Hope Bancorp Inc (HOPE) 2010 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the third-quarter 2010 Center Financial Corporation earnings conference call.

My name is Fab and I will be your coordinator for today.

At this time, all participants are in listen-only mode.

We will conduct a question-and-answer session towards the end of today's conference.

(Operator Instructions).

As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to Angie Yang, Investor Relations for Center Financial.

Please proceed.

Thank you, Fab.

Good morning, everyone, and thank you for joining us today for Center Financial's 2010 third-quarter investor conference call.

Before we begin, please recognize that certain statements made during this call may not be historical fact and may be deemed therefore to be forward-looking statements under the Private Securities Litigation Reform Act of 1995.

Many important factors may cause the Company's actual results to differ materially from those discussed in or implied by any such forward-looking statements.

These risks and uncertainties are described in further detail in the Company's filings with the SEC.

Center Financial undertakes no obligation to publicly update or revise these forward-looking statements.

Now as usual, we have allotted one hour for this call.

Center Bank's President and CEO, Jae Whan Yoo, will begin today with introductory comments.

Our interim CFO, Doug Goddard, will then review certain details for the Company's 2010 third-quarter financial results.

Our Chief Credit Officer, Jason Kim, will then comment on asset quality metrics before J.W.

makes his closing remarks.

We will then open up the call for a question-and-answer session.

Now I would like to turn the call over to J.W.

Thank you, Angie.

Good morning, everyone, and thank you for joining us today.

Late yesterday, we announced the financial results for our 2010 third-quarter and reported a net income of $6 million, equal to $0.13 per diluted common share.

I'm very pleased to note that this is our third consecutive quarter of profitable operations.

Moreover, if you exclude special items like our bargain purchase gain in the second quarter, gain on sale of securities or loans and like our tax benefit this quarter, you would see increasing trends in our earnings each quarter this year.

This is very positive.

As we have said before, the many decisive actions that were taken last year enabled us to be in the position of this trend.

And this is not withstanding on the economic environment that has not really improved on the ground level for customers in our core markets.

Now Doug and Jason will go in more detail in their reviews, but let me begin with the quick reviews of some highlights for the quarter.

We experienced a continued and meaningful improvement in our asset quality trends.

Linked quarter, classified loans declined 18%.

[Impaired] loans were down 17%.

Nonaccrual loans decreased 36% and the total nonperforming assets were reduced by 35%.

[The more definity] with directional consistency in our asset quality resulted in lower levels of provisioning compared with the previous quarter.

And this certainly has a positive effect on our overall profitability.

That said, we recognize that the economy recovery is not yet [in sight] by our customer base and expect that the recovery will take longer than any of us would hope.

As such, we are taking a very cautious and conservative approach to our allowance calculation.

Now, we believe we are making way to a return to growth.

We have already reached our goal to return to profitability and with a greater amount of our attention dedicated to growth, we would expect to see gradual increases in our own portfolio in the near future.

The Innovative Bank transaction in the second quarter was certainly a strategic acquisition that will contribute to this growth.

From an organic growth perspective, we are making particularly strong progress in our SBA lending.

According to the SBA report on the fiscal year ended September 30, 2010, Center Bank was ranked number 3 in terms of the number of transactions in the Los Angeles district, and we were third following Wells Fargo and JPMorgan.

This obviously means that Center Bank was the leading Korean-American bank, in terms of SBA loan origination in Southern California.

In fact, on a national scale, out of 22 Korean-American banks, we were the top producer in terms of number of loans.

And we are very proud of this achievement.

During our 2010 third quarter, we originated nearly $25 billion in SBA loans.

Notably, our business development efforts have led to a more than doubling in our loan pipeline in just the second half of the 2010 third quarter.

With these trends and the reopening of our Denver loan production office earlier this month, we expect to see increasing levels of SBA lending in the coming quarters.

So generally speaking, we are very pleased with the way things are unfolding here at the Center Bank, and I look forward to keeping you apprised of our success.

With that, let me pass it over to Doug for his review.

Doug.

Thank you, J.W., and good morning, everyone.

Let me begin with a quick update on the integration of Innovative Bank.

The systems integration was successfully completed in August as scheduled.

Concurrently we closed the one Los Angeles-based branch in the Fashion district that Innovative had and transferred the accounts to one of our two legacy branches in the area.

In northern California, we relocated our Santa Clara branch earlier this month to a more convenient and accessible location in the heart of the city's Retail Business district.

And with the completion of branch upgrades in the Oakland area last week, we hosted a grand reopening that was very well-attended by our customer base and community representatives.

While we will not be providing a breakdown on the contributions to earnings from the Innovative Bank as we did last quarter, we do anticipate further improvements in operational performance.

Overall, our core deposits at our Northern California branches have been increasing.

We believe in part due to our customers' comfort in banking with one of the leading Korean-American banks in the nation.

This has been without the benefit of any real marketing to date.

We are just now launching a more active new business development strategy in this geographic market.

And we are very optimistic these operations will be increasingly important contributors to top- and bottom-line growth.

Now moving on to our financial results for the 2010 third quarter, net income totaled $6 million for the quarter.

After preferred stock dividends net income available to common shareholders was $5.2 million equal to $0.13 per diluted common share.

If you all have had a chance to review our results already, I will just highlight certain areas and point out any specifics that should be considered when thinking about a normalized run rate.

You may have noticed there was a significant decline in our interest on investment securities from the preceding second quarter.

Subsequent to filing our June 30, 2010 financial statements, we determined that an adjustment was needed to the interest income line item related to the securities acquired in the Innovative Bank transaction.

This adjustment of $446,000 was recorded in the current third quarter.

This increased our interest on investment securities in the 2010 second quarter while the correction adversely impacted our yield on investment securities in the 2010 third quarter.

And this in turn negatively impacted our net interest margin for the quarter, which declined by 22 basis points linked quarter.

In the fourth quarter, we anticipate our NIM to expand, in part due to the adjustment that had an adverse impact on the third quarter.

But we also expect to see some additional reductions in our core deposits.

Cost of deposits, excuse me.

Furthermore, as J.W.

discussed earlier, our SBA loan pipeline ramped up significantly in the third quarter.

And we expect increasing levels of SBA production going forward.

These loans, which typically have higher margins, will also contribute to net interest margin expansion.

In terms of our non-interest income and non-interest expense line items, the quarter was pretty normal with no significant non-core items.

With regard to our income tax provision or benefit this quarter, as announced in our news release, we recorded an income tax benefit of $846,000.

This was comprised of an income tax provision or expense of $1.2 million and an income tax benefit for the reduction of the deferred tax valuation allowance of $2.1 million.

Center Financial in the past had established a $16 million reserve against the deferred tax asset position.

In the current quarter, this reserve was reduced to approximately $14 million as the growth deferred tax asset position declined while the Company continued to be profitable.

The potential for further reduction of the deferred tax asset reserve will be dependent upon the continuing trend of profitability.

Moving on to deposits, total deposits on a quarter end basis as of September 30, 2010 were relatively stable from the June 30 levels.

Non interest-bearing demand deposits accounted for 21.4% of total deposits compared with 22.1% as of June 30.

While we are continuing to roll off higher rate broker deposits as they mature, our jumbo time deposits increased by $20 million from the June 30 levels and accounted for 29% of total deposits at September 30, 2010.

Overall, our cost of deposits declined by another 6 basis points from the preceding quarter to 1.13%.

Now moving onto loan production, we are beginning to see some increasing activity in loan production.

During the 2010 third quarter, new loan origination and renewals totaled $144 million of which approximately 80% were variable rate loans and 20% fixed.

This is up from $124 million in new loan origination and renewals in the second quarter.

With this level of production and lower levels of note sales in the quarter, our legacy loan portfolio declined by just $7.6 million from June.

The decreases in our CRE and commercial loan balances were largely offset by increases in trade finance, SBA and consumer loans.

The reduction in our commercial real estate portfolio lowered the concentration to less than 63% of our total portfolio.

Net CRE as a percentage of risk-weighted assets was less than 240% which is comfortably within the regulatory guidelines of 300%.

With the strong profitability in the quarter, our capital ratios further strengthened from June 30 levels.

As of September 30, our leverage capital ratio was 12.55%.

Our Tier 1 risk-based capital ratio was 18.04% and our total risk-based capital ratio was 19.32%.

Tangible common equity to tangible assets also improved from June 30 to 9.52%.

With that let me turn the call over to Jason to discuss asset quality.

Jason.

Thank you, Doug, and good morning, everyone.

As reported in our news release, we saw some very positive trends in our asset quality during our 2010 third quarter.

Also as noted in the release, there were three major factors that contributed to the 36% decline in non-cover nonperforming loans from June 30 to September 30.

First was a note sale completed during the quarter with an outstanding balance of $1.5 million.

You will note that this level is down significantly from recent quarters.

However, we did make the determination to sell two other loan relationships during the quarter.

These two lending relationships were transferred from non-cover nonperforming loans to loans held for sale at the lower of cost or fair market value as we began to actively market them.

Accordingly, the increase in our loans held for sale from June 30 to September 30 is due in part to this transfer.

Both of these note sales were completed subsequent to the close of 2010 third quarter, which will result in a $12.8 million reduction in this bucket in the 2010 fourth-quarter financial results.

And third, one non-cover nonperforming loan with an outstanding balance of $6.6 million was upgraded during the quarter to accrual status.

Of the $43 million in our non-cover nonperforming loans at September 30, commercial real estate loans accounted for 71%; C&I represented 19%; construction, 9%; and consumer just 1%.

New non-accrual loan inflows during the quarter decreased to just $7 million during the quarter down significantly from inflows of $27 million in the preceding second quarter.

CRE-related loans accounted for 61% of the new inflows to non-accrual status including two hotel motel loans.

C&I allows constituted 38% of new nonaccrual loans.

We are pleased to see a continued slowing in new inflows to loans past due 30 to 89 days which totaled $5.8 million in the 2010 third-quarter.

This is up slightly from inflows of just $4.7 million in the preceding second quarter.

Now net charge-offs for the 2010 third quarter amounted to $8 million and includes recoveries of $1.5 million.

Net charge-offs represented 1.79% of average loans on an annualized basis.

Generally speaking, we are pleased with improving performance of our loan portfolio.

And as you know, we have been actively doing note sales since early 2009.

At this point, given the extent of our loan reviews over the last year, we would expect to see decelerating levels of note sales going forward.

However, the economy is still challenging; so we are keeping a close eye to make sure we stay in front of any potential issues.

With that, let me pass it back to J.W.

for some closing remarks.

Thank you, Jason, for your review.

Given the continued positive trends in classified and delinquency loans, we are beginning to move toward more normalized provisioning levels and slowly tucking back into our reserves.

With our third consecutive quarter of profitability, we are directing more of [intentional] growth to increase our earning power.

From an organic growth perspective, as I mentioned before, our loan production volumes are on the rise, and we already opened one loan production office in Denver.

We are considering a few others as well.

From a strategic growth perspective, we have continued to evaluate other financial products and services to diversify our portfolio and revenue stream.

New geographic markets, like in Northern California, are also being considered.

And from a very strong capital position, we continue to actively monitor strategic opportunities that are rising, given the dislocation in the industry.

As we enter the final quarter of 2010, and begin preparation to celebrate our 25th anniversary on March 18 next year, we stand proud and tall for what we have accomplished and believe the prospects for Center Bank are stronger than ever.

With that, let's open up the call for questions.

Operator, would you please explain the technical elements for the Q&A session?

(Operator Instructions).

Joe Gladue from B.

Riley.

Good morning.

I wanted to ask, I guess get a little bit of additional clarity on the securities adjustment for the Innovative securities.

If I heard you correctly, you said that there was a benefit in second quarter, and then the adverse impact in the third quarter.

I'm just trying to gauge, is that $446,000 the difference between the -- I guess, the benefit and the adverse impact in the second quarter?

And if so, I guess, we shouldn't expect to see that whole $446,000 bump up in the fourth quarter.

If you could just (multiple speakers) --?

If we're looking at your run rate, you should simply add that $446,000 to the third-quarter income and subtract $446,000 from the second quarter.

That would have been the correct run rate for the two quarters.

Okay.

Thank you.

And I guess I'd like to talk about deposits a little bit.

I guess a number of banks in Southern California have been seeing growth in both total deposits and some pretty good growth in non-interest-bearing deposits.

And you know, I guess you are seeing declines particularly in non-interest income.

Just are you doing anything differently or do you think you can expand the non-interest-bearing accounts more going forward?

I would say yes.

I mean, in the short term, one area where we hope to have a noticeable difference over the coming quarter, too, is Northern California.

Because that is an area we haven't really marketed.

We have been mostly doing the transition from the former ownership to the current ownership.

The fluctuation between June and September, as I look at it -- I've tried to look at it is mostly sort of day-to-day fluctuations.

There is no significant trend in the underlying averages to me between June and September.

But I think we see a lot of opportunities.

Short term in the markets, we haven't marketed like Northern California.

And I'm also seeing some repricing opportunities still in the market on our existing deposits.

It continues to be, if anything, slightly less competitive from a very high level, mind you, than it was three months ago.

Joe, for instance, in the area of Northern California, after acquisition of Innovative Bank, we found that [DDA] increased more than 40% and the money market increased more than 60%, which is phenomenal in our situation right now.

Okay.

All right.

Thank you.

And I guess just in terms of wondering about an additional expense savings, any -- whether it's from the integration of Innovative or from finishing up some of the changes you were doing with the branch network in the quarter, are you expecting any additional cost reductions going forward?

The third quarter is probably a mix that we got some of the cost savings from Innovative.

Certainly we had cut the head count fairly early in the quarter.

But offsetting that was a lot of miscellaneous coming out in small amounts and line items as we went through systems conversions, relocating branches, closing branches and so forth.

So I would say we do have some cost savings there, but I wouldn't give you a very big number for your run rate analysis.

It's -- I mean, the direction will be downward, but it's not many, many hundreds of thousands of dollars.

All right, that's fair enough.

Thank you.

That's all I had.

[Chris Belton] from Howe Barnes.

Good morning.

What --?

Can you talk about what you are seeing as far as cap rates or -- and/or cash flows associated with your non-owner occupied commercial real estate borrowers in your primary markets?

(multiple speakers)

Have they leveled off?

Are you seeing improvements, stabilized, continue to fall?

What are your thoughts there?

In terms of investment properties, cap rates have gone up significantly from -- at the peak of the market in 2007, where we saw the cap rate between 6.25% to 6.5%.

Right now we are seeing about 8.25%, 8.5%.

That seems to be stabilized, but the kind of absorption rate or the retail [stream-alls] has been extended.

But right now we are seeing a stabilized cap rate in those respective commercial real estate markets.

Okay.

That's basically stabilized, okay.

And what kind of activity are you seeing or expecting on import and export fronts or the trade finance lending?

Does that excite you at all going forward?

Yes.

I mean, we have a number of accounts that are improving in the export area.

We also have a number of accounts that are provided under the SBA EWCP.

It's an export working capital program that provides 90% guarantees [to] the export trading borrowers.

So we are also utilizing that program to support the exporting.

So there are activities going forward, given the stability of the Korean won currency which wasn't a factor about a year and a half ago where the currency declined significantly.

So, but we are seeing improved activities in the respective trading finance area.

Okay.

Just one last question, then I will step aside.

Can you talk about -- the question everyone always asks for these conference calls -- about the TARP repayments and, in your situation, the timing or at least your expectations regarding the MOU?

You know, with respect to MOU, basically we are in full compliance with all of the provisions under the MOU.

But, the MOU has never been [limited] before or it is the one-year anniversary based on our experience and our understanding.

So we are thinking that that can be lifted with our next full examination in 2011.

But under the informal MOU, you know, basically we are discouraged to pay back the TARP, because they like to have a more capital cushion.

Even though our capital level is way above capitalized ratio and it is now over 19%.

But still we are under MOU and it should be lifted first before we take some action.

Definitely, we are looking at the situation very closely and we are doing a lot of intensive analysis on this particular [issuance].

Great.

Makes sense.

Thanks for taking the time to speak with me.

Joe Stieven from Stieven Capital.

Good morning.

First of all, good quarter.

Actually, Chris just got my question.

I was going to say with almost 9.5% tangible common, have you even started to discuss the repayments of TARP and -- because you are in such good position.

But you've already answered it.

So thank you.

Fernando Inzunza from Lombardi.

Lombardia.

I wanted to go back to the first Joe's very prescient question.

If the Innovative Bank investment securities interest income adjustment of $446,000 had not taken place in the third quarter, would your net interest margin have been closer to 3.40%, not 3.31%?

Correct.

And correspondingly, if the benefit had not occurred in the second quarter, then we would have had a very flat movement in net interest margin from second to third quarter.

Would that be fair to say?

That is correct.

Second question.

If you scan the SBA loan approval report dated October 23 for fiscal year 2011 year to date, you will see that there is a jump of 103% to $282 million in the dollar amount of 7 A and ARC category loan approvals.

Do you feel that you are fully participating in this strong growth trend, given especially the favorable reputation Jason Kim has in the Glendale district office?

Well, Fernando, thank you for the remarks.

The Center Bank is a nationally recognized SBA lender.

Nationally ranking, we are ranked 15th in terms of loan amount in the country among probably 700 lenders throughout the United States.

And given the $5 million increase to 90% guarantee, we have a strategic marketing plan which was prepared in anticipation of this new initiative bill that we were expecting.

And basically, we doubled our loan officers to respective SBA Department, and the pipeline we are seeing -- it's a big market.

It is going to be a very profitable market, and the pipeline is building up significantly as we speak right now.

So we would expect a much, much higher origination going forward.

And that is a really exciting lending area that we're really going to capitalize.

Thank you.

I'll follow up with Doug later.

Julianna Balicka from Keefe, Bruyette, Woods.

Good morning.

Hope things are well, good quarter.

I have a couple of very small questions since the conference call pretty much answered a lot of them.

One, under income tax benefits that you had this quarter, if your next quarter profitability and income is the same as this quarter, should we expect a similar benefit then?

It's not a sim -- it is a quite complex complication, but another quarter of profitability would certainly add to the argument for reducing the reserve more.

I can't assign exact probability for you because it is really a quite multidimensional calculation.

But we expect to continue to be profitable, and because we expect to be profitable, a good part of that $14 million is coming back to income over a period of time.

I just can't tell you which quarter.

Okay.

That helps.

And in terms of your remarks, Doug, you referenced some production numbers.

And I'm sorry, I wasn't writing down fast enough.

Could you talk a little bit more again about the production and maybe give us some specific numbers on the originations from this quarter?

Well, I could do it from my memory or I could turn back to my notes here.

I'm going to go with the notes.

$144 million in new production and renewal.

Right.

Did you want --?

I mean, we broke it down fixed versus variables.

Did you need that?

How about new production versus renewal?

Do you have that breakdown?

I don't have that breakdown.

We will have to look -- we'll have to get that for you.

It is not as (multiple speakers).

And then, a final question and I will step back.

On the -- I know you said that the run rate for expenses, there isn't a significant change for next quarter.

But in terms of pulling out any items for the purposes of merger stuff that's nonoperating, is there anything that we should pull out from the branch closure, etc.?

Or is that just too small to be bothered with?

I think it is probably too small.

I mean, there isn't a big item in there.

I mean there might be $100,000 of expenses or maybe a little more.

But it's not -- I wouldn't mess with it with your run rate projection, I don't think.

Very good.

Thank you very much.

I appreciate that.

Bill Dezellem from Tieton Capital Management.

Thank you.

I had a group of questions.

First of all, how would you characterize the change in borrower conditions over the last 12 months, please?

Good morning, Bill.

Well, obviously, small, small businesses are still impacted by this uncertainty (sic) economy.

[Various] sales and revenues continue to show not much improvement to respective retails and services, but the level is a little bit higher -- of businesses are doing okay.

I mean, but there has not been a significant improvement in overall healthy (sic) of their businesses.

So if you were to say up, down, or flat, more flat than anything?

More flat than anything.

All right.

Thank you.

The second question is relative to your loan to deposit ratio.

Longer term, where are you targeting that to be?

Well, I don't know that we ever target that at specific ratio.

I mean, we look at the inverse of that, which is the non-core funding ratio.

And certainly, we like to stay under 40% for that and we'd like to be closer to 30% or less.

But in terms of loan to deposit --.

Okay.

Yes, I think loan to deposit, generally speaking, 80% to 85% is kind of an ideal position and situation.

But it depends on the market demand.

In other words, if the economy is picking up and there is a loan demand, then we might be more flexible to increase this ratio in an overall, you know, 90% or 95%.

But at this point of time, even though the loan production start to show up some increase, was still -- it is not as strong as in the past.

So at this point of time, 85% seems to be some ideal situation at this point of time.

And that's a great segue, J.W., to my next question, which was what is your view of loan demand?

And have you sensed any notable change over the last six or 12 months?

Well, I think that has a function with the general economic situation, even though large corporation, small corporation, and middle-size corporation might vary.

But from our point of view, the market in this small and medium-sized has been very slow recently because of SBA, you know, the act was signed by President Obama in the last month.

And also, our CCO, Jason, has been very strong in creating some new ideas to develop SBA loans.

And as far as Center Bank is concerned, loan demand is not as strong, but I see there is an increasing trend.

Jason, would you add on that?

Yes.

First, I think we could probably cover two respective areas.

One, I think there is a little bit of a separation between some of the banks out there still struggling.

So they like to create -- they like to cultivate a relationship with Center Bank.

So, on a C&I level given the separation among the banks, we are seeing some healthy C&I borrowers coming into the bank.

So, that takes time.

I mean we want to know the borrower, we want to know the industry.

We want to know the whole aspect of each business's book.

So that is taking time, but we are seeing the pipeline as we speak.

Secondly, this SBA, I mean, we've been doing this for 20 years.

And one of the most profitable and -- in terms of risk management, which is one of the products that we are going to really be active and given the size and the identified number of clients that we already have in the pipeline, it is going to be a big factor going forward.

So we are going to see a much [higher] origination going forward.

So that is going to be an area that we are going to see a much, much higher growth in the C&I borrowers that we are seeing that are separated.

So we are going to see on both ends, we are going to see a growth to respective areas.

And so in essence, yes, Center Bank has done some things to drum up some business, if you will?

But in addition to that, there is some improved loan demand out there, in part because of the new SBA initiatives that are in place.

And then the other item that is working to your advantage is the correspondent bank relationships that you have, where those folks still are not in a position to take on a lot of new loans?

So --.

That is correct, Bill.

Yes, that is correct.

Thank you both.

(Operator Instructions).

Brett Villaume from FIG Partners.

Good morning, everyone.

I had a follow-up question on loan origination, and I apologize if I missed this, if you had quoted it.

But of new production, what specifically I'm interested in the SBA loan origination.

Do you have a number you can give me?

And/or just describe what the pipeline there looks like?

Third quarter, we originated $25 million SBA new origination.

$25 million?

Yes.

$25 million that we originated in the third quarter.

Okay.

Thank you.

And my second question is about OREO expenses have come down pretty significantly the last couple of quarters.

Do you expect that's going to continue?

I mean, I sort of -- I'd like it if you could give me a little more color on why that is happening.

Is that due to fewer markdowns or is it actually lower carrying costs?

And what were the components of that $170,000?

We expect the OREO expenses to come down.

We had one OREO previously that showed a significant markdown.

So we're not going to expect that kind of a level markdown in the past.

Great.

Thank you very much.

Julianna Balicka.

Good morning.

Thank you for taking my follow-up.

I wanted to touch a little bit more on commercial loans as opposed to SBA and trade finance.

Do you have any comments about trends in the line utilization levels for your existing C&I customers?

Well, I look at the off-balance sheet item (sic).

I mean, there seems to be not much of a big level of drawing, but we see a stable level of the lending relationship on the respective C&I portfolio.

Very good.

And then, I was wondering if you can maybe talk a little bit more about -- so I'm assuming there was new originations in there somewhere, but between the $296 million from last quarter to the $279 million this quarter balances and commercial loans, given the trend -- the positive trends in SBA and trade finance and, you know, your return to growth in origination activity, I was wondering why there was the drop?

If you can maybe talk about a little bit more about that, and what we should expect to go see -- to see going forward?

I have to probably go back, but there might be a seasonality factor.

Because some of the -- we have a large number of businesses that are medium-sized with seasonality [with respective their nature] of the businesses.

I think that will probably be one of the factors.

Okay.

Very good.

Thank you very much.

Joe Gladue.

Pardon me if you talked about this and I missed it.

But I was just wondering if you could give us a little more color on what is going on with the TDRs in the quarter and, I guess, what you are doing in that regard, and if there is any possibility that nonperforming TDRs could be reclassified as performing in the fourth quarter or going forward?

Yes, Joe.

You know we had just a little tiny bump up, really couple of million dollars respective to TDR.

Let's see, we have like a $23 million, $24 million performing TDR that are paying.

And we are following rigorous guidelines, and the definition of TDR from the regulatory perspective.

And also, internally, we have a very stringent guideline.

Any TDR that are over 30 days past due we automatically place nonaccrual.

So we are looking at the TDR very carefully, but there seems to be leveled off.

We are working through each of the TDRs and are seeing what they're doing, but generally right now we are seeing $24 million of current TDR performing well.

All right.

Thank you.

There are no further questions in the queue at this time.

I would now like to turn the call back over to management for closing comments.

Thank you, all, for participating in Center Financial's 2010 third-quarter conference call this morning.

On behalf of the entire Center Financial team, we appreciate your continued interest and look forward to your ongoing support.

Thank you.

Thank you all for your participation in today's conference.

This concludes the presentation.

You may now disconnect.

Have a wonderful day.