Home BancShares Inc (HOMB) 2007 Q4 法說會逐字稿

Greetings, ladies and gentlemen, and welcome to the Home Bancshares Incorporated fourth-quarter 2007 earnings call. The purpose of this call is to discuss the information and data provided in the quarterly earnings release issued this morning. The Company participants will begin with prepared remarks and then entertain questions. (OPERATOR INSTRUCTIONS). The Company participants in this call are John Allison, Chief Executive Officer; Ron Strother, Chief Operating Officer; Randy Mayor, Chief Financial Officer; and Brian Davis, Investor Relations Officer. The Company has asked me to remind everyone to refer to their cautionary note regarding forward-looking statements. You'll find this note on Page 3 of their Form 10-K filed with the SEC in March 2007.At this time, all participants are a listen-only mode, and this conference is being recorded. (OPERATOR INSTRUCTIONS). It is now my pleasure to turn the call over to our first participant, Mr. Allison.

Welcome, everyone. Good afternoon. Let me welcome you to our fourth-quarter and year-end conference call. Even though it seems like only yesterday that we did our IPO, this is the seventh time that we have reported to our investors, and I'm proud to say that we have good news again today. We've been able to report improving results quarter-by-quarter in all seven reports. I'm sure you've read the press release, and as investors, I'm sure your as pleased as we are. We will go over the highlights. Net income for 2007 of $20.4 million, up from $15.9 million in 2006 and represents a 28.4% increase in net income. Diluted EPS went from $1 to $1.17, a 17% increase. Net income for the fourth quarter of '07 was $5.4 million, another 20.5% increase over the $4.5 million in the fourth quarter of '06. Diluted EPS for the fourth quarter of '07 was $0.26 for the fourth quarter of '06, an increase of 19.2%. That was $0.31 versus $0.26, a nickel. Cash earnings hit a new record high of $1.23 for '07 versus $1.07 for '06, and cash [diluted] earnings for the fourth quarter was $0.33 versus $0.28 for the fourth quarter of 2006, an increase of another 17.9%. We hit a milestone for the Company this quarter. I had reported to you in the past that I thought, that some point in time, we would see a 1 in front of an ROA. I'm proud to report to you that cash diluted ROA was 1.01 for the fourth quarter, and congratulations to our people. That was a goal we had, and that will raise it up a little bit more. What's driving this performance? Improved net interest income, a maturing balance sheet -- we had $101 million roll off of our securities portfolio on low-yielding securities that went into loans in '07, and we have $124 million to roll off in '08. Improved non-interest income, strong loan growth, improved efficiency ratio as you see in the report. We've instituted strong expense control. You'll see that in the non-interest expense, particularly in this quarter, when it was only up $72,000. Actually, if you look at it year-over-year, and I'll explain that, it was actually down.Improved margins -- $253 million worth of capital, strong loan loss reserves. We had net recoveries against charge-offs for the year of over $50,000. As the rates continue to come down, the Company is slightly inverted, and it plays to our strength. Also a subsequent event to year end -- we're pleased to welcome Centennial Bank of Little Rock as are sixth bank to the Home Bancshares family. That have already demonstrated the ability to generate quality loans. We are very proud of this acquisition and the greawt team of people that come with Centennial.After I complete my remarks today, we're going to go to Ron Strother, our Chief Operating Officer. Rohn will update you on the loan side, and then to Randy Mayor for a little more discussion on the margin. We improved margin this quarter even though -- and Randy will talk about how we got there. Some of this I've repeated in my opening remarks, but I've got to run through it. Quarter over quarter, were up $917,000 or 20.5%, and diluted EPS was up $0.05, 19.2%. On the cash earnings side, we were up 19.3% to $5.7 million, and diluted EPS was up $17.9 million. On a linked-quarter basis, we were up a couple hundred thousand dollars on net income to 12.7%. Earnings from 9-30-07 went from $0.30 to $0.31, a 13.2% increase. Cash earnings were also likely up 12.1%, and diluted cash EPS was up 25.6. That's kind of a rounding. As Brian tells me, we get a couple of quarters with an extra penny, two quarters with an extra penny and two quarters with a penny. Net interest income was up $1.6 million from 12-31-06 to 12-31-07, 10%. Loan loss reserves -- we put in $584,000 in 12-31 of '06 fourth quarter, and we put in $1.2 million into this quarter. That was based on strong loan loss reserves and concern over our Florida market. We will talk more about that in the future.Non-interest income was up a strong $1.3 million, 22.6%. We're real pleased with that. Non-interest expense went from 12-31-06 of $14.5 million to 12-31-07 at $15.7 million, an increase of $1.2 million or 8.3%. Of that, $500,000 of the $1.2 million increase was FDIC premiums, and $1.5 million of that was fees associated with generating additional interchange revenue. That was the expense side. The income side to match that was $2.8 million. So it was a good expenditure. On a linked-quarter basis, net interest income was up $540,000 or 12.4%. Loan loss provision, we increased it by $648,000 for the quarter or 470%. Net interest income -- again, strong quarter, up $342,000 or annualized at 21.5% while noninterest expense was only up $79,000. The Company has embarked on a third-party consultant for an efficiency study. We have expressed, for your people the model us, that we would suggest that you model us in the high 50s or the low 60s. We would like to be in the 55s. We have hired a company. We paid for it in last year. Excuse me, we paid for the initial study in last year, which was more than the $79,000 or, actually, non-interest expense would have been down. You'll see us spending probably between $100,000 and $700,000 this year. We hope that doesn't impact EPS on the study, but we think there is some low-hanging fruit out there that we can get our hands on, and we're going to try to pick that up. There will be no sacred cows in this study, and hopefully our Board and our management team will be looking at that study in the next 30 days to determine which of the challenges we want to embark on. Return on assets, 12-31-06, 0.83 and ROA for 12-31 on a GAAP basis was 0.94. On a cash basis, 12-31-06, 0.90. We hit the 1.01 for this quarter. We're pretty proud of that. Good job, guys.Cash turns (inaudible) ROE -- from 10.46 last year to 10.98 this year, and efficiency, which drives the profitability, as you know, dropped from 63.10 last year to 60.54 this year, down 256 basis points. On a linked-quarter basis, the September quarter we did 0.92 ROA. We did a 0.94 the last quarter, and again, we talk about the cash ROA. We did 0.99. We got real close to it the third quarter, the 9-30-07 quarter, but we hit it 1.01 at 12-31-07.Cash tangible ROE dropped just a little bit from 11.16 to 10.98, primarily a result of, even though we had good earnings, unrealized loss improvements on our securities portfolio. If you remember, we mark those to market every quarter, and as rates have come down, then the equity has come up. Efficiency ratio at the end of 9-30-07 was 62.47%, and we dropped to 60.54%. One of the big drivers has been loans. We did $190.7 million worth of loans. We now have $1.61 billion worth of loans; that's a 13.5% increase. Total assets grew by about $100 million, and deposits were off by about $15 million, but that was by design in lots of areas. We had some hot money in there that we let go away. We stayed as competitive as we needed to maintain our market share, and we used favorable home loan borrowings as well as some broker deposits and the $101 million worth of roll-off on the investment portfolio to fund that. Loan-to-deposit ratio, loan-to-deposit ratio dropped -- excuse me, increased to about 100%, up 13 basis points year over year. We had a strong fourth quarter, $46.6 million worth of loan growth the fourth quarter. It just kept coming and and kept coming in. Ron will discuss a strong that appears to be right now. Total assets were up $24 million, third quarter to the fourth quarter, and deposits continue to remain about flat. There was a local drop there of 1.6%.Equity grew $6.5 million to $253 million. Loan to deposits went from $97.61 million to $100.93 million. Loan loss reserve -- we continue to maintain strong loan loss reserves. That's kind of a rounding there. We dropped from 184 to 183. Allowance for nonperforming loans, 904% this quarter versus 574% the same quarter last year. Nonperforming loans to loans, 0.20 compared to 0.32 last year, down 12 basis points. Nonperforming assets to assets increased to 0.36 from 0.23. That's primarily our liquor store. Ron will talk a little more about that in a few minutes.Loans and leases past due 30 days or more, including past-due non-accruals loans and leases to total loans, were 0.46 versus 0.74 a year ago matching quarter. On a linked-quarter basis, loan loss reserves dropped from 183 to 184, 1 basis point, and allowance dropped from September quarter at 1052% coverage to 904% as nonperformings ticked up just a hair. Nonperforming loans to loans were 0.17 at 9-30 and 0.20 at 12-31. Nonperforming assets to assets were 0.34 and 0.36. Loans and leases 30 days past due, including past due non-accruals, loans and leases to total loans, dropped from 0.48 in the September quarter to 0.46, down 2 basis points. During the year, we opened six branches -- Key West, Key Largo, Quitman, Arkansas, as we continue to edge up into the Fayetteville Shale, two more in Searcy, Arkansas, White County, a little bigger play in the Fayetteville Shale, and in Bryant, Arkansas.Pending branches presently -- we have two, Morrilton, Arkansas, a little more play in the Fayetteville Shale, and then our community bank in Cabot is adding another branch.At this point in time, I'm going to go to Ron Strother for some information on the loan portfolio. Ron?

I think I'm going to go ahead and reiterate what Johnny said. Our loan growth has just been phenomenal, and from Q3 to Q4, as Johnny indicated, we had $46 million of growth. That's almost 12%. For the year, we are very, very proud that we put $190.7 million on the books. We were in the teens. Our annualized growth was 13.5%, which we are very proud of in this very difficult market. The Q4 '07 saw the majority of the loan production coming from the Arkansas banks and, most specifically, central Arkansas. About 55% of the production came out of the North Little Rock bank. The other two central Arkansas banks contributed about 16% each, so clearly, about 85% of the production came within the Little Rock [MSA].Let me talk about mix for a second. We really stayed on balance. Q3 '07, 81.2% of the portfolio was in real estate. It only dropped 1 BP. At Q4 '07, it was 81.1%. Interestingly, you might note that we have more fixed than floating, so obviously, in a falling rate environment, we get a little pickup. About 54% of the portfolio is fixed, about 46% float. Most of the demand has been in nonfarm, nonresidential. We had a slight drop in construction and development. We had good growth in retail. The hotel industry continues to be very viable for us, principally related to the Fayetteville Shale phenomenon. Johnny also touched on the pipeline. I'm proud to tell you that, especially with Centennial Bank coming on, that it looks like we've got near $100 million of pipeline prospects. Some of that is Fayetteville Shale vendors, and we are very, very pleased with that. I want to break tradition here, especially for the analysts, for John and Barry and Joe and David. I hope you all have a pen, because we're going to give you a little guidance, finally. What I want you to do is go to www.bidforassets.com\liquor. What you'll find when you go there is Marine bank has a liquor auction, and you can look at the lots; we've got 76,000 items in the lots. It starts January 29 at 8:00 AM, and it runs for a couple of days. So if you all will, please join in.

Thank you, Ron. For you analysts, we would appreciate it if you all would bid it up pretty good for us; that would help us on our recovery.Randy, we had a little surprise on margin. It did a little better than we anticipated. Do you want to tell us what happened?

Sure. As Johnny mentioned, our net interest margin improved 6 basis points. If you recall last quarter, I think I had mentioned that we anticipated some additional pressure on the margin for the next two quarters because of the lag time between CD repricing compared to floating rate loan repricing in a down-rate environment.There were really three principle areas that helped us overcome that pressure. The first is we have aggressively monitored and worked our liability rates. The banks were able to reduce the yield on overall interest-bearing deposits by 20 basis points. Our loan yields did come down about 22 basis points, so that was a big influence to help offset that decline on the loan side. In addition, we've made a conscious decision to keep our other funding sources, such as FHLB borrowings, fed funds purchased and repos, on very short maturities, and we have been able to ride down the rates, improving the yield on that group of funding about 50 basis points. Then the last piece is that we continue to reallocate assets from our investment category to loans, which has also helped to increase our margins. Those are really the three basic areas that have helped recover some of what we had anticipated in the decline.

Randy, thank you. That concludes my remarks except for closing remarks. Amy, if you're with us, do we have any questions from the audience?

(OPERATOR INSTRUCTIONS). John Arfstrom, RBC Capital Markets.

Good afternoon. If we can carve out the Stoli Vanilla, I might bid on one of those lots. I was just looking at it.

You'll just have to look. They'll have all brands of Stoli, I'm afraid.

All right. A question for you on the efficiency study -- what kind of timing do you think you will have? Is there any targeted savings that you're shooting for?

Well, our references on this company went from fair to excellent. The fair portion of it was they had annual savings of two times their their investment. The excellent one was four times the savings on an annual basis. So, Randy, do you want to address what you think on the time line there?

Yes. The time line -- they have been pretty aggressive. They've just started this in January, and they are about to present us what I would call the first phase of that study. Then we'll have to look at that, Jon. It's really our determination at that point as to what steps we pursue and try to pick up there. So we really are just through the first phase, so we don't have an estimate at this point of what they are seeing or what their estimations are. So I can't really tell you what it has been but, as Johnny said, up it has been from a 200% to 400% return on the investment. But of course, there will be some lag time there if we choose to pursue those options; it will be an expense upfront.

They also claim that the investment, that 200% investment that he's talking about would be a recurring investment, too.

How do you determine the size of the investment? Is that the fees that you pay them?

Yes.

Yes.

Yes. They will come back to us, as I understand, Jon, with maybe seven projects that they will price from $50,000 to $150,000 per project. Our management team and board will make the decisions of which of those projects, if any or all, we want to proceed with.

Okay. Well, Johnny, they probably won't cut your salary, right?

They told me they were going to double my salary.

$2? Is that what it goes to?

(inaudible) in it.

On funding, you talked about -- I remember your quote from a year ago. You talked about $100 million coming out of the securities portfolio, and you hit that number. Now, you're saying about $124 million, I think, was the number. When you pencil it out, it sounds like you have some strong loan growth. If you matched last year, it's $200 million. I guess the question is, do you feel like you can hang on and grow the deposits you have to fund it? Do you have to borrow to fund it? Or just walk us through a little bit your thought process on that.

Well, we're going to go with the lowest cost of funds. We have stayed short of the Federal Homeland Funds when we needed them, paying in the 4.25% range. We just -- rates are coming down. The short end is coming down. We picked up about $20 million at 250 the other day. We like those rates. We think it's playing to our hands. CDs are coming down. With the fact that Bank of America is buying Countrywide, we believe that the reality will turn back there and broker deposits nationwide will come down. We only have $39 million worth of broker deposits, and we have about $200 million worth of the available federal homeland borrowings. So I think it's actually working to our favor. Rates are coming down; CDs are coming down; borrowings are coming down. If we stay disciplined -- we were tempted awhile back to step out and buy somebody. We didn't. It heard our income a little bit because we stayed so short, but now it gives us an opportunity to step out at some of these low-priced money, Jon.

Jon, this is Randy. One thing on the $124 million that's coming off of there -- some of that is restricted for pledging purposes.

That's true.

We won't be able to turn all of that but, as we can free it up from pledging, we will definitely continue to reallocate.

Okay. Then, Ron, just one question for you -- in terms of the loan growth, you talked about where. But what do you think is driving it? Also, we've seen spreads widen through a number of different asset classes. I'm wondering if there is still the appetite by your customers for fixed-rate loans. Are you able to move the spread up a bit? Even though the prime rate is obviously coming down, are you still able to get what you think is a fair yield on fixed-rate product?

We have been very lucky to still deal with the mini-perm product, which is a three-year maturity. We've been very, very successful in that. Where it's coming from, especially with the Centennial guys -- these are relationships that hark all the way back to First Commercial Bank. We are still moving major, major relationships out of those other banks. The Fayetteville Shale play clearly is helping us with some vendors. The Cabot Bank and the Conway Bank are making good inroads with people that are offering products to Chesapeake and [Sieco] and those, Schlumberger. So it's coming from there. The hotel industry is still strong, and we are not having to concede the rates that far and we are floating some of those. The customers are doing that, and in exchange for a floating rate, Jon, we stay relatively short. We will stay like three years.

This is Johnny. Our Twin City bank -- the fourth quarter was our big loan engine. It takes a while to move relationships, but that was the big horse in the fourth quarter. The Conway Bank has approved over $50 million already this month of quality, quality loans -- customers we know and relationships that we've built that are projects that are going on in and around Conway, Arkansas. So it is the strongest January. In the loan committee they have been very long. They paid us $250, and I told them we was going to start charging by the our. But they've been from 3:00 to 7:00, the loan committees have, and lots of good credits coming in.

Okay, great. (multiple speakers)

Specifically, Twin City in that fourth quarter, of the $46.620 million, they produced $25.8 million. So they had a very, very, very strong quarter. As John said, they continue to enjoy a very good pipeline.

Barry McCarver, Stephens Incorporated.

Good afternoon, guys. Great quarter. I guess, next quarter, we won't be able to joke about all of this liquor. It will finally be off the books.

If you will help us bid it up now.

I guess I screwed up; I must have bought the wrong load, because I already bought some.We've talked a lot about the loan pipeline already, but I guess, just because it seems so strong and certainly not everybody is seeing this, any particular market you expect this year? I guess more specifically, a question for Ron would be, what type of loans are coming on here? Is this a lot of construction we are looking at? Is it more C&I?

It is C&I. Of course, the vendors with Fayetteville Shale thing are receivables inventory [carrying] those major companies. Great retail opportunity at Twin City, a $10 million credit. We are still getting some hotel stuff, some multi-family, a wonderful, wonderful opportunity here in Conway who you would know well, you would note the spiral well. We have a wonderful multi-family opportunity. Warehouses is doing extremely well, particularly in Conway, with the Fayetteville Shale phenomenon. So it's not one, but it is a construction. To answer your question, it's not really construction and land development. These are in the non-farm, nonresidential category, Barry.

There's not a warehouse left in Conway. Two Fortune 500 companies since the Fayetteville Shale boom, as you well know, is working so well. A lot of people didn't believe it was going to be real, and with the money that's being pumped in here, there's lots of companies coming in, and there's a shortage of warehouse space. We just picked up one of our shareholders and customers a large warehouse loan.

John, asset quality to certainly not an issue for Home Bancshares. It still looks very good. But you know as well as I do that's what the industry is focused on right now. Kind of your thoughts on what 2008 could look like? Do you see any change in any of your markets that would affect your bank?

I think nonperformers are going to go up; I think they're going to go up. That's the one thing that wakes me up at night. If its waking you up, don't let it bother you because it wakes me up, Barry. That's the one thing concern -- I see a little crack in the armor out there. I told you last time, the last couple times I think, we're going to get some houses back in Florida. We got one of those this quarter. I think we're still one to get some houses back. The Florida market has not improved. I have concerns about the Florida market. Arkansas has stayed pretty strong. We have a couple of builders out there that could get their sales in trouble. Do I think -- we've done a good job of underwriting those credits, and we are well-positioned; I think we're well-positioned. Of course, you know that we're picking up about $2 million of nonperforming out of Centennial, but that's part of the carve-out that we did. We found that, when we did the due diligence on the company, and we carved that out. So you'll see that, but our shareholders don't have any liability there.But that's why we built $30 million of loan loss reserves, to be prepared for what could happen. I still think nonperformer is going to go up. I guess, if the world came to an end, they could go to 2%. If it's reasonable, they could go to 0.6%. So somewhere in that range would -- the ones I think about from time to time that wake me up, I think, well, is that one going to be all right, or is that one not going to be all right? So I say that was the range. I was going to forecast that and give you a little insight into where I saw us going in '08.

But it sounds like what you're trying to tell us is it's more of a getting back to historical norms and measured increase each quarter, maybe a little bit in NPAs, nothing really significant all at once?

I think that's exactly right. I think there will be some workouts in there, as there always is, and they ebb and flow, as you know, in the nonperforming. Hopefully, our liquor store -- we got our liquor sold, and the building will be -- I think Hunter has it 100% leased know, and it's throwing off about an internal rate of return of about 8% or 9%, 10%; I don't remember what Hunter said. But it can be marketed pretty quick. We get that off the books. We got a house or two in the Florida Keys to deal with.It's just -- we're not immune. We have done a good job of underwriting, but we are not immune. But that's why we got $30 million worth of reserves and we haven't taken negative provisions. We have continued to build our loan loss reserve, as you can see, in the fourth quarter. We added, this year, another $3.2 million to loan loss reserves even when we had recoveries.

Then my last question you've already answered part of it, but on Centennial, when that thing comes on the book and we take a look at it when you report the first quarter, we will have some nonperformers come over. Can you give us an idea of what the end of the year, in terms of net interest margin, anything else that might stick out when they roll on?

I'm going to let Randy -- I don't know if we're --.

The bottom 1.1, and I don't know if we have all of the margin impact for them at this point in time. The one number that I did have is, just because I know it off the top of my head, is that our allowance for loan loss, as a percentage of loans, if they were combined on day one -- Mean, if they were on 12-31, it would drag our [AOL] to loans down 7 basis points. We're a 183, so I guess the math on that would be 176.

They are at 1.20, Barry.

(multiple speakers)

That's the kinds of things that we're looking for here, just so we're not caught off-guard.

Yes.

All right, guys. That's all I had. Thanks a lot.

One other thing on Barry's comment. Actually, Centennial has not closed out their general ledger at this point in time. I think they are going to run their final ledger tonight.

David Scharf, FTN Midwest Securities.

A lot of my questions have been answered, but I just wanted to kind of follow up on a couple of things. One, I believe, Johnny, you mentioned that you are (technical difficulty) about 46 basis points. Is that right?

David, you're cutting out on us.

You broke out on us, David.

Sorry about that. I said I was wondering about the 30 to 89-day past due list. I think you mentioned it was 46 basis points. Is that right?

That includes (multiple speakers) and 30, anything 30 days or over and non accruals is 0.46.

As far as the watchlist, how is that performing?

Fine.

No change with regard to how -- you mentioned Florida is feeling a soft?

Florida is soft. There's just not much going on there, and we've got some concerns there. If this continues in that market, we're going to have some problems there. We're just reserving for it and being prepared. Hopefully, it won't. But you've got to get out in front of these loans, and that's what we try to do. We try to get out in front and look at a worst-case scenario. I want to know the worst news that can come in, and hopefully it will be better than that. That's when I say nonperformers could go to 2%. I think that's the max that they could go to. If everything blew up that I know of company-wide, so that normally doesn't happen, as you know, but as conservative as we operate, David, I like to have the worst out there.

No, in this market, that's a good strategy. Then with regard to the pipeline, if you're going to put a percentage on it, on the closing, what percentage would you say historically you've operated at?

Well, the Conway, the $50 million in Conaway, I'm going to put 95% on that. They're our customers. The deal is done, basically, and we're starting to fund. One of them we closed the 30th of this month. There's about $14 million of that closed on the 30th.

Does that number include Centennial's contribution?

No. It's just Conaway. Conaway has the strongest pipeline. It's got about $50 million. Centennial has got about $50 million in the pipeline. Ron, do you want to talk about, when they close, what percentage you think will --?

Yes. These, again, are moving relationships, David, and they have a very high closing rate. Twin City, which has been the lone horse the whole time, they, too, are moving relationships. They had, as you saw, a $25 million quarter. So, I mean all of the central Arkansas banks are strong.

Cabot is strong. Cabot has got -- or Community Bank has got a good pipeline in it. That was Twin City up $25 million, but they sold another $10 million of overlines out, or $12 million, to the rest of the banks. So it's pretty nice right now.

Okay. Could you give us an update on the six branches you've put in the network this year as far as deposit gathering? It sounds like you are going to have to fund the robust loan growth with some borrowings, but just sort of clue us in on how you feel about the branches.

I don't have that information; I apologize. I think Bryant -- I looked at Bryant, Arkansas, when Twin City opened that one, and the transaction had already hit the transaction totals of -- daily transactions had already hit the level of some of our other branches. Of course, we opened two new branches in Searcy, Arkansas, as you know. Those deposit growth -- they just opened, so we don't have a lot of deposit growth in there. But that's right in the middle of the Fayetteville Shale. The little Quitman, Arkansas move-up is in the (inaudible). I think it's about $8 million already in Quitman, Arkansas. I don't have the totals on Key Largo and Key West; I apologize.

How should we look at the Fayetteville Shale as far as the deposit gathering? Is it going to be more just of a loan generation, or do you see it eventually transitioning to some good seller core funding?

I think it's going to eventually transition to good core funding. What we have had is the initial run, where they leased the land. Now, they are drilling until they get paid out, then our people start getting their money. But where we are seeing it right now is our motels, restaurants, warehouses. Everything is full. Housing -- everything is full here right now. Even though residential has tailed off a little bit, we are seeing it through the businesses that we operate with, the little quick-shop stores that there's 25 trucks in front of them in the morning at 6:30 in the morning. So that's where we are seeing it. Ron has put a team together and is going after the Fayetteville Shale with Tracy French out of Community Bank in Cabot, as well as First State Bank. We're out making calls on these people, finding who the landowner is, knocking on the door, introducing ourselves. I think we made 92 calls last month or something like that. So we are out putting cards in people's hands and introducing ourselves. We know a lot of these people. Those we don't know, we're introducing ourselves.We probably need to get into some wealth management at some point in time. But that has not been our field. We probably need some direction there, because there's going to be a lot of money coming in.

David, today's newspaper announced the major oil companies, the Fayetteville, Arkansas Sam Walton School of Business study that yielded the $5 billion to be spent in five years. They funded today to update that study. Hopefully, that will be coming out in a few months. So, we will have new statistics on the ripple effect of the play.

Okay. Well, very good. Thank you for your time. I appreciate it.

Amy, are we complete so far or --?

We have no further questions at this time.

I want to thank you. I want to thank everyone for your support in '07. It was kind of a wild year. They kind of beat up our stock like they have everyone else. But we put '07 to bed in great shape. '08 we have a look at -- we're dealing with economic uncertainties and declining home prices, a higher unemployment rate. We're seeing no improvement in Florida. I've talked about and NPAs and where they could go in a worst-case and a best case scenario, and we've talked about the $2 million that will come on from Centennial that's part of the carve-out. From the [pros], your company has a fortress balance sheet with nearly $353 million in capital. That's nearly $100 million in excess of the well capitalized financial institutions. I know you think, well, it's probably a good time to have that $100 million in excess capital. We have our hands in our pocket. We are looking out there to see if there's opportunities when opportunities come up. But if they don't come up and our stock is selling about 1-4 book, it doesn't make a lot of sense to pay somebody 1-8 a book or two times book. We may just buy some of our own stock.From the reserve, you know the story on reserves, how strong it is. It's 18 in the nation in reserve with a 1.83 percentage, almost $30 million in reserve. Our peer group happens to be at 1.05%, and we are at 1.83%. That 71% lower in reserve. So if we wanted to play the games and pop earnings, we could have played the games and popped earnings. We could have done a reverse. You see some people out there that did the reverse provision and then turned around and put in big provisions. We maintain good asset quality. Ron and I have talked about the pipeline, the strong pipeline. You're seeing improved margins. We're working hard on efficiencies. Non-interest expense is under control, improving revenues. We're sitting in the middle of the Fayetteville Shale; it continues to boom. We think '08, pending some crisis in the financial community, should be a great year, again, for the Company. We thank you for your support, and we'll see you in 90 days.

Amy, that concludes.

Thank you. That does concludes today's conference. You may now disconnect. Thank you for attending.