National Bank Holdings Corp (NBHC) 2017 Q1 法說會逐字稿

Good morning, everyone, and welcome to the National Bank Holdings Corporation 2017 First Quarter Earnings Call.

My name is Mike, 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 margin, taxes and noninterest 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 U.S. 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.

Thanks, Mike.

Good morning, and thank you for joining National Bank Holdings' First Quarter Earnings Call.

As usual, I have with me our Chief Financial Officer, Brian Lilly; and Rick Newfield, our Chief Risk Management Officer.

I am pleased to share that our pretax earnings were in line with our expectations, and you'll also see that we realized a meaningful tax benefit during the quarter.

Loan production was solid, with our teams delivering a 20% increase in production over first quarter of 2016.

Our growth in deposits was primarily driven by a 6.3% increase in annualized growth in our low-cost deposits.

Noninterest income was in line with guidance, and then expenses were flat to the fourth quarter.

I'll add that we feel very good about our momentum going into the second quarter.

Finally, as I turn the call to Rick, I'll encourage you to pay particular attention to his comments on the diversity and granularity of our portfolio.

While there's no doubt that our commitment to diversification makes growth more difficult, we continue to believe that this discipline will translate into more reliable returns over time.

Rick?

Yes.

Thanks, Tim, and good morning, everyone.

I'll jump right in to covering our credit metrics and trends during the first quarter.

Classified loans decreased from year-end 2016, and our outlook remains positive in the coming quarters for further problem loan resolution.

Net charge-offs for the quarter were only $117,000 or 2 basis points annualized.

30-day past dues remained well-contained at only 11 basis points, with immaterial past dues of 90 days or greater.

Nonaccrual loans did increase somewhat, with the nonaccrual ratio moving from 1.13% as of December 31, 2016, to 1.2% as of March 31, 2017.

We are executing our resolution strategies on each nonaccrual loan, and I expect that ratio to improve over the next several quarters.

We're off to a good start relative to provision expense.

We recorded $1.8 million in the first quarter, driven by loan growth, very low net charge-offs and impairment taken on one of our 3 existing energy nonaccrual loans.

As Tim said, we delivered $197 million of loan originations during the traditionally slower first quarter, an increase of 20% over first quarter 2016.

Commercial loans represented 65% of the first quarter originations; non-owner occupied commercial real estate was 19% and well diversified across a number of property types; and consumer, principally single-family residential loans, was at 16%.

Consistent with prior quarters, our new production was granular in nature.

Our outlook for asset quality remains favorable, driven by our disciplined adherence to our self-imposed concentration limits across industry sector and real estate property type.

Non-owner occupied commercial real estate is only 18% of our total loan portfolio and only 102% of our company's risk-based capital, and no individual property type exceeds 4.1% of total loans.

With retail properties under pressure from store closings by major chains, I'll note that we have only 1.3% of our loans in retail properties with no exposure to malls.

Multifamily continues to be low at less than 1% of our loans.

And we're well-diversified across commercial industry sectors, with most industry concentrations at 5% or less of total loans, and all concentration levels remain well below our self-imposed limits.

Another example of how our concentration limits mitigate risk is evidenced by the agriculture industry, which remains stressed by low commodity prices.

Our agriculture portfolio is only 4.6% of total loans and is well-diversified across crop and livestock types.

Our experienced food and agribusiness specialty team has maintained prudent client selectivity, leading to agriculture clients possessing low leverage and, correspondingly, low bank debt to assets, minimizing any potential credit losses in the future.

With respect to provision expense, I'll say again that we're off to a good start with our first quarter results, and I'll reaffirm the guidance I shared during our last earnings call relative to provision expense for the year.

Provision expense for the remainder of 2017 will cover net loan growth at about 1% of the net increase in balances, with the net charge-offs for the full year in the 10 to 20 basis point range.

I remain confident that we'll continue to reduce our problem loans in the coming quarters as we work to exit or otherwise resolve those loans quickly, as has been our practice.

I'll now turn the call over to Brian.

Great.

Thank you, Rick, and good morning to everyone.

As you saw in yesterday's release, we delivered $0.30 earnings per share with return on tangible assets of 81 basis points and a return on tangible equity of 7.7%.

We continue to make progress towards our financial goals of 1% return on tangible assets and a double-digit return on tangible equity.

There's a lot to like in the first quarter, as we realized solid trends in loans and deposits, fee income, credit quality and expense control.

In fact, we are delivering on our 2017 guidance provided last quarter, and as a general rule, we are reaffirming that guidance.

Included in the results was a tax benefit of $2.8 million or $0.10 per share from the realization of previously issued performance-based equity awards.

Recall that prior accounting recorded these tax benefits directly to capital.

Partially offsetting this benefit was almost $0.02 of net problem asset workout and OREO expense in the quarter.

I point this out as we have guided these expenses to a net 0 for the year, and we see this as simply a timing difference and fully expect a net 0 to even a net positive impact for the year from OREO gains more than offsetting the problem asset and OREO expense.

I should mention the economic assumptions inherent to the 2017 guidance.

Our markets continue to outperform the national averages, and we see nothing to disrupt this trend.

With regard to interest rates, recall that we included just one 25 basis point move in June in the prior guidance.

We got that one move in March.

The current consensus is for additional rate increases going forward.

Given our asset-sensitive balance sheet, we would continue to benefit from increasing interest rates.

However, reflecting a level of conservatism in our forecasting, we've not included any additional rate hikes.

Loan growth has gotten off to an excellent start, growing 13.1% annualized.

The first quarter has been historically slower, so we were pleased with the start to the year.

It's worth noting that our originated loan book grew 17% annualized, led by the commercial portfolio growing at a very strong annualized rate of 22.3%.

Our pipelines continue to be robust, and we are reaffirming the full year total loan growth guidance of around 20%.

Turning to deposits.

We had a good linked-quarter average deposit annualized growth of 5.5%.

This growth was led by a 6.3% annualized growth in low-cost transaction deposits.

Just as noteworthy is the fact that we grew average transaction deposits on a year-over-year basis 3.4% while consolidating 8 of our banking centers over the last 12 months, representing an 8% reduction of our banking center footprint.

In the second quarter, we are on pace to complete the 4 banking center sales that we mentioned last quarter.

These banking centers represent approximately $100 million in total deposits, with half in time deposits and about $14 million in total loans.

We are reiterating our prior guidance of delivering total deposit growth for the year, led by a mid-single-digit transaction deposit growth while keeping time deposits flat after the reduction for the banking center sales.

Fully taxable equivalent net interest income totaled $36 million with a net interest margin of 3.44%.

We are right on target with the guidance we provided last quarter.

We also guided that we expected to reach a linked-quarter net interest income growth inflection point for the year, as interest income from loan growth is expected to more than offset the decrease in high-yield 310-30 accretion income.

We are very pleased to be forecasting linked-quarter growth for the second quarter and for the remainder of the year.

We are increasing the net interest margin guidance range to 3.4% to 3.5% and keeping the earning asset guidance at $4.4 billion to $4.6 billion at year-end.

Given the prospects for increasing interest rates, let me share a few comments on interest rate sensitivity.

We continue to be about 4% asset-sensitive given a 100 basis point parallel shift in the rate curve.

We model a weighted mid-30% deposit beta, which continues to show a very conservative, given actual deposit rate moves over the past year.

Given that the rate curve has not been moving up in an orderly fashion, we often get asked about the loan portfolio sensitivity.

About half of the originated book, or about the mid-40s percent of the total loan book will move with changes in short-term rate indexes such as the 1- and 3-month LIBOR, prime rate and others.

We're beginning to realize the benefits of March's rate move and would welcome additional rate increases going forward.

Rick provided a credit quality overview and our outlook for the rest of the year.

Adding in our loan growth guidance results in an expected full year provision for loan losses in the range of $10 million to $13 million.

Noninterest income totaled $8.7 million, coming in at the middle of the first quarter guidance of $8.5 million to $9 million.

We reiterated our guidance of mid-single-digit growth collectively for banking fees.

In addition, we are on track to realize the second quarter estimated gain of $3 million on the previously mentioned banking center sales.

We continued good trends in noninterest expense as they totaled $34.6 million in the first quarter, basically flat with the fourth quarter.

As I mentioned, the quarter did include net expense of $760,000 related to problem asset workout and OREO.

We reiterate our full year guidance of $136 million, including the net 0 impact, if not better, from the OREO and problem asset workout expenses.

Regarding the tax rate, we are repeating prior year guidance, with a forecasted 2017 effective tax rate in the range of 22% to 24% and a fully taxable equivalent tax rate in the range of 29% to 31%.

Capital ratios remained strong with $55 million in excess capital at quarter end using a 9% leverage ratio.

One final comment would be that we have forecasted average fully diluted shares to be in a tight range of 27.7 million to 28 million.

Tim, that concludes my comments.

Great, Brian.

Thank you.

Mike, why don't we go ahead and open up the call for Q&A.

(Operator Instructions) Your first question comes from the line of Gary Tenner with D.A. Davidson.

It's actually Riley Stormont on for Gary.

Just wanted to get a little more clarity on loan growth, maybe in terms of geographic breakdown, and then sort of what competition you're seeing in each market.

The good news is we continue to have solid growth in our core markets of Colorado and that Kansas City, Overland Park market of Missouri (sic) [ Kansas ]. Texas has been a little slow in our markets of Dallas and Austin to ramp up this year a little slower than even we expected, given the quality of those markets.

But we're very excited about what we're seeing developed in the pipeline there.

In terms of competition, so many of the independent banks, community banks that are in our markets continue to be heavily focused on CRE, and that's evidenced if you look at their balance sheets, that I would tell you, in Kansas City, Overland Park, the real competitors there are UMB and Commerce.

They both do a great job, obviously well-entrenched banks in that market, and yet tend to be rational, which we like.

They're smart when it comes to credit and they're rational on pricing.

In Colorado, it's a little bit of a mix, but we have benefited in particularly over the last 6 months.

And we see that trend continuing from some fallout of one of the larger national banks.

All right.

That's great color.

And then maybe just one more.

I know, last quarter, you guys really highlighted an ATM rollout that you guys were planning in some markets, particularly the front range.

Just any commentary around that, how that's going so far.

Yes.

Our -- I'll tell you our expectation in terms of impact on the income statement is really neutral this year.

Having said that, I'm a little disappointed with the pace of our partner on that effort.

They've run into a few roadblocks on their side, but they remain confident that we're going to be able to deliver and have those additional network points delivered here this year.

And we're still pressing for this summer.

So I think, from a financial standpoint, neutral this year; from a timing standpoint, not moving at the pace that we were initially promised.

Your next question comes from the line of Chris McGratty with KBW.

Maybe, Brian, a question for you.

Your loan yield of 4.01%, I'm interested in where new loan production's coming on given the mix.

I think it was 2/3 commercial.

Is new production accretive?

Or is it still a little bit of a drag to existing book yields?

It's actually right on top of it, Chris.

I'm glad you asked that question.

As you've heard us talk before, we've consistently been in that 60% variable in our production range.

In this past quarter, it was actually 66% for a weighted average yield of 4% even and as you might recall it wasn't that long ago, we were talking about 3.6% as a new loan yield so, to your point, it's dilutive to that particular category.

So we're real pleased that we are seeing in the details of the new production coming on that's becoming equal to, and we expect shortly to see it be accretive to that yield.

Okay.

And if I could, on the margin guidance.

It sounds like no more rate hikes are in your estimates.

Do you -- can you remind us, Brian, the sensitivity, if we do get a June hike, what each 25 means to spread based on your model?

Yes.

It's a little difficult to do that on so many assumptions that get into it.

So what I did play -- so what I did repeat to you, we're 4% asset-sensitive.

Now that's a little over $6 million when you think about it on an annual basis.

And inherent in those assumptions are certainly the asset sensitivity that we have plus about a 30 -- mid-30s deposit beta.

Looking -- as you look historically, at least recent historically, it's fun to look at our deposit costs.

Our interest-bearing deposit costs only increased 6 basis points while rates have moved 50 basis points -- well, actually, 75 basis points most recently, but 50 in the last 12 months for practical purposes.

So I think we're a little conservative on the deposit side.

I think, as you look at your guesses as to that 25 coming or not, I'll try to give you the loan specific that you can model in.

Our total loan portfolio would move about 40%, and so that's short-term rate movements.

And so as LIBOR moves -- certainly, prime rate hits very quickly and treasuries and other indexes we might have, but as LIBOR moves, you'll see that come through our loan yield first before anywhere else.

Hey, Chris, I'm going to lever your question and Brian's response to thank our teammates for their continued focus on expanding our client relationships.

We feel very good about the growth in our low-cost transaction account business.

And that's just part of good relationship-building with our clients.

And if you think about that growth in light of reducing our distribution network by 10%, it's even more meaningful.

But more important than that, I would tell you is we're seeing very nice momentum on that front.

So to Brian's point, as you think about the influence of those low-cost deposits which come with core operating accounts, that's just the nature of that business.

That's an attribute that we're going to get, whether we see those interest rate hikes or not.

And Chris, if I could, just one last piece.

So I did -- to provide some guidance of the 3.4% to 3.5% on the net interest margin, and we -- as we currently model out with no rate hikes, we'd be in that tight range through the rest of the year on a quarterly basis as our loan book -- as our originated loan book yield's going to go up but we're still running against some of that 310-30 yield burning off.

Okay.

If I could ask a question on the balance sheet in terms of leverage.

You're still above 10% on the tangible ratio.

And obviously, it's going to be -- I think, if I heard you right, it's going to be funded -- used to fund the 20% loan growth.

Is there any change in terms of capital priorities, given, I guess, the environment we're in post-election and where your stock is trading?

Chris, really nothing from our side.

I think you've heard us consistently for 4 or 5 years here that we are very focused on the use of capital and the best return for that.

We're certainly projecting great use in our relationship banking and growing those.

But there will be additional capital that's accessed there.

We've taken full advantage of buying into our shares.

And look, the market has given us at least the start of a reasonable share price, from our perspective, that becomes a little bit more attractive in expanding our own footprint.

So we will continue to focus on opportunities that best leverage that at full returns.

Okay, and great.

If I could ask one for Rick.

I missed the number.

The CRE concentration, it was -- I forgot the number as a proportion of capital.

165%?

No, Chris.

102% of our company's capital.

Your next question comes from Brian Zabora from Hovde Group.

Yes, one question on the C&I loan growth.

How much of that is line utilization versus new credits?

I can tell you, the vast majority is new relationship expansion.

Okay.

And then I have a question -- I'm sorry.

I had a question on floor -- the loan floors.

And you talked about a 40% repricing.

Does that go any higher as rates continue to go -- increase?

Or do you have very little floors at this point on your loans?

We've -- we moved through a number of those floors.

So that's pretty much our book.

Yes.

Great.

All right.

And just lastly, you've got a few sales as far as the branches.

How are you looking at your branch network today?

And could we see additional trimming in -- later this year?

Look, we're constantly looking at the performance of each of our banking centers, each of our profit centers for that matter.

And we look at the contribution of that banking center -- or the -- each banking center and each profit center relative to the potential or the opportunity in the market it serves.

And so you can imagine, our focus is on those lower-performing profit centers where there's lower potential.

We think we've identified the group that really, in our operating model, didn't have the opportunity to -- or the potential to contribute within our expected time frame.

And we'll continue to monitor the rest of the profit centers on the same basis.

So I would tell you it's very dynamic, and we're going to continue to have accountability, and that accountability will drive further actions.

Your next question is from Tim O'Brien from Sandler O'Neill.

Tim.

Just to follow up quickly for Rick.

Rick, you said 1.2% of CRE was retail or did you say 1% -- 1.3% of total loans was retail CRE?

Yes, Tim, to clarify, 1.3% of loans would be...

Total loans.

Do you have the dollar amount of that retail?

It's just a little over $30 million.

Between $30 million and $40 million.

Is any of it on a watch list or classified?

Actually, no.

Okay.

And I'm sure -- how often do you kind of look at that and stress it and evaluate it?

We conduct quarterly portfolio reviews, really, across our entire loan portfolio, Tim.

So we're looking at each of those loans on a quarterly basis.

Rick, I may be opening up a box here that Brian will want to close quickly, but why -- because we're not in a position in this meeting to share details, but you ought to talk about, while we're not required to conduct a stress test, you ought to explain to the group how we do internally stress our own portfolio.

Sure, Tim.

And as you say, it's not a regulatory requirement.

The guidance is simply do what you believe is best given your loan portfolio and characteristics.

We started doing semiannual stress tests where we look at a very adverse scenario where default rates are very high, driven by unemployment, lowering housing price index, GDP actually falling back versus any kind of growth, along with just a stress on the underlying assets.

We did leverage the guidances provided for the CCAR stress testing and actually are a bit more conservative on our asset values when we conduct that.

And we think that's just a good practice as part of our capital planning.

And the bottom line is, when we do that work and factor in those very severe loss levels, we still operate as a well-capitalized bank post that kind of an experience.

And Tim, I know that's a lot more than you asked for, but I'd like to get to a point where we could even provide more transparency around that testing and what we do.

Again, it's not a regulatory requirement, but we think it speaks to the quality and the importance of the diversity of the portfolio.

I -- it can't hurt you to talk about your credit outlook and what you do to manage that part of your business, so that's all good stuff.

Speaking of which, sticking with credit.

I did not hear the word energy mentioned even once on the call.

Can you give a little bit of color in terms of that segment of your business?

And what opportunity and focus is going to be here through the remainder of the year, I guess?

Sure, Tim.

I actually -- not -- I hate to correct you, but I did mention energy only in the context of one of our existing nonaccrual loans.

Oh.

That's right, Rick.

I heard that, yes.

But we continue to be at roughly 86% pass rated on our energy book.

We're not expanding that book currently, but as we mentioned before, we certainly -- we see opportunities with existing clients that see the need to better utilize their unused commitments.

With respect to the 3 nonaccruals, I'd just point out that we've had no new nonaccruals over the last year, really, since first quarter 2016.

And those 3 are the residual from problems that we identified back in 2015.

Are you guys actively lending in the space again and going to grow that part of your business?

Tim, it's really a focus on a set of very high-quality clients with deep relationships.

The challenge we have is that almost all of them were able to successfully raise large tranches of equity in the downturn.

And if anything, we've seen our senior bank debt come down.

Many of them are sitting on the sidelines waiting for opportunity to acquire assets at the right values.

And until that happens, I would expect our exposure in that space to either maintain current levels or even decline slightly.

The next question is from Matt Olney from Stephens.

I want to go back to the discussion of the core loan yields.

I think I appreciate that the new yields are coming on similar to the overall book around 4%, and it sounds like there's a few floors out there, but the floors are pretty modest at this point.

I guess, I would've guessed that there would've been more of a lift in the core loan yields in the first quarter from the December rate hike.

Any more color you can share as to why the core loan yields only [ lap ] a few basis points?

And what would the outlook be on just that loan yield in the second quarter?

Yes.

No, look, that's a good insight, Matt.

It is happening underneath.

And what you see in the 3.98%, specifically, you're talking about a non-310-30 loan yield going from 3.98% to 4.01% and saying, "Well, that's just 3 basis points." And maybe you'd expect, given the guidance I gave, that we would be closer to the 6, 7, 8, 10.

We are seeing that in our coupon rates.

Just to be clear, they are in the coupon rates.

But as you know, there's a number of other things that happen in fee income.

And I'd also point out -- this is not fee income but fees.

And also pointing out that within that non-310-30, there's still a, I'd use the old-term analogy, the 141(R)-purchased portfolio, a couple hundred million dollars, that continues to throw off some accelerated discount hiccups.

I mention that because we didn't get much in the first quarter, but we did get a chunk of that in the fourth quarter.

So the 3.98% that you saw in the fourth quarter was a little bit higher because of that and it diluted the quarter-to-quarter change that you would've expected from the 25 basis points.

But as we project out on the quarters coming up, the coupon underneath is increasing.

And we expect that we'll see that in that yield.

So Brian, at this point, would you consider the 1Q level of fees more of a normalized level and it should increase?

Or was it unusually low at this point?

No, probably more normal, where the fourth quarter was a little higher.

Yes.

All right.

So are you saying that the core loan yield, that those should expand more in 2Q than in 1Q?

Yes.

We're going to see a benefit from the March move that happened.

Okay.

And then on the securities side.

It looked like we saw a little modest increase on the end-of-period securities balance.

Didn't quite see it on the average piece.

I think this is the first time we've seen this in a while.

Any color you can share as far as the securities book outlook?

Yes.

Look, and maybe I'll point out a couple of things on that spot versus the average.

You'll also note that our loan deposits -- or excuse me, our loan growth, which grew at 13% on a spot basis, grew less than 1% on an average.

And so the average earning assets are going to see a nice pickup as we go from the first to the second quarter, which will help, remember that guidance on that net interest income.

Now back to the investment portfolio, we saw an opportunity with the deposit activity that Tim's mentioned in our book to go ahead and place some investment securities on the book.

Not a lot.

We haven't done anything in 4 years.

But we added just under $100 million of MBSs because we still like the cash flowing from them.

We were able to pick up a yield of 2.6%.

We saw that as an opportunity here in the first quarter.

And as I guided last time, we didn't see that we were going to recur doing that as the quarter goes on, probably see that book continue to come down in our forecasting for the second, third and fourth as we fund the 20% -- around the 20% loan growth that we had guided.

Okay, that's helpful.

And then, finally, Brian, I'm sure you've mentioned it, I just can't find it in my notes.

The outlook for core fee income in 2017, what was that outlook?

Yes.

We were looking for the mid-single digits on a year-over-year growth.

And look, we were real pleased that we hit the first quarter.

You might recall I -- we gave specific guidance of $8.5 million to $9 million, so getting that $8.7 million in the first quarter was right on top of that.

But on the full year, look at it as a year-over-year on mid-single digits.

And specifically, what was the interest rate swap impact in the first quarter?

We picked up a little bit on our commercial clients back to back.

Not as much as we're expecting.

We certainly have a lot more conversations in that.

So it was a couple hundred thousand dollars.

And not much in the marks for the ineffectiveness that you have to take on those things.

But -- so really a pretty quiet quarter there versus last quarter.

You saw a big pickup that's going to reverse the number of the rate moves for 2016 in total.

The next question is from Chris McGratty from KBW.

Brian, just on the tax guidance.

Given the noise in the first quarter, and I could probably do the math offline, what should we be thinking about just for the individual quarters for the back half of the year?

Just adjusting for the noise in the first.

I know you gave full year guidance.

Yes.

No, the -- it's -- look, the effective tax rate, without the fully tax affected, we feel pretty good on a quarterly basis to be in that 22% to 24%.

And then when you gross it up for the fully taxed equivalent, about 29% to 31%.

I will tell you that this new accounting standard for the vesting of share-based compensation will move -- continue to move that around a little bit.

The next question is from Tim O'Brien from Sandler O'Neill.

One quick follow-up.

You guys ended the quarter with a loan-to-deposit ratio of just under 75%.

Does that give you an advantage in this rising rate environment?

Looking out at some of your peers that have much tighter loan-to-deposit ratios, does that -- is that something you can leverage?

And how do you see that opportunity to leverage that core deposit base and that funding base in the marketplace to the maximum advantage of shareholders?

Look, Tim, it's a great question.

We absolutely hold ourselves accountable for leveraging that advantage.

Said another way, we clearly see it as an advantage and, I would say, certainly, coupled with the fact that we see a number of competitors that have over-concentrated in certain specialties.

Certainly, we all have seen the number of banks that have broken 300% of capital in the CRE space.

We think, to the extent that we're willing to work with clients in the CRE space, our capacity gives us the ability to be very selective as it relates to both credit structure and pricing and, again, to take advantage of situations in the market where other banks are having to retreat.

So I -- it's a topic we spend a lot of time internally focused on.

And I don't know if there's anything, Brian or Rick, you would add, but that's the best answer I can give you.

And I know we like that, and it's a source of how we're going to drive to that 1% ROA is getting that loan-to-deposit ratio up to -- closer to that 90%.

And you can see there's a lot of runway.

And with the success we're having with deposits, that creates even more.

So we're excited to have that opportunity, and that'll continue to move the net interest margin and offset the 310-30 and then grow from here, as we've talked about.

So it's always been part of that strategy.

We're cash flowing out of the investments, securities to allow that to happen.

So it's a good point, Tim.

Thanks.

I would -- Tim, the other point I would add that really relates to safety and soundness.

I think I looked probably at as many failed banks or troubled banks during the great recession as anyone, and if there were 2 common denominators, one is they tended to be over-concentrated in one loan type, often outside of their own footprint; and secondarily, they were dependent on noncore deposits for funding.

So you'll continue to see this intense focus on holding ourselves accountable for capturing the full relationship of our clients, focusing as much on that treasury or cash management business and serving the operating account needs of both small- and medium-sized businesses as we focus on the other side of the balance sheet.

So we are big believers in the importance of having that core component of the business and reward our bankers accordingly.

Thank you.

And I am showing we have no further questions at this time.

I will now turn the call back to Mr. Laney for his closing remarks.

Thank you, Mike.

I just want to thank everyone for joining us today.

Please don't hesitate to follow up if you have any additional questions.

Good day.

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 5, 2017, by dialing (855) 859-2056 or (404) 537-3406 and referencing the conference ID of 92242744.

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.