estate assets. And, we would look at the cash flows from the sale of those assets and cap rates that improved a bit, and that ended up resulting in us releasing a little bit of reserve there.

And, then the last one that I've got is on the larger nonperformers. Last quarter, you guys referenced $9.6 million student housing loan that looks like it's still in there, but doesn't make the threshold for the top five anymore. Is -- the specific reserve there I think last quarter was $3.4 million. Is that still the case?

Let me look. One second here. It was actually $3.2 million is what I've got for the specific reserve on that.

That's as of end of this quarter, right?

Yes.

Great, thanks very much.

Thanks, John.

And the last question today is a follow-up from Damon DelMonte from KBW.

Hi, thanks. Just a quick follow-up on credit. Could you give us the dollar amount or the cures this quarter?

What do you mean by cures, Damon?

Nonperforming loans that return to performing status, if there are any?

I don't think we had any that cured that were of any meaningful size. I don't think there were any during the quarter.

Okay, that's all I had. Thank you.

Thanks, Damon.

Thank you, everybody, for joining us on today's call and thanks for your questions. I look forward to talking to you again next quarter.

Thank you. And, that concludes today's teleconference. You may now disconnect your phone lines.