National Bank Holdings Corp (NBHC) 2015 Q1 法說會逐字稿

Good morning, everyone and welcome to the National Bank Holdings Corporation 2015 first quarter earnings call. My name is Laurel and I will be your conference operator for today.

(Operator Instructions)

As a reminder, this conference is being recorded for replay purposes. I would like to remind you that this conference call will contain forward-looking statements, including statements regarding the Company's loans and loan growth, deposits, strategic capital, potential income streams, gross margins, taxes and non-interest expense. Actual results could differ materially from those discussed today.

These forward-looking statements are subject to risks, uncertainties and other factors, which are disclosed in more detail in the Company's most recent filings with the US Securities and Exchange Commission. These statements speak only as of the date of this call and National Bank Holdings Corporation undertakes no obligation to update or revise these statements.

It is now my pleasure to turn the call over and introduce National Bank Holdings Corporation's Chairman, President and CEO, Mr. Tim Laney. Please go ahead, sir.

Thanks, Laurel. Good morning and thank you for joining National Bank Holdings first quarter earnings call. I have with me our Chief Financial Officer, Brian Lilly; and Rick Newfield, our Chief Risk Management Officer. During the call this morning, we will cover our performance in the first quarter and update you on our capital management actions.

Turning to the quarter, there were no real surprises as we continued to organically grow both loans and low-cost client deposits. Our focus on building solid client relationships with small and mid-sized businesses, continues to yield solid results. Our team delivered annualized total loan growth of 10%, and grew low-cost transaction client deposit balances 7.7% annualized.

I'll point out that as we continue to build a higher quality consumer and business client base, we are somewhat challenged by declining overdraft fee income. Having said this, our fee income in all other client related activities is showing steady improvement.

We did a nice job with expense management during the quarter, but we can and will to better. And finally, very important, our credit quality remains excellent. We maintained our life to date record of nominal chargeoffs with just four basis points annualized during the first quarter. And on that note, I'm going to turn the call over to Rick Newfield to cover our credit quality in greater detail. Rick?

Thank you, Tim. First, I'll provide a summary of loan origination activity for the first quarter. Second, I'll discuss facts regarding our solid credit quality, as well as provide an update regarding our limited exposure to oil and gas loans. Third, I'll discuss our success this past quarter in reducing nonstrategic loans and the continuing positive economic benefits generated through those efforts.

Our originated loan portfolio totaled $1.75 billion at March 31, 2015. An increase of $101 billion or 24.8% annualized growth over December 31, 2014. We've delivered these results while remaining disciplined in our underwriting and credit structuring.

During the quarter, we continue to drive growth with a granular mix of consumer and commercial loan types. Combined, commercial industrial, agriculture and owner-occupied commercial real estate make up 58% of our originated portfolio. Residential mortgage loans make up 28%, non or occupied commercial real estate 12%, and other consumer loans 2%.

For the quarter, we originated $204 million in new loans, an increase of 11.8% over the prior quarter. Commercial originations of $168 million were granular. Averaging approximately $1 million in funding per relationship.

Consumer originations were $36 million, principally driven by residential that averaged $128,000 per loan, with average LTV of 64% and average FICO of 765. These metrics for both consumer and commercial are consistent with our results in 2014.

Turning to credit quality, I am pleased with the performance of our non 310-30 loans, which totaled $2 billion at March 31. Net chargeoffs in this portfolio were just 193,000 or as Tim said, 4 basis point on an annualized basis. 90 day past dues remained immaterial.

Nonperforming loans comprised of non-accruals, and restructured loans on nonaccrual, remains steady at 0.58% of total loans as of March 31. Overall, our credit quality remains steady and strong with adversely rated loans continuing to decrease in both absolute terms, and as a percent of our total loans.

Now while we've seen energy prices increase recently, we continue to work closely with our clients exposed to the energy sector. Because of our continued commitment to build and maintain a well diversified loan portfolio with prudent concentration limits, energy sector loans were just $149.6 million as of March 31, a decrease of 7.5% from December 31, 2014, and represent only 6.8% of loans and 3.3% of earning assets.

The decrease is attributable to actions taken by our clients to raise capital, increase cash positions and moderate debt. We expect this trend to continue as long as oil prices remain depressed.

With that said, we are seeing opportunities for new business particularly, in the exploration and production sector. And if companies can be underwritten at current oil prices, they are clearly the type of client with which we seek to do business.

As a reminder, we approach the energy sector recognizing that price volatility is part of the industry. We built our energy banking team with experienced energy bankers, and experienced energy credit underwriters, including a petroleum geologist.

Our loan structures have protection against oil and gas price risk using downsized scenarios in our borrowing bases, and asset base lending structures for clients in the services subsector. Despite improvements in oil prices, we continue to watch and monitor our clients closely.

Our ongoing assessment of our portfolio continues to give me confidence in the ability of our clients to manage effectively through a protracted trough in oil prices. Overall, I continue to remain confident in our ability to maintain excellent credit quality.

Our resolution of acquired problem assets continues to be a great story. During the quarter, reductions in our nonstrategic loans were $23 million or a 46.7% annualized rate. We ended the quarter with just $179 million in nonstrategic loans and OREO balances were reduced to $23 million at quarter end.

You may recall that a year ago, nonstrategic loans were $321 million, and OREO balances stood at $66 million. Furthermore, our pipeline for both Prom loan dispositions and OREO sales remain strong for the coming quarters.

It's also important to note, that nonstrategic balances are now only 8% of total loans. While we expect to maintain our current pace of resolutions, the dollar impact should be lower given the lower dollar value of the remaining nonstrategic loans.

Our three 10/30 loan pools are composed entirely of loans acquired through our three failed bank purchases. Our quarterly remeasurement of the expected cash flows from these loans resulted in $10 million in accretable yield pickup.

The cumulative life-to-date accretable yield pickup in these pools is $240 million against impairments of only $24 million, resulting in net economic gain of $196 million. We continue to demonstrate the effectiveness of our problem loan workout efforts.

To summarize, we started 2015 with solid organic loan growth while adhering to our disciplined underwriting standards. As I've shared before we are committed to building and maintaining a loan portfolio with outstanding credit quality and we will not compromise our standards for short-term loan growth.

I'll now turn the call over to Brian Lilly, Chief Financial Officer.

Thank you, Rick and good morning, everyone. As Tim and Rick have shared, we are pleased with the first quarter results as we continue to add to our organic growth, manage nonstrategic assets for increasing returns, continued excellent credit quality and managed expenses lower. We're generally consistent with our financial guidance and are delivering the results that we believe leads to our profitability targets.

In my comments that follow, I will touch on the highlights of the quarter and provide an update on our guidance. Generally speaking though, we are staying consistent with our prior guidance.

Before going too far, I should point out that adherent within our 2015 guidance are economic assumptions consistent with the current outlook of leading the economist, although we have not included an interest rate increase for the remainder of 2015. Given our asset sensitive position, we would benefit from an increase in interest rates, but we felt that the interest rate increase is more uncertain.

Our reported earnings per share were $0.03 per share, and after the usual adjustments, primarily the non-cash charge for the FDIC indemnification asset amortization, the adjusted earnings per share was $0.17. The adjusted return on tangible assets was 60 basis points, marking the fifth straight quarter in the 60s.

As Tim and Rick mentioned, we are very pleased with the progress that we have made growing the loan portfolio. Our originations of $204 million more than offset the decreases in nonstrategic loans, resulting in total loan growth of $54 million or 10% annualized.

The weighted yield on the new originations was 3.4%, while a strong 68% were variable rate, supporting our asset sensitive position. The 3.4% yield is lower than our recent quarters, as we had several highly rated credits swapped the LIBOR plus floating rate structures resulting in high 2% floating yields. Given the strength of our pipelines and what we can predict in the nonstrategic loan payoff downs, we are reiterating our total loan growth guidance of 15% to 25% for the full-year.

In terms of deposits, we achieved another key inflection point this quarter by growing total average deposits 1% annualized. We continue the good growth of transaction deposits at 7.7% annualized which more than offset the decline in average signed deposits.

Not included in the deposit numbers is a large client repurchase agreement which averaged $117 million in the first quarter. As Rick mentioned, the amount was the result of a capital raise by an energy client in anticipation of opportunities, and is expected to be relatively short term. We are reiterating our 2015 guidance of mid-single digit growth for transaction deposits and flat total deposit growth.

Net interest income totaled $39.5 million, and came in within the lower half of our $39 million to $41 million quarterly guidance. We did not benefit from any large accelerated accretions during the quarter.

Given our best estimate of the pace of the high-yielding nonstrategic loan payments, we guide to the lower side of our quarterly range for the rest of the year. As usual, the pace of the nonstrategic loan payoffs has an outside influence on the results.

Rick addressed the credit quality, and I would only add that we expect the credit quality to remain strong in 2015, and at the level of provision for loan losses will continue to support loan growth. We have planned for non-FREIT 10/30 net chargeoffs to be in the range of 10 to 15 basis points for 2015, with the allowance for loan losses increasing slightly as a percentage of loans.

Turning to non-interest income, the quarter totaled an unusual looking negative $479,000. The net negative impacts from the FDIC related OREO income and recovery of prior chargeoffs, more than offset the total of our more traditional banking fees.

The more traditional banking related fees totaled $7.4 million and decreased on a linked quarter basis primary due to seasonality and lower levels of overdraft occurrences. But total banking fees grew 7.1% compared to the first quarter last year.

Higher levels of mortgage gains and debit card interchange fees led the year-over-year growth. We are reiterating our banking fee guidance for mid-single digit growth year-over-year.

The FDIC loss share related income accounts totaled a negative $8.5 million and included $7.7 million of FDIC indemnification asset amortization expense, plus a net $800,000 expense related to increases in the [Clawbeck] liability, the sharing of OREO gains and covered expenses. We are reaffirming our full-year guidance of $23 million to $33 million nets expense.

Total expenses were $36.7 million and were better than our first quarter target. Operating expenses of $36.4 million were better than our $37 million to $38 million quarterly guidance, but given our normal second quarter compensation actions and the timing of certain expenses, we are reaffirming our $37 million to $38 million quarterly guidance.

OREO and problem loan expenses of netted to just $400,000 in the quarter. These expenses are lumpy, but we continue to expect our prior guidance of $4 million to $6 million to be a good estimate for the full-year.

In addition, we did incur data processing conversion related expenses of $364,000 during the quarter, and continue to estimate the full-year expenses in the $3 million to $4 million range, with most occurring in the fourth quarter. We recorded a net tax benefit in the first quarter as the non-taxable income exceeded the taxable income. At these levels of pretax income we could record a net tax benefit in the coming quarters before consideration of the non-cash deferred tax asset write-offs.

Per our prior guidance, recall that we expect the non-cash write-off of the deferred tax asset, related to the expiration of prior stock awards, to executives no longer with the Company. We expect to record additional tax expense of approximately $1.8 million in the second quarter, and $200,000 in the fourth quarter.

Capital ratios remain strong, tangible book value per share end of the quarter at $18.86 increasing $0.23 from the end of the fourth quarter, as the available for sale fair value marks benefited the quarter by $0.17. Tim will cover the share buyback activity, and I note that we ended the quarter with $42 million available from the current authorization, and that we will continue to be opportunistic with our capital management.

Summing up our guidance, reported earnings per share will continue to be depressed by the large quarterly non-cash write-offs of the FDIC indemnification asset, and the second quarter non-cash write-off of the deferred tax assets. However pursuant to our adjusted profitability analysis, we are projecting stable net interest income while building the more valuable interest income from organic loan growth, maintaining excellent credit quality, growing banking fee income and delivering strong expense control.

We project that a significant amount of the earning asset remixing and the adjustment items will burn off in 2015, leading to our goals of higher returns in 2016, and ultimately, a return on average tangible assets goal of 1% in 2017. Tim, that concludes my comments.

Thanks, Brian. Turning quickly to capital management, you can expect us to continue to opportunistically buy-in our shares at these attractive prices. I continue to believe that purchasing our shares at current prices is the safest and most financially beneficial acquisition we could make. As a reminder, through the end of the first quarter our cumulative repurchases were at 29.8% of shares outstanding, and they were acquired at an average purchase price of $19.48.

I'll sum things up by share with you how proud I am of my teammates across our company. We continue to build a culture with a strong focus on the use of common sense and we're working hard, very hard to get better every day.

If you consider the average age of banks in the United States, arguably we are just a toddler. But that just means we have tremendous capacity for growth. We've gotten our legs under us and we feel more confident than ever that we can deliver attractive returns for our investors.

On that note, I will open the line up for your questions.

(Operator Instructions)

Chris McGratty, KBW.

Good morning, everybody.

Hello, Chris. Good morning.

Hey, Brian. I missed the tail end of the expense guidance. I caught the $37 million to $38 million -- I think you were talking about $4 million to $6 million and $3 million to $4 million or something by the fourth quarter. Can you just repeat those for me?

Sure. The way we break it down, as you know, we talk about operating expenses, OREO, and then we do have the additional cost from FIS this year. You got the $37 million to $38 million. We look for the OREO in total to be the $4 million to $6 million for the full year and then we look for the FIS Fiserv data processing conversion to add $3 million to $4 million one-time expense for this year.

So those $3 million to $4 million are one-time expense? And when will those be coming to the numbers?

We have $300,000 almost $400,000 here in the first quarter. So we will have a couple like in the first two quarters. The conversion is targeted for the fourth quarter. Most of those expenses will hit the fourth quarter.

Okay. And then the $1.8 million that is coming in -- will that be in the tax line or will that be in the expense line?

I'm glad you asked that question. It is just a straight tax hit. It is a straight hit to the earnings per share. It's a tax expense.

Okay. That is helpful.

I wanted to talk about capital for a second. Your [assessor] of the buyback. Brian, some of your peers are getting more constructive with the ability to exit [loss] shares. Could you share how you guys are thinking about it, given the noise in your numbers still? And kind of how you're thinking about earn backs in economics?

We look at it the same way that we shared last time. We'd be very interested in [exiting] with something that makes economic sense for us. We've looked very hard at those that have been announced in the marketplace and happy to see some of the activity. It still looks like the activity is happening with some of the smaller deals in the guidance that the FDIC has provided. And we still have a couple hundred million dollars left out of our two deals.

Chris, we're in conversations. It's a long process. But we would be interested.

That's probably enough said.

Okay. That is fine.

And then, I'll hop out with the drag from your fee income, the write-off of the IA. I got the guidance for this year. This is stub that's -- is that the right word to think about 2016? There is a stub of a few million dollars, assuming you don't accelerate it?

The accounting requires you to amortize that over the remaining loss share period. You're actually specifically the time that you expect to be billing the FDIC for a locked share. Our last agreement ends in the fourth quarter of 2016. So it's fair to say that there will be a carryover impact into 2016 of some amount. But you can tell by -- regarding the $29 million now, we have guided that number to be that we'll write that down, another in the high teens. So we're going to get a lot of that moved out. And then plus there'll be some billings to the FDIC.

I think Chris's description of the remainder in 2016 as a stub is pretty accurate, particularly given the kind of accelerated pacing we're seeing here in 2015. Does that make sense?

That is fair.

So the full number won't be written off because there'll be some exchange rate between?

The accounting rules won't let us do that.

All right. That is good enough. Thank a lot, Brian. Thanks, Tim.

Thank you, Chris.

(Operator Instructions)

Matt Olney, Stephens.

Thanks, good morning, guys. How are you?

We are well. Thank you.

Great, Matt.

Great.

I got on the call a few minutes late, so if you addressed this, I apologize. As far as the energy lending, can you give us an update in terms of the redeterminations that you saw in the spring season? What was the result of those? And how many did you get through with your energy borrowers?

Sure, Matt. This is Rick. Good morning.

I'm not sure what you'd call it, but I'll just again repeat that our total energy loans as of March 31 were $149.6 million. That is down about 7.5% from the end of the fourth quarter. In terms of redeterminations, we're active with all of our clients and we're wrapping up that, if you want to call it the spring season. But frankly, with the actions clients have taken, there have been a lot of intermediate moves where we've worked with clients outside of this conventional twice-a-year cycle.

In terms of pricing, as I know you know, oil prices have come up a bit over the last quarter. With that said, clients are still being very conservative. As we look at the bar and base redeterminations in our price deck, we're still looking at near term in the upper $30s on oil. So again, we continue to stress that downside scenario. Again, no pressures. We've not had any issues with these clients.

You should in fact -- I'm not sure if Matt heard it; it is worth repeating. Talk about our marketing efforts on the energy front.

Sure, Matt. We actually have several opportunities that we are currently looking at where energy exploration and production companies are in good shape seeing opportunities and we have some financing we can do. And as I shared, if they'll underwrite during the current pricing environment, they're fully going to be very strong clients for us.

And finally, Matt -- this is Tim.

We are seeing a number of clients raise capital. We cited an example of where one client in particular has put a substantial amount of dollars in repos where there's some a temporary basis. But it would -- understandably, a number of our strong clients are actually taking the position that this could be a great acquisitive period and we're benefiting at least on the depository front.

Okay. That sounds good. That's helpful.

And while there's lots of moving parts I guess in the energy book, and I know it's tough to forecast, but I'm curious -- within your expectations of loan growth for this year, what are you assuming for the energy balances in 2015?

We feel like, Matt, we disclose about as much detail as any bank out there. But that's not a number that we've gotten -- we've not gotten comfortable with disclosing specific industry growth targets. But do keep in mind we do have exposure levels, in-house exposure limits, on virtually every industry we do business with. So I'm not sure I can give you the answer you were looking for.

But I would add, in the context our total production, you heard us reaffirm our -- or maybe you didn't. You heard me reaffirm our guidance so that 15% to 25% total loan growth. So we're still very confident of delivering on the production targets that we had guided out there.

That is a great point, Brian.

One thing we didn't mention on the call that your question provokes, Matt, is we came into this second quarter with the largest pipeline -- loan pipeline -- we've had in the history of the Company. And that's, by the way, not just focused on C&I and consumer, but we're really starting to see a pickup in our small business activities. I cannot recall if we've mentioned it in the past: the SBA has granted us our preferred lender status. We have doubled, if not tripled, down on activities in that space and we love it. So we really feel like, in fact, we have just seen the tip of the iceberg in terms of what we can do in the small business arena.

Okay. That is helpful. Thank you, guys.

Thank you, Matt.

Laurel, it sounds like, given limited activity, as we had suspected, this was somewhat of a boring quarter. No real surprises. So if there are no other questions, we will close out the call.

Laurel?

We do have one further question from Tim O'Brien from Partners.

Hey, Tim. I am not bored.

Good. We were actually sort of hurt that we had not heard your voice, Tim.

Not bored at all.

Just to stick with the SBA conversation -- did you guys have actual SBA production that funded this quarter? And if so, can you give us that number?

Again, not detailing production at that level. But I will tell you, while we had very nice high-percentage growth, the reality is that it was on a very small base. And I will just reiterate that what we've seen thus far is the tip of the iceberg. We really feel like it is interesting. We believed it to be the case, but it is unfortunately, at least in the parts of the country where we do business, it appears to be an underserved segment. So that represents opportunity for us and we think it's great for our communities.

And as far as geographical footprint for that, is it existing bank footprint? Or is it beyond that in other markets as well?

Very good question. At this point it's really just in our -- in the communities where we do business.

Great. And then, the game plan is, will there be some gain on sale income generated out of that you anticipate? Or are you going to retain the whole loans?

Given our low loan-to-deposit ratio and really the understanding, we can make this model as complicated as we want. But as these non-cash expenses burn away, the real focus is on getting to that 90% to 95% loan-to-deposit ratio. That would suggest that in a lot of cases what we're going to be doing is holding on to that paper. But you always have the optionality to push it. But I would describe -- and Rick, Brian, jump in if you think I'm not describing it well -- but I would suggest we have more of a hold strategy.

Yes. That's right on.

Brian, a question for you, and piggybacking on another question. OREO cost of $46 million for the quarter and first quarter, second quarter kind of well below that. So, did you say there's a specific quarter, like Q4, where the majority of that is going to be realized?

No, let me try and sort that out. On an OREO and problem loan expense -- as you know we break that out -- we incurred a net $400,000 in the first quarter.

Yes.

And our full-year guidance we still expect, as we provided at the end of January, $4 million to $6 million in net expense for the full year on that line item.

And you think that's going to hit when?

It is lumpy. It really is lumpy. There's activity that happens there. So that's been a line item that we haven't been able to be real specific on the quarters. But, the $4 million to $6 million in your models for the year I'd be comfortable with. As you look at --

And you did say on second quarter -- you didn't make any suggestions about what the second quarter number could be then?

Did not.

Okay, great.

And then the $3 million to $4 million was related to the FIS Fiserv conversion, our data processing conversion.

Got that.

Okay, and that was $400,000 in the first quarter. $3 million to $4 million for the year, with a real leaning into the fourth quarter of that expense.

And then the $1.8 million tax hit is Q4 as well, did you say?

There is $1.8 million in the second quarter.

Q2, got it. Okay.

That will hit tax expense. So directly after-tax income. And then $200,000 in the fourth quarter.

And then, Brian, can you just recap? Did you give margin -- any update or outlook on margin expectations directionally?

I didn't, because we gave very specific guidance on the net interest income.

I caught that. I was fishing for that other thing because there was a lot of volatility in that margin number this quarter, and I know a lot of it is just kind of noise with the repo stuff.

That is what makes that a little hard. As you saw, the repo influence, that net interest margin number percent quite a bit. So I focused on the net interest income. (Multiple Speakers). As long as that is with us, that will be lower than the one we've been running.

And to be clear, Brian is not hedging on that. We do, there was a rather, it was somewhat of an anomaly in the first quarter. As we look at pipeline, we feel good about the kind of spreads relative to the risk we're taking on the loan production. So I think that's important to point.

And then just back to a macro level, I would want everyone on the call -- again, back to no surprises. Brian has detailed this, and I think to an incredible degree. But at a macro level, what I would leave you with is, we do expect a very heavy level of non-cash expenses to hit us here in the second quarter.

Good to know. And for you Tim, just last question.

Understanding that you're not going to really give specifics about outlook for the margin -- broadly speaking and strategically speaking, in order to ultimately achieve that 1% ROA is there a margin number that you think is going to be necessary to get there? How does that fit into the equation? How do you view that strategically margin management?

A great question. In fact, I think we've touched on it. Brian, do you want to --

Yes, Tim.

I will reiterate the directions that we've looked at. As we model out to longer term, we clearly see in that 375-plus being a natural coming out of our loans and deposit pricing in the spread. And actually, we monitor that as we're booking business on our monthly, quarterly basis, even today, to see that we are heading in that direction. And that is a normal mix of investment securities, loans against a very high funding base.

Just that as we go through time here, we have these 19% earners offsetting this, and the 2% commodity investment securities. So that's why we have focused mainly on what turns the lights on and off and that's net interest income. And the margin is going to fluctuate on the shorter-term basis. But driving towards that on the longer-term basis is what we model out.

I would also add that some folks look at where we came from in terms of cost to deposits and where we're at today and assume that we would be satisfied where we're at. We actually see reasonable capacity to continue to improve that cost of funds given the pace of core client transaction account growth. And we still have, for example, a block of pretty high-cost CDs out there that we're going see move away from this. So in terms of overall return management, margin management, we feel good about what we can still do on the deposit front as well.

Thanks a lot, guys. Nice progress this quarter.

Thanks, Tim.

Thanks, Tim.

Gary Tenner, D.A. Davidson & Company.

Hello, Gary.

Hello. Good morning, guys.

Actually, just a little bit of a follow-up on that margin question. Did I hear you say that your loan-to-deposit target was -- did I hear you say 90% to 95%?

Yes. It really is.

So, just thinking about what the ratio is today, and a good quarter here on deposits, although obviously, that's been trending down on the CD side. That would require pretty meaningful catch-up on the asset side. How do you think about the asset generation piece? Would you think about just acquiring a pure asset generator to try to get you there? Or do you think you could do that through the organic bank system as it is today?

So about as strategic a question as we have discussed this morning.

We have modeled the ability to get there organically, but I would remind you we continue to focus some lifting out, in particular specialty teams, that can continue to that asset growth. And to your question, we look at a lot of asset generators for acquisition but quite honestly, to date have found none of them that would meet our credit standards. So the areas that we have more interest than others -- and a good example would be, we know the asset-based lending space. We have an existing team; if there were opportunities to expand that, we would be all over it.

I'll use this as an advertisement to the extent that there's specialty banking teams out there looking for a great home with a lot of capital capacity and a proven track record for getting their loans paid back and growing relationships. Call me directly. And I don't know how to be more direct in answering your question than that.

I appreciate that.

So it sounds like, again, organic and maybe augmented with lift outs. As you think of potentially acquiring asset generator or a team; as you look at specialty lending lines of business; would you do something that would be more out of footprint? Or more quasi-national lending business? Or are you looking strictly in footprint for the assets?

If proven. Our view -- and again, Rick and I worked together over a 30-year period. Our view is, the only thing that will trump a local banker with local banker knowledge, banking clients in their local market, is a 15-, 20-, 25-year experienced banker in a targeted industry that knows and understands all of the players in that industry; knows who will pay him or her back and who will not; has the proper relationships. And in that scenario, we are willing to look at teams that would pursue that specialized business on a national basis.

But again, we make no apologies for our obsessive views on smart credit underwriting and getting paid back. So maybe that's more of an answer then you were looking for, but that is how I would paint it.

That is great color, Tim. Thanks very much.

You bet. Thanks so much.

Thank you and I'm showing that we have no further questions at this time. I'll now turn the call back to Mr. Laney for his closing remarks.

Well, Laurel, I just want to thank everyone that joined us today, and in particular, those folks that took time to ask questions. Great questions this morning.

And we're off and running with a great focus on the second quarter. So we'll be back to you then. Take care.

And this concludes today's conference call. If you would like to listen to the telephone replay of this call, it will be available beginning in approximately 2 hours and will run through May 8, 2015, by dialing 855-859-2056 or 404-537-3406 and referencing the conference ID of 16946906. The earnings release and an online replay of this call will also be available on the Company's website on the Investor Relations page. Thank you very much and have a great day. You may now disconnect.