Hancock Whitney Corp (HWC) 2008 Q3 法說會逐字稿

Good day, everyone, and welcome to Whitney Holding Corporation third-quarter 2008 earnings results conference call. Today's conference is being recorded. Participating in today's call are John Hope, the Chairman and CEO; John Turner, President; Tom Callicutt, CFO; Joe Exnicios, Chief Risk Officer; Lewis Rogers, EVP of credit administration; Bobby Baird, EVP of banking services and Steve Barker, controller of the bank. At this time, for opening remarks, I would like to turn things over to Whitney's manager, investor relations, Trisha Voltz Carlson.Ms. Carlson, please go ahead.

Thank you, good afternoon. During today's call we may make forward-looking statements. Forward-looking statements provide projects and results of operations, or financial conditions, or state other forward looking information, such as expectations about future conditions and descriptions of plans and strategies for the future. Factors that could cause actual results to differ from those expressed in the Company's forward-looking statements include, but are not limited to, those outlined in Whitney's filings with the SEC. Whitney does not intend and undertakes no obligation to update or revise any forward-looking statements.

I will now turn the call over to John Hope, Chairman and CEO.

Afternoon, everybody. Thank you for joining us this afternoon. Hopefully by now you've had a chance to review the details of the quarter, which we released earlier today. And as you can see from this release and also the pre release that we did last week, the numbers are very similar to those that we reported another the end of the second quarter. Obviously the major disappointment relates to the fragile economy and the real estate valuation issues, which aflect -- which affect our Florida banking franchise. Earnings for the quarter were $7 million, or $0.11 per share. Included in this result was the one-time cost of $2 million, or about $0.02 a share for casualty losses and expenses related to hurricanes Gustav and Ike.

Before I talk about the topic on everybody's mind, credit, I'd like to take a couple minutes to point out some things that in today's environment we may tend to overlook, and that's some of the positives. The net interest margin of 4.53% was essentially flat compared to the last quarter, and net interest income was stable, something we're proud of, obviously, in this environment. This reflects continued long growth, stable level of noninterest bearing deposits and another quarter of benefit from the LIBOR rates. Loans grew 6% on a linked quarter annualized basis, mainly from activity in our Houston, Texas market. Deposits on average were flat compared to the last quarter, while quarter-end deposits were actually down 3% from June 30th. The growth in loans is being funded from normal cash flows from the investment portfolio and a small increase in short-term borrowings.

Couple of quick balance sheet notes. We do not have any preferred or common Fannie Mae or Freddie Mac stock in our portfolio, nor do we have any exposure whatsoever to Lehman or AIG. Fee income was down slightly in almost all categories. Expenses increased link quarter and include the $2 million that I previously mentioned related to the hurricanes. The other additional expense in -- the other additional increase in expenses was mainly related to personnel and occupancy expense.

Now to credit. Issues that have been impacting our results for the past few quarters are again the main drivers for this quarter's provision; MBA's and criticized loans. The story remains basically the same; real estate issues in Florida. While we are not experiencing any systemic issues in any industries or regions outside of Florida and coastal Alabama real estate, we are seeing signs of a general weakening in the overall economy. Tourism and energy are the sectors we are most closely watching today given the economies of our home markets. Approximately $25 million of this quarter's provision of $40 million was driven by residential-related credits within the CRE portfolio, mainly located in the Tampa Bay areas. Downgrades on a couple of C&I credits added $5 million to the provision. The unallocated allowance and adjustment to qualitative factors factors increased to approximately $4 million, reflecting our assessment of current economic conditions.

Consumer and other small credit charge offs total $4 million, and $1 million was added to the provision for changes to noncriticized credits. This provision of $40 million exceeded net charge offs of $24.5 million, which brought the allowance on loans up to $1.55 million from the $1.38 million level last quarter and $1.10 million a year earlier. Approximately $10 million of the charge offs were related to two C&I credits identified in the second quarter, and then $11 million was related to residential development loans. Something that you need to know and understand, we are sticking with our methodology and our discipline that we have a great deal of comfort in in establishing the appropriate level of our provision. That is a discipline that we intend to maintain.

The overall level of criticized loans increased $122 million to a total of $586 million. Special mention credits, the least criticized category ,increased $19 million to a total of $168 million, as we continue to see migration in and out of both real estate and C&I loans in markets across the Company. Approximately $58 million of the $102 million increase in more severely criticized loans came from four previously uncriticized credit relationships. The relationships are in different markets and represent credits impacted by real estate issues and also by general economic conditions. These loans are all currently performing credits.

Included in criticized loans are approximately $235 million of nonperforming loans, up almost $88 million net during the last quarter. The vast majority of the nonperforming -- new nonperforming credits are located in that Tampa Bay area. Approximately $57 million in the increase in the new nonperforming loans came from five previously identified and criticized real estate related credits in Florida. In addition, a $13 million previously criticized Louisiana credit was added to nonperformance. The lack of demand for real estate in the Florida markets, coupled with the difficulty of finding comps for appraisals continues to impact collateral values, in turn causing deterioration in the markets.

At the end of the third quarter 66% of our nonperforming loans are in Florida, 14% in Alabama, 18% in Louisiana and 2% in Texas. We all know that until there's a floor on real estate prices in Florida we cannot hope to predict when we may see a turn or stabilization in levels of problem credits. We are considering a variety of ways to manage these problem assets, including bulk sales. However, we are not going to package and sell loans if we believe it is the wrong business decision. Currently we are managing our problems the way we always have, credit by credit, and until this credit cycle is over we may continue to see these elevated levels of credit measures to continue. I do want to point out that over the past few quarters we've been able to absorb the higher level provision and still make money.

Given our strong level of capital we've been able to continue to reward our shareholders and pay our quarterly dividend. We said last quarter that nothing had occurred that had caused us to think differently about our dividend policy or the level of capital needed to operate in this environment.. Today I will admit that we have been surprised by severity and extent of this cycle and I think if we're all honest that most of you would admit the same thing. However, we are still well capitalized. We intend to remain well capitalized. If credit problems persist we are prepared to reconsider our dividend pay out policy. The tangible capital;ration was 7.89% and the leverage ratio was 8.14% at quarter end.

We're also currently studying the announcements from federal officials rand regulators made earlier this week regarding the government relief package for financial institutions in order to determine if there are any opportunities we could take advantage of that could be in the best interest of our shareholders and the Company. Today we are focusing on addressing credit issues while also being a source of strength and stability for our customers, just as Whitney has done for the past 125 years. We are addressing the challenges present in the current environment and as you can see from our results we're still making money, we are still well capitalized, we have sufficient levels of liquidity, and we are continuing to focus on our strategic plan that we've mentioned to you before.

I'd now like to open it up for questions and will call on my colleagues to help answer those questions.

Thank you. (OPERATOR INSTRUCTIONS) We'll go first to Adam Barkstrom with Sterne, Agee.

Hey, everybody, good afternoon.

Hey, Adam.

Hey, John, Certainly I do want to ask a couple of follow ups on credit., but just a macro question for you, and wonder what your thought is. Oil is now bumping against $70 a barrel. Certainly you guys are in the heart of oil country there and I just wondered, big picture, what are your thoughts with that? That's a pretty dramatic decline in the price of oil in a pretty short period of time.

Adam, this is Joe Exnicios. Let me try to explain how we do that. We are -- at least twice a year and when the prices of commodities drop like they have recently it would prompt us to review our price deck for the E&P lending. We're currently in the process of doing that. We are comfortable where we are. We've always taken a very conservative approach, but we intend to -- upon completion of the review we currently have underway we're going to be lowering our price deck for the balance of this year and for 2009.

What does that mean, lowering your price deck?

That's the price per barrel of oil when we run our economics on the oil and gas reserves. When we analyze the collateral offered on a reserve basis --

Okay, I got you, I got you. Okay.

And we've actually -- it's been -- when the price of oil got up in the 100s our price deck was still in the $60 to $70 range that we were making loans.

Where -- not to pin you down a number, but where -- is $70 a barrel are we starting to get nervous here, or does it have to go to $50 or $60 the range? Any thoughts there?

Adam, this is Lewis Rogers. I think you're beginning to speak more globally about the energy economy as opposed to how an oil and gas reserve base credit would perform and that would depend on the economics, and as Joe indicated, we run those conservatively. Traditionally, the energy companies have made good money at these levels. I think what we've tried to do is always be cognizant of loading up the service and supply companies with term debt, how much could they take on. Many of us live through the difficult times of 1985, '86 and '87 and so did our customer base, so they really know how difficult it is to deal with the term exposure on equipment when there is no demand or falling demand and day rates for a variety of pieces of equipment fall. So I think that the players can make money. It is true that the cost to build vessels and other equipment is higher and they are relying on higher day rates than they did back in 1986 and '87. But all I can tell you is we're cognizant of that risk and that's what we pay attention to when we underwrite credit. But, yes, I think the well-capitalized players can survive at $70 and $60 a barrel.

We don't see any problems at $60 or $70. If it continues to go down, be it below that, and were to stay down for an extended period of time then you would see some problems.

Okay, all right. And John, could you maybe just a little more color on what you guys are thinking as far as the whole -- globally the TARP package? Would you guys consider the preferred -- as it stands now the preferred offering? Just generally what do you think about that?

Well, I'll probably tell you more than what you're interested in. My first reaction was that we weren't going to have any interest in it whatsoever. It just wasn't something that Whitney would want to do. The more, though, the reality of the offering sinks in, it -- the more you begin to think that you owe it to your shareholder to just look at it. 5% money is pretty inexpensive today. We need to understand the cost associated of the strings that would be attached to participating in that and then just really look and see what it can do for us. It's a business decision and we've got to evaluate it as a business decision.

We're all -- the other question that you have to ask yourself two -- really from two different perspectives, is what level of capital is going to be the right level of capital for a well-capitalized bank going forward and I would suggest to it it's going to be more than it was in the past. So we're going to be probably looking at enhancing our capital in some fashion once we can get to a rational solution to do that. But the TARP stuff, we're going to look at it, we're going to get some outside help to make sure that we understand it properly and then we'll make a decision that's in the best interest of our shareholders. We will give it serious consideration if, in fact, it can be a good deal.

Right. Last thing -- and you alluded to this in your opening remarks and certainly it is -- I think you're wise to do so, looking at the dividend, looking at your payout ratios, looking at your capital issues, and you certainly make a good point where you said the adequate capital level today is not what it was a year ago or whenever that time period was. What -- can you add anymore color as to the process that you're going through internally looking at your dividend? Many -- some might say why don't you guys just go ahead and cut your dividend and start retaining as much capital as you can with this uncertainty, et cetera, so I was wondering if you could add a little bit to that?

Well, let me just first say to limit analysis just to say that you're going to cut your dividend in order to begin to assimilate capital is really not taking into consideration those shareholders who depend to a great deal on receipt of that dividend. We have an obligation to match them -- their needs also at the same time that we're balancing the needs of maintaining an appropriate level of capital, so we have to consider all of our shareholders and we'll consider it appropriately when we make that decision. We will look at our credit quality metrics as this quarter moves forward to see whether or not we can determine if there is any trend change taking place. I can just -- I can assure you that if the credit metrics continue to deteriorate then the dividend will be on the table fairly quickly. We normally announce our dividend decision at our November board meeting and so I think you can look for some sign there one way or the other.

Okay, great, Thank you, gentlemen.

We'll go next to John Pancari with JPMorgan.

Good afternoon. Can you give me some additional detail on your reserve for your Florida portfolio, particularly resi construction? Can you give us an idea how much of that portfolio is reserved for?

I don't think --

What level of reserve do you have --

Yes, John, we haven't broken out the reserve by geographies. We've had that question from time to time. I think if you look at the statistics we gave you, though, in the -- even in this you'll see the residential construction piece in Florida is frankly very small, but you probably would be lumping in a commercial construction land and land development. If you look down at the criticized totals our methodology is sensitive, very sensitive to risk ratings, so you can begin to understand how much of the reserve may be allocated to Florida. It would be consistent with the level of criticized loans that we are indicating here as of September 30th. But it's -- there's not a tremendous amount of single family contractor base in our portfolio. I think we're showing $57 million in residential construction in Florida as of 9-30.

And are you able to give us a little bit more detail on your calculation of the reserve charge you took this quarter and how you came up with that? Are you basing it on your refresh rates on your LTV's in this -- in the Tampa markets and your Panhandle markets because we're certainly hearing on some of the nonperforming loans sales and some comps coming in around $0.35 and $0.40 on the dollar. So I just trying to get an idea of how you came up with your amount and the potential here for additional sizeable charges in coming quarters?

Well, I will tell you that we have adjusted our reserve thoughts as it relates to looking at collateral-dependent loans and the frequency of appraisals and we have taken bigger discounts on those assets as we analyze them based on the age of the appraisal. For example, it could be that an appraisal that was up to a year old in the Florida markets we would have discounted up to 10% in looking at what we thought the value would be. That value has moved up to 20% as it would relate to appraisals generally over six months old.

So as we get information and we are looking at a collateral-dependent loan nd you're looking at early '08 or late '07 appraisals we've gotten more conservative in our assessment. That's been developed, really, over the last nine months, because as we get feedback in terms of values, we incorporate that as we analyze not only the loan in question but how to apply it to another loan, if I'm, in fact. answered your question. So it is taken into account. We -- and so yes, I think both in terms of loss migration statistics, as well as the assessment of collateral values, it is imbedded in this allowance. John gave you some color as to how the allowance flushed out in growth and how much we had in net charge offs, et cetera. I don't know if I'm helping you.

Well, you mentioned collateral values, I'm just trying -- I guess if you can tell us what is -- where have you refreshed your average LTV to on this resi construction book there in Florida?

In terms of refresh, we get -- that's -- I'm not sure, I understand --

Just in your recent reapp --

-- where you're headed.

Yes, your recent reappraisals --

Are you talking about the frequency --

-- (inaudible) this whole process that you've worked on coming up with new reserve, where are the current reappraisals coming in at on the LTV side on the resi construction book?

Again, we don't have a lot of residential construction. I can tell you on land and land development the refreshing of appraisals has been pretty consistently down and I think I indicated last quarter we've at times seen decreases from '05 as much as 50% in the Panhandle. I think that we're seeing that more consistently now. I think a little less so in Tampa, but those are getting to be more common discounts that we see from those peak appraisals when we get refreshed. What I was alluding to, though, is that we beginning -- we are beginning to see that even appraisals performed in early '07, beyond the peak where you were already beginning to feel some discount, we're finding that those appraisals, when and if they are refreshed, are coming down further in value and that is, in part, what's driving up criticized totals. We see more risk in those credits and more credits are subject to being classified as risky because of the refreshing of appraisals that you alluded to.

Okay. All right, and the last question, what industry was the Louisiana MTL that [drived] this quarter?

That would have been in the hospitality industry.

Right.

Okay. All right, thank you.

We'll go next to Kevin Fitzsimmons with Sandler O'Neill.

Good afternoon, everyone. John, you talked a little bit about the TARP program and the willingness to get more capital if it makes sense. Can you talk a little bit about what you might use that for. Is that in this kind of environment? Is that strictly to bolster your capital levels further? Or is it to have dry powder for acquisition opportunities that might come along through weaker players that might not have the capital?

Yes, Kevin, the motivation for us to consider it would be two fold. One would be our anticipation that revised levels of capital to be well capitalized are going to be higher, as we previously mentioned, and the second reason is to prepare ourselves for hopefully some opportunities going forward, because we do think that they'll be there.

And are those -- the preference for those opportunities, would those be similar that you outlined earlier, John, in terms of the some of metro markets as you move north of your Gulf Coast footprint?

Yes, I think we mentioned the metro markets that were more C&I oriented, but I also say that we would be real interested in some in market because of the synergies that would be associated with them.

(inaudible), okay.

The synergy of an in market would be pretty attractive to us today.

Yes, Kevin, this is Tom. I think beyond just acquisition-type opportunities it gives you an opportunity to grow your balance sheet potentially and take advantage of asset-growing opportunities that are not necessarily acquisitions.

Okay, good point.

But we're being inundated with credit requests that we would like to be able to take advantage of, but since we're trying to manage or capital levels there's a limit to how much of that we can do so it would be nice to have some additional capital.

Okay; I don't know if you mentioned it earlier and if you did I apologize, but any update you can give us on New Orleans on what you are seeing there. Are you more optimistic or are things getting more tougher there?

Let John Turner, our President, talk to that.

On the deposit side it's very competitive. We are experiencing a lot of competition, really, from most of our competitors and we're working hard to hold our position in the market. On the asset side we would -- I think as indicated we're concerned about hospitality, just because of the state of the economy and people traveling less and businesses actually traveling less, so we are somewhat concerned about that. On the other hand, continue to feel very positive about the infrastructure work that will occur here, continue to occur here, the impact that that will have on our economy. So it's -- I'd say New Orleans is mixed at the moment, largely because we're not as optimistic about what may occur in the hospitality industry primarily.

We're budgeting some pretty rough numbers for next year and the year after, not necessarily because of Florida, but just because we think that the economy nationwide is going to have a pretty significant slowdown.

Okay. All right, thank you very much.

(OPERATOR INSTRUCTIONS) We'll go next to Jennifer Demba with SunTrust Robinson Humphrey.

Good afternoon. Could you talk a little bit about -- give us some color around your deposit flows during the third quarter, as well as talk about what your net interest margin outlook is given the feds just cut rates by 50 basis points?

You faded out a little bit at the end, Jennifer.

Also if you could give your outlook on the net interest margin given the fed just cut rates by 50 basis points?

Okay, I'm going to let Tom talk to margin and then I'll let John Turner talk to the deposit situation.

Okay. Jennifer, as far as the margin is concerned, as you know our margin has held up very well and we think it will hold up reasonably well, but it seems to me that with the cut that came -- as where we are today on the deposit side and the competition that John Turner just mentioned, it's hard to move our deposit rates down any more. But on the other side of the equation, as long as LIBOR stays up and we've $2 billion repricing with LIBOR it takes a little pressure off the margin. I think it would be unreasonable to think that the margin wouldn't tend down a little bit, but I don't think it'd be anything drastic.

Thanks.

Yes, I would just add that. We have seen some pressure on our deposits as there's been some concern about the industry in general. and so we haven't seen it -- we've seen a little bit of run off in our deposits, as some of our customers have sought the safety of treasuries. That money -- those relationships haven't left the bank and we think we can get that money back as we experience some stability and a little more confidence in the market. We are in competing here particularly where we have the richest source of deposits and we intend to be competitive with our competition. We're not going to let them take our customers from us, so to the extent we've got to price up some to do that, we will in the short term. We're very active in our markets, calling, talking to our customers, and I think that will pay dividends for us as we, again, try to connect with them and ensure them that this is a safe and sound place to keep their money.

Yes.

Let me just focus on one thing in case you haven't thought about it. As the regulators' strategies have evolved, I think it's become very clear to everybody in the country that they've determined as a group of large banks that they're going protect at all risks the ones that are the too big to fail banks. As you heard those banks announce their quarterly results, every one of those banks has mentioned that they've had significant deposit growth in the third quarter, particularly in noninterest-bearing deposits. What the regulators have done basically is create an environment where the public, in order to get to a flight to safety, has gone to a bank that is too big to fail and they pulled money out of smaller community banks and to some extent the regional banks.

However, with that said, Jennifer, our demand deposits is holding extremely well, so we -- like John says, we've got the relationship deposits. Where we may have lost some is more in the money markets or cd's.

Thank you.

And we'll go next to [Casey Embreck] with Millennium.

Hi, thanks very much for taking the questions. Just a couple of follow ups on credit, Can you give us a little more color on your MPA disposition strategy in terms of what type of pricing you're seeing in distress (inaudible) situations like in Florida? Do you have anything to help us figure out where the market's pricing and where you're pricing, that's what I'm trying to get to.

The -- there are two issues here, one would be -- as I think we may have have indicated we are considering asset sales. We are -- we have not attempted any so the pricing of MPA's as it relates to our book we don't have a litmus test to tell you whether we're getting $0.80 on the dollar, $0.85, $0.70. Probably -- I have talked to other bankers and probably hear the same things you hear, that heretofore it's been all over the ballpark depending on the location of property, how far out from a metro area it might be and how long then it'll take for it to really be put into commerce as part of a growth pattern, a And those numbers are anywhere from $0.60 up to $0.85 depending on how attractive the underlying assets are. Our ORE, frankly, has held up well. We have sales, Our velocity of sales, to date we have --

Let me ask the question a slightly different way.

Okay.

Have we seen -- have we taken any charges of any material nature as a result of a sale of a piece of ORE?

No, they're no material --

Casey, we're doing our best to take --

Let me ask you, you said -- hopefully you're looking at -- maybe you're trying to get $0.60 to $0.80 depending on the property if you choose to go down that path. Is that fair?

I think it'd be fair to say that we're going to explore it and take a look at it, and I think as John said, if it makes good business sense then you do it -- we'll do it. if it is too deep a discount, we will evaluate the cost of us continuing to carrying that asset and disposing of it at a higher price eventually.

Okay. Have you guys helped the Street figure out what you guys mark your theory assets down to when they go MPA? Is there a certain formula so if something is going MPA you mark it down $0.80?

If it's a piece of real estate, we get a current appraisal and then we evaluate the appraisal and then we write it on -- we put it on our books at 85%. I believe that's right, Lewis?

Of the appraisal.

Depends on the -- when it goes on MPA and the age of the appraisal, and it would be anywhere from 90% generally on down, Casey, and it would depend at the point of time it goes MPA and how fresh that appraisal is.

Just assume that it is 95% of the appraised value.

Okay. And then the -- forgive my ignorance, but is Tampa Bay considered in the Panhandle?

No.

No, so -- okay, so the increase in MPA's in Florida you said it looked like you saw a big surge in Tampa Bay, that seems like new?

There were the --

Is that correct?

There were the four credits that made up a fairly sizeable piece of the increase in Tampa Bay, but I can't really say that there was a lot of new stuff.

Okay. You guys haven't had a lot of previous large MPA's in Tampa Bay, though, have you?

Yes, we have.

Okay, I thought it -- okay. And then last question, right now your reserve to MPA's kind of -- you really built your reserves here, which is -- commend you for at $155 million, but your reserved to MPA's are 49%. Is there a certain point where it just can't fall any more?

You mean the values or the --

No, I mean -- your reserves are half of your MPA's.

It's not really part of our methodology, Casey, to have that in ratio, but we -- theoretically the more severely criticized, and if your assessment of exposure, the reserve will build consistent with more problems. But I can't tell you that it wouldn't fall more or might back up the other way. Just depends on how the reserve calculates when we throw it all together.

Okay. Thanks for taking the question, appreciate it.

(OPERATOR INSTRUCTIONS) We'll go next to Peyton Green with FTN Midwest Securities.

Good afternoon. I was wondering if you could answer a couple of questions about the growth opportunity. I think you all referred to it earlier as basically you're seeing an increase in the opportunity to go after new business and I was just wondering how you could characterize the opportunity versus what it would have been earlier this year or even this time last year? And then, to what degree are the spreads wider, versus your existing book? Thanks.

Yes, I think as the year has evolved we've seen our competition generally withdraw from the market and so the opportunities that we're experiencing are in large part because our competition just isn't as active and in many cases has actually communicated to their customers that they don't intend to loan any additional money. So we have an opportunity created by their absence from the market, which at the same time then brings some more rationality to structure and pricing. So we believe that historical pricing and structure is returning to most of the markets we're in and we're pleased to see that.

Is that something that at margin would be accretive if you could bring in deposits at your all-in cost or --?

I would say yes.

We actually -- that's one of those long-term trends that we think is -- will be pretty marked and that once we get through the confusion that we're in right now you will see an improvement to the margins overall.

Okay., Is that predominantly from the money center and super regional banks or is it across the spectrum?

It's across the board.

Yes, I would say based upon what we know most of our competitors, be they large or small, are experiencing the same sorts of issues.

Okay. And would your outlook that this loan growth might improve over the next two or three quarters, not withstanding the credit issues?

No, I think you've got to assume that we're going to be trying to managing our aggregates, also. We're going to -- our priority is to first take care of our customers in any regard that's necessary there and then we'll pick and choose among the opportunities beyond our customer base.

Okay, great. Thank you very much.

And we'll take a follow up from John Pancari with JPMorgan.

Hi. I just have another quick two questions here. On your grandfathered assets, I know they had been some properties in general that are probably valuable to some in the oil industry, I'm assuming, or as it seems just given some of your locations down there as you have described. I'm just wondering if you can comment at all on how the valuation of those may have been impacted by the price in oil or how they could be and if you are likely to see if any sales of those assets to help you on the capital side?

Well, I think -- this is Tom, John. As we said before we don't do valuations all the time on those properties, so when oil goes up and down, we're not out there trying to figure out evaluations of one or another and sales of those properties are generally a willing buyer and willing seller kind of thing. Where the opportunity's right and the price it fair we'll do something with it, but I can't make a wholesale generalization about those.

Okay, all right. Then my last follow up is can you comment at all on the general credit direction of the parish portfolio and if you're still comfortable with the terms and everything of that deal and the credit standing or if you're going to need to address that once it's closed? So if you can just comment on that.

To the terms, we don't expect any changes in the terms and we are still very comfortable with the opportunity that the parish transaction presents.

Okay. All right, thank you.

Are there any more questions?

There are no further questions at this time. I'd like to turn it back to Mr. Hope for any closing remarks.

Thank you. Before we close I just want to take a quick opportunity, if I might ask you all to hang around for a second. On September 24th of this year King Milling, our recent President and now Vice Chairman of the board of directors notified the Company that he intends to retire from his position as Vice Chairman of the board effective at the close of business on December 31st. This is actually the final step in our previously-announced and executed-upon succession program. King will continue as a director of the Company until the normal retirement age for directors, but I do want to acknowledge the fact that King first became associated with the bank in 1978 as a director. He became President of the bank in 1984 and we're very appreciative of his continuation -- agreement to continue to serve as a director.

King was on board at the bank during the challenges of the 1980's when the oil patch collapsed. He was on board in the '90s when the real estate markets in parts of the country collapsed. He was here in 2000 and he's here now and we have a great deal of appreciation for his service and his experience, both in good times and in bad. King has been a very active leader in this community and its recovery after the hurricanes of 2005 and his service, both to the bank and the community, has really been something outstanding. So King, I know you're not here today but if you happen to be listening we appreciate your service and we congratulate you upon your pending retirement.

If there are any other questions that need to be handled on a follow-up basis, you all know that you can contact Trisha Carlson and she'll take care of you. Thank you for your participation.

Thank you, everyone, that does conclude today's conference. You may now disconnect.