OceanFirst Financial Corp (OCFC) 2011 Q1 法說會逐字稿

Good morning and welcome to the OceanFirst Financial Corporation earnings conference call.

All participants will be in listen-only mode. (Operator Instructions) After today's presentation there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Jill Hewitt, SVP and Investor Relations Officer. Please go ahead.

Thank you, Jill. Good morning and thank you all for joining us. I am Jill Hewitt, Senior Vice President and Investor Relations Officer. We will begin this morning's call with our forward-looking statement disclosure.

On this call representatives of OceanFirst may make forward-looking statements with respect to its financial conditions, results of operations, business, and prospects. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond OceanFirst's control, are difficult to predict, and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements.

OceanFirst undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. In our earnings release we have included our Safe Harbor statement disclaimer. We refer you to this statement and the earnings release and the statement is incorporated into this presentation.

For a more complete discussion of certain risks and uncertainties affecting OceanFirst, please see the section entitled risk factors in management's discussion and analysis of financial condition and results of operations set forth in OceanFirst's filings with the SEC. Thank you.

Now I will turn the call over to our hosts this morning, Chief Executive Officer John Garbarino, President Vito Nardelli, and Chief Financial Officer Michael Fitzpatrick.

Thank you, Jill, and good morning to all who have been able to join in on our first-quarter 2011 earnings conference call today. We appreciate your interest in our performance and are pleased to be able to review these results with you this morning.

We have completed another strong, satisfying quarter with net income, adjusted for extraordinary items, increased over both the linked and prior-year quarters. As we review our financial performance over recent quarterly periods, we can point with pride to several significant positive factors helping us build value for our shareholders.

Our margin has reversed the contraction experienced in the latter half of 2010 and expanded 8 basis points during the quarter. Our balance sheet and total revenue continue to grow, as does our tangible common equity ratio which increased to 9.1%. Just as importantly, we are building our loan loss reserve and strengthening our coverage ratios despite the reduction in our quarterly provision reflective of our stabilizing credit metrics.

You have all had the opportunity to review the earnings released last evening and, following our usual practice, I will not be disrespectful of your time reciting a host of actual numbers from the release. My introductory comments will merely help frame our opportunity to add some color to the results posted for the quarter.

Diluted earnings per share for the quarter, of course, were $0.28, that is $0.04 ahead of the prior-year quarter and a $0.01 increase over the linked quarter core earnings after adjusting the prior quarter for the non-recurring state deferred tax benefit then recognized. The Company's 57th consecutive quarterly cash dividend was declared and maintained at $0.12 per share, representing a comfortable and sensible 43% payout ratio as well as an attractive 3.7% current yield on our shares.

Asset growth for the quarter was nominal, largely resulting from purchases of investment and mortgage-backed securities. While the commercial lending pipeline was robust, heavy commercial loan prepayments were experienced during the quarter. Residential mortgage demand has slackened to the lowest levels in 3.5 years and, although our gain on sale margins remained strong, the reduced volume of residential loan sales owing to the low level of originations has adversely affected our non-interest income.

Deposits reflected seasonal governmental unit outflows and, as we discussed in last quarter's conference call, the departure of certain high-priced government deposits has had a beneficial effect on our total deposit costs. Our average core deposit mix continued to increase comprising 83.2% of total average deposits.

Operating expenses remained well-controlled in the new year and our efficiency ratio continues to moderate, moving downward to 57.6% at the end of the quarter.

As is our custom, I will now ask President Nardelli to provide some added background to our loan portfolio performance and give a general assessment of local market conditions.

Thank you, John. I am pleased to report a quarter-over-quarter decrease in non-performing loans, 215 basis points of total loans receivable reflecting decreases in residential, consumer, and commercial loan delinquencies. While still high for OceanFirst, this level of non-performing loans remains favorable to the most recent industry measures available, such as the NBA and a comparison of the call reports of the 100 most similarly-sized banks in the country.

We are encouraged by the overall improvement and the relative stability in the portfolio. In looking for a moment at the 30- through 89-day category, I would like to note that more than $13 million of the $18 million, or 75%, are residential mortgage and home equity loans that are 30 days past due. Historically, our experience has been that many of these 30-day delinquencies are seasonal.

During the quarter, we realized net charge-offs of $970,000, essentially flat from the linked quarter but lower than the same quarter last year. Also the level of ROE at $1.9 million is lower than both the prior year and the linked quarter.

For the quarter we set the provision for loan losses at $1.7 million, down from prior quarter. When evaluating the provision consideration was given to the current quarter's charge-offs, the level and composition of non-performing loans, and our overall perception that the local real estate market continues to stabilize.

As CEO Garbarino pointed out earlier, our allowance for losses and coverage ratios continues to grow. Following our standard thorough quarterly analysis of loan loss reserve, we feel that our reserve level is strong and adequate.

Turning for a minute to a broader view, early spring here at The Shore is showing some positive indications that the local economy is recovering, especially for some commercial customers. In fact, the apparent lack of commercial loan growth in the quarter was not from a lack of originations but from three large, unexpected payoffs resulting from property sales driven by purchaser motivation. The commercial pipeline ended the quarter at an excess of $100 million, one of the strongest pipelines in many quarters.

We are also seeing long vacant commercial properties beginning to be leased. We also hear from our realtor contacts that seasonal rentals are running somewhat ahead of last year's pace, all positive indicators.

I have often said that OceanFirst has been there for our customers through many, many economic cycles, and that is true for the recovery cycles as well. Prudent underwriting and patience have always been, and continue to be, two key ingredients to growth and success in a recovering economy.

Coupled with OceanFirst's strong capital position we are confident that we are well-positioned to navigate through this challenging environment. We look forward to continuing to service the needs of our customers in our local communities.

With that I will return the discussion back to the CEO Garbarino for some concluding comments prior to engaging in a question-and-answer session this morning.

Thank you, Vito. Recapping the quarter then we feel we have made a solid start to what we see as a continuation of our recent strong operating results. We are pleased that we have been able to further strengthen our company's capital position, improve our balance sheet mix of assets and liabilities, and build reserves for our loan portfolio while delivering a solid stream of quality core earnings for our shareholders.

With that Messrs. Nardelli, Fitzpatrick, and I would be pleased to take your questions this morning.

(Operator Instructions) Matthew Clark, KBW.

Good morning, guys. Can you first maybe quantify the payoffs on the commercial portfolio, the three large payoffs, how much that amounted to?

In excess of $15 million, Matt.

Okay. Then just in general, can you update us on your originations in the quarter, the payoffs, and the loan sales that more than offset that?

Commercial we wouldn't have any loan sales if that is -- if you are just focusing on --.

No, I wasn't talking commercial; I am sorry. I am not talking commercial.

Overall in the portfolio we sold $40 million and our originations was $103 million.

Okay, and then the payoffs were?

Well, the payoffs would have been the difference.

Okay, got it. Then in terms of the -- you mentioned the commercial pipeline being above $100 million. On the residential side it sounded like it's fairly soft. Can you quantify that for us then?

Yes, the residential is very soft. As I pointed out, it's as low as it has been in 3.5 years. In terms of our pure numbers, we are looking at about $15 million a month in originations, which is well off obviously the refi peaks. And we are still running about a 40% to 50% refi volume of that $15 million, so that has been pretty consistent. But the purchase money activity is really quite soft.

This is a little bit seasonal in our case, Matt, at The Shore because very often seasonal properties don't get sold at this time of the year. Purchasers would love to buy them, but sellers don't want to sell them coming into a new season. So I think that we see some seasonal variation in terms of at least seasonal properties at The Shore and that is not too uncharacteristic.

But it's clearly a soft residential market. And of course, we are hearing that on an other-than-local basis too. That is no surprise.

Right, okay. And then on the FDIC insurance side of things can you quantify how much relief you might experience here in the second quarter?

It was about $200,000 a quarter that we benefited from the new FDIC calculation.

Okay. And then finally, on the M&A front can you just give us a sense for why it has been so quiet, whether or not you guys are seeing or having more discussions with potential sellers?

I always thought that M&A was a question of supply and demand and sellers and buyers expectations, Matt, and I don't think that changes. But I think there is a lot of uncertainty going into the regulatory changeover, what is going on in Washington, the Dodd-Frank rule writing.

I think that the regulatory fatigue, is the way I have been characterizing it now for the last year or two, will begin to set in on people over a period of time, but right now maybe people are still a little more optimistic than they should be in the spring about their ability to cope with it. So I think, overall, we are still going to see some pick up in M&A activity. But as always, it's buyers' and sellers' expectations that help drive it.

Okay. Thanks, guys.

Okay, Matt.

Frank Schiraldi, Sandler O'Neill.

Just a few questions. First I wanted to ask about -- well, it sounds like loan demand is picking up, which is good, but is there any thoughts to maybe trimming your current capital cushion back a bit through returning capital to shareholders, either repurchases or maybe even is it too early to think about a bump up in the dividend?

We have talked about that. I think the bump up in the dividend is not necessarily under consideration. I think that regulatorally there is still a lot of pressure on the dividend. We certainly saw that with Hudson City's announcement yesterday.

I think our payout ratio, as I discussed, is in the low 40%s. We are comfortable with that; I don't think we want to take it above that level. We have been at -- our payout ratio has been targeted in the low 40%s for some time.

As far as the other capital management issues that you addressed, and we have talked about this over the last couple of quarters, I think it's a little premature. I think again regulatorally I think we feel very comfortable with that capital. We are still delivering our shareholders double-digit return on that capital and we don't feel the need to reduce that.

So that at [9.10%] and as you know we picked up some help there from our comprehensive income calculation on some of our trust preferred securities. But at [9.10%] I think we are very comfortable with that level right now and it also provides us some offensive capital if an opportunity should present itself on the M&A front going forward.

Okay. And then just follow-up on M&A, it seems like in the Northeast -- maybe it's the capital levels out there, maybe it's just the health of the market, but it seems like pricing may be getting a bit prohibitive. I mean what are your thoughts there?

Well, I think that is the case. We have commented on that. We haven't done a lot of acquisitions, primarily because we are pretty disciplined acquirers and I think that pricing expectations of sellers have not really gotten down to the level that we think they are reasonable.

There is also a lot of takeover premium, I think, in a lot of the companies that might be considered to be targets. So that you balance this all out and I think it's very difficult to get deals done and expectations have to reach some sort of an equilibrium before you are going to see activity pick up. I know all your investment banker friends are very distressed about this, Frank, but I think that is the reality of the market.

Okay, fair enough. Then I just wanted to ask about the balance sheet. What are the thoughts on growing further from where we saw at the end of period, growing the securities portfolio? Are we going to continue to see that ratchet up?

You saw we did that this past quarter; we added some securities on there because, again, loan demand was so disappointing. Well, actually loan demand wasn't disappointing but our ability to grow the portfolio was with some of the prepayments that we experienced.

I think we are at a comfortable level in terms of having built that investment portfolio over the last year or so. We are at what we would consider to be an equilibrium and that will always be a plug for us.

So that if we can get this commercial loan growth going -- and we think we will with the size of our pipeline right now. As Vito pointed out, it's well in excess of $100 million at the beginning of the quarter. We don't think we will see a lot of additional investment purchases.

And of course, it's always going to depend too upon how many core deposits we can continue to generate. This quarter was a little bit of an aberration because of the repricing of some of those government deposits, but we still -- we are still optimistic about our ability to grow the deposit base through the next three quarters.

And in the quarter funding this through borrowings, what sort of maturity borrowings were going on the books?

Well, we are still in the process of extending our borrowings. Our overnight is basically down to zero and we are in the process of extending our term borrowings generally in the 3- to 5-year period. That has been a goal of our interest rate risk management policy for the last, I guess, 4 or 5 quarters at this point, and we are going to continue that right now.

We are currently not exposed to any borrowings with call features, nor do we have any significant overnight exposure.

Okay, great. Then finally just wanted to ask one question about mortgage banking. You mentioned -- I think Mike mentioned originations were $100 million in the quarter and they are running now at around $15 million a month. So is it too simplistic to say $45 million for the quarter here, just multiply 15 by 3, and then say that we could see revenues down 50% linked quarter as originations were down 50%?

I don't think the calculation is quite that simple. And as I pointed out to the question Matt had also, we do see some of our residential originations as seasonally affected here in the spring. So we would like to think that the residential market might pick up.

Some of this may have been some of the winter doldrums. It was a tough winter here in the Northeast obviously; we had a tremendous amount of snowfall. I think that although bodes ill residential originations.

And I don't think it's an easy arithmetic exercise to simply say it's going to be $45 million over the next quarter. That is the current run rate but I am not sure that is a good proxy for what is going to happen.

Now because of the, maybe the seasonality of the footprint, does the selling the season for you guys start -- pick up more after the summer?

Yes, I mean it's clearly in the seasonal properties, because, as I said to Matt, if I am holding a seasonal property and it's for my own use or if it's for rental, I am coming upon a new season, I would just as soon hold it through the new season. So I am not interested in selling it.

If a buyer, by the other measure, the buyer wants to occupy it now so he can get his family settled for the summer. If he is going to use it himself or if he is going to rent it out, he is going to reap the investment income from the summer season. So again, the expectation of buyers and sellers don't often reach an equilibrium here and the seller really controls when the sale is going to take place.

So you might see listings increase, you might see purchase contracts increase, but closings generally don't occur until the fall.

Okay, that is great. Then just finally on that front, given that the mortgage banking -- revenues ratcheted up, was there any increase to fixed costs that maybe will come out more slowly over the coming quarters or no?

I am not sure I understood that.

Well, I am just wondering, I know a lot of the mortgage banking revenue in terms of the expenses is tied to the revenue in terms of commissions. But --

Do you mean in terms of downsizing of fixed costs?

Right.

No, I don't think we are at that level yet. I think our people are taking a good breather. Throughout most of the heavy refi environment we made significant use of temporary employees, and we have certainly pared that down. But those I wouldn't call fixed costs.

Those are intermediate labor costs and that is probably some of the contribution that you see on our operating expenses with only nominal increases year over year. But I don't think we will see any wholesale downsizing of that operation. I don't want to get those people too nervous, Frank.

Okay, fair enough. Thank you very much.

Laurie Hunsicker, Stifel Nicolaus.

Hi, John, Vito, and Mike. Well, Matt and Frank hit a lot of it so just a couple of things. Do you have a month-end margin for us?

Month-end, you mean at March 31?

Yes, or for the month.

As opposed to the quarter?

As opposed to the quarter, yes.

Yes, it was about the same.

It's the same, okay. And so directionally on margin, I was just looking through my notes from last quarter; it was sort of the expected to come under pressure and it obviously you didn't. Any sort of forward direction for us as you are kind of looking at the rest of the year here?

We still think the rest of the year it's going to come under some pressure, but again, we benefited, as we talked about in the last call, from some repricing of that government deposit. We also are benefiting on the commercial side from some -- well, we just converted a very large construction loan to a permanent loan and there was a nice tickup in rates on that so that will help certainly our loan yield. That loan closed early in this month.

But we still see pressure in the long term for the rest of the year. Part of that will be governed by, again, an extension of our wholesale borrowings at the Home Loan Bank. In managing our rate risk situation, we are going to be cognizant of the fact that we don't want any short-term exposure to those wholesale borrowings.

So I still think overall there is some pressure on the margin. I think the first quarter is a little bit of an aberration with the 8 basis points expansion, but I don't see real significant changes unless there is a real shock to the market in the latter part of this year.

Got it. Okay, perfect. And then jumping over to credit, your credit obviously continues to look good. Provision continues to come down. It's still away in excess of charge-offs and obviously you are continuing your reserve build here. You are at [1.23%].

How do you look at that? Do you guys have a goal in terms of where you want to get that before you are going to more closely match your provision with your charge-offs?

We look at it -- there is a number of factors that we look at, Laurie. There is not a specific goal that we are trying to hit in relation to that coverage ratio or coverage of loans. We will look at that. We will look at the charge-offs. We look at trends in non-performing loans and short-term delinquencies so it's a mix of items. It's one factor that we consider.

But clearly we have built -- we have consistently built reserves. I guess over the last three years our provision has consistently outpaced charge-offs, so at some point that is going to even up and even probably go the other way at some point. And we may not be that far away from that.

Okay. So could we expect to see that being a this-year event?

We well know better after the controller's office comes in for their first exam this summer, Laurie.

Okay, and they are coming in the summer. Okay. What month are they coming in?

They are probably due in right after the turnover. We finished our last exam with OTS early last summer.

Okay, great. And then jumping over to non-interest expenses, did you have any snow removal one-time costs, I am assuming maybe?

You sound like you have been talking to our department managers when they are explaining why they are over budget. Yes, there was some in there, but I don't think it was probably as significant as it may have been last year.

Last year was significant. When you say one-time, last year was significant too. It was about $100,000 in the first quarter so that will come out in the second quarter.

And a lot of what we had was in the fourth quarter of 2010 and also because we had that terrible day after Christmas storm.

December 26.

That was the 31-incher.

It never quite melted, right? Okay. So about $100,000.

And then, I know Matt had asked this. The savings benefit of $200,000 so you are dropping from $741,000 to about $540,000 on your FDIC costs?

On your FDIC costs, yes. Yes, given the same level of deposits, yes. It's about $200,000 a quarter based upon the new FDIC calculations.

Okay, perfect. And do you have plans to spend that or is that going to be a true savings that we are then going to see then drop all the way through? Are you going to go out and do some sort of a marketing beef up? Some other companies are doing that. Or is that a true savings we will see drop all the way through?

I think that is a savings that we -- we would capture the savings on that.

Okay, because that is a few cents a share. Then your tax rate this quarter was lower. Did you put anything in place or is 36% going to be a better number to use? I think you had given us guidance or for some reason I was using 38% in my model. I am not sure where that came from.

Typically we run at 37%. We were a little lower than that this quarter because of the state tax expense was a little lower than last year. So I think probably that 36% is probably a better number for this year. Our state tax expense this year will be less than last year.

Okay. Then just going back to what Frank was asking, i.e., the dividends and the buybacks, and I guess more specifically the buybacks. With your capital level sitting here up at 9% and you are only trading at 1.2 times book, how do you look at that?

In other words, do you say, well, we still want to keep building capital or is it about price or how do you see that bigger picture in terms of (multiple speakers)?

No, I don't think it's at all about price. I think that we have been in our corporate life very aggressive in buyback of our shares when the timing was appropriate. And I think we represent what we feel right now that there is significant value on our shares and we would certainly be in the market buying it back if we felt that was the appropriate use of the capital.

I think that we are not convinced that the appropriate use of the capital is to engage in buybacks as it's not to return additional dividend yield to our shareholders. I think that capital still affords us some protection against adverse effects of the economy. There is still some regulatory risk in terms of the OCC changeover, and I think that we are not ready to declare that we are out of the woods yet as far as the need to keep these reserves at a little more significant levels.

Again, the fact that we are returning double-digit returns to shareholders gives us some comfort there. I think that even though our capital levels are a little high and they would be considered a little robust by investors' standards, I still think that we are returning adequate returns at this point in this environment. And that when and if we do decide to leverage that up a little bit we will be able to increase the bottom line at the same time.

Okay, okay. Then just last question, and I know Matt and Franco both touched on this. But in terms of expansion, and I wonder if you could quantify this differently, to the extent that you do look to do acquisitions -- and I realize seller expectations are very, very rich and obviously you have shown yourself to be a very disciplined acquirer on the other side -- what sort of dilution do you see as acceptable to tangible book?

And I guess I ask this off the backdrop, yesterday we saw Brookline buy BARI. BARI, great company; it was a good price. But for Brookline they had a lower currency and they took a 26% dilution to tangible book and the market really didn't like it. So it's a good footprint but it was expensive for them.

And so I guess I am asking what do you see as the acceptable threshold? What won't you cross beyond or how do you look at it relative to your -- just one multiple, your tangible book, or how does that weigh in?

We agree. We took a quick look at that transaction this morning as the news hit and we also thought it was expensive. The problem with New Jersey is that there is a lot of capital chasing a lot of companies and the price always looks expensive.

I wouldn't want to say that we are willing to accept less than this or more than that at this point in time. We would evaluate each transaction on its own merits. But I think that what we have seen in terms of recent acquisitions in our footprint, which is where we are -- the only place that we are looking, there is just a lot of capital in this state right now that is chasing the relatively few companies in our footprint that might be considered to be sellers.

Okay, good. Thanks.

Thanks, Laurie.

(Operator Instructions) Matthew Breese, Sterne Agee.

Good morning, guys. So given some of the dynamics going on in the loan portfolio, do you guys think you can grow net loans in 2011?

I think we definitely think we can. Again, we are not interested in growing the residential portfolio, especially at current rates and at current sale margins. But on the commercial side, which is what we target, and given the pipeline that we are seeing right now, we think that we will be successful in growing that commercial portfolio for the rest of the year.

Okay. So the commercial loan growth will offset some of the softness in the 1-to-4 family.

Yes, essentially all of our -- almost all of our 1-to-4 family production is being sold these days. The only exception to that would be the relatively nominal amount of ARMs that we are generating.

Okay. And then turning back to expenses it looks like there is some seasonality in the first quarter typically and I know there is some FDIC expense reductions. What would be a good run rate to use quarterly for the rest of the year on total expenses?

Well, based on the $13 million we have now, we have talked about the snow removal $100,000 coming out. Marketing was probably a little less for the quarter. It typically ramps up as the year goes on, so that might offset some of that.

I don't know, Matt, if it's going to be much difference than what we have in the first quarter. FDIC is going down, so there is some pluses and minuses.

Okay so you would say --.

I don't know if it would be materially different than what we have in here now.

Okay. Okay, thanks, guys.

Bill, anybody else in the queue?

Ross Haberman, Haberman Management.

Morning, gentlemen. Can I push you a little bit more on that net loan growth? Would a 5% net loan growth be an optimistic guess for the year?

On the commercial side that might be a little. Especially considering the flat first quarter that might be a little aggressive. Mike is just looking at what we are --.

It's hard to grow 1-to-4 families because we have heavy prepayments, which are temporary now, plus we have loan sales, so that is going to be a drag. We do expect to grow commercial, so if you are looking at the entire portfolio the growth in commercial will offset some of the lag in mortgage. So it will be some modest increase.

We will have substantial -- we expect some fairly healthy commercial loan growth in the next couple quarters.

And just one final question. Residential real estate prices, what are you seeing and are some areas a little stronger than others within your market area?

Yes, as always in The Shore market there is areas that are appreciating in value. There is always areas that are going to perform stronger than others. But overall, I think we are still fairly well pleased with the fact that we still haven't seen dramatic fallbacks in real estate values.

It's like anything else, Ross, there is always a yin and a yang here with the appraisal industry in terms of what you are seeing on the loan you are originating and what you are seeing on the loans you are servicing. So when you see an appraisal come in on a property that has been abandoned or is distressed or is a foreclosure you are seeing a lot more conservative value than you are when someone is selling their home to a new buyer.

But on the whole, I still think that the most recent market data for The Shore area has got our prices off from a peak to a trough only about 16%. And that I believe the peak was being measured back in 2006 and I think that the regression has only been reported at about 16% from, say, 2006 through the end of 2010.

Do you think prices are up this calendar year so far?

In pockets.

Okay. All right, thank you, guys.

In pockets.

(Operator Instructions) John Shibles, Regal Securities.

How are you doing this morning?

John, you can certainly opine on that previous question about real estate prices.

Yes. I think -- at least in northern Monmouth County I think it's more stable.

Well, but you know, there is pockets. Certainly Spring Lake. I just have anecdotal evidence of a lot sale in Sea Girt than absolutely blew my mind, just a vacant lot that was two blocks from the ocean. 50-foot lot, $1.5 million; so you can appreciate that.

Yes, just a general question. In the back half of the year do you have any concern with the potential for increased competition with a startup bank entering the northern Monmouth County marketplace?

I am not sure of that. We have never targeted northern Monmouth County as necessarily within our immediate footprint, and so I am not -- I don't know that that would create any interest or concern for us.

John, the answer I would use there is consider where we operate mainly in Ocean County and it does extend into Monmouth. But you know who the competition here is. It's the biggest banks in the nation with the biggest budgets and what they say are the best and smartest people.

I think we fare quite well here given our position relative to our deposits and given the fact that the hometown paper here voted us two years in a row as best of the best in terms of service quality. I think we welcome competition. We will take it on toe to toe.

I hear you. I think that -- but in Monmouth and Ocean County I think there is only so much business. If it did, would it force you to do more participations out of --?

No, I don't (multiple speakers).

We are definitely not disposed to that. We still have a very strong policy of we will certainly welcome anyone that wants to participate in a loan with us as the lead, but we are not interested necessarily in following along. Whether it's in-market or not.

Okay. All right, thanks, guys.

This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Garbarino for any closing remarks.

Thanks once again, Jill. Once again, let me thank all of you for joining us this morning, one day earlier in a busy earnings week than has been our custom and as a result of the late spring religious holidays.

Those observing Passover this week and for those looking forward to a happy Easter weekend, please accept our best wishes for you and yours in your celebrations. We look forward to speaking with you again in July.

Thank you. The conference has now concluded. Thank you for attending. You may now disconnect your phone lines.