OceanFirst Financial Corp (OCFC) 2012 Q3 法說會逐字稿

Good morning and welcome to the OceanFirst Financial Corp. 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, Senior Vice President and IR Officer. Please go ahead.

Thank you. Good morning and thank you all for joining us. I'm Jill Hewitt, Senior Vice President and Investor Relations Officer, and 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 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 statement 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 in the earnings release and the statement is in incorporated into this presentation.

For a more complete discussion of certain risks and uncertainties affecting OceanFirst, please see the section entitled Risk Factors and Management's Discussion and Analysis of Financial Conditions and results of operation set forth in OceanFirst's filing with the SEC. Thank you.

And now I will turn the call over to our host for this morning, Chief Executive Officer John Garbarino, Chief Financial Officer Michael Fitzpatrick, and Chief Administrative Officer Joseph Iantosca.

Thank you, Jill, and good morning to all who have been able to join us for our third-quarter 2012 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. You have all had the opportunity to review the earnings release from 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.

As has been our custom, we will also spend some time reviewing our credit metrics and reserve provisioning as well as other attendant issues from the past three months. Our team assembled for you this morning includes a new voice. First Senior Vice President Joseph Iantosca.

Joe has been a key member of our senior executive management since 2004. In his role as Chief Administrative Officer, he is uniquely qualified to provide background information on our loan servicing, credit provisioning, loan repurchase analysis, and branch expansion.

For the quarter, diluted GAAP EPS of course was $0.28, unchanged from the prior year quarter as was the Company's sixty-third consecutive quarterly cash dividend which was maintained at $0.12 a share representing a 43% earnings payout ratio of GAAP earnings.

For purposes of comparison in today's call however, I would like to define core operating EPS from the quarter as our GAAP earnings per share adjusted for the $0.03 nonrecurring severance expense referenced in our release. On that basis, this quarter was stronger than first glance with core operating EPS of $0.31, posting gains over both the linked and prior year quarter. The increases were driven by reduced credit costs, higher non-interest income and lower average shares outstanding.

Our loan loss provision decreased $300,000 from the prior quarter, the rationale of which we will rebuke with you shortly. Non-interest income benefited from a continuation of strong gain on the sale of mortgage loans and across-the-board increases in merchant services revenue, bank-owned life insurance, and other real estate operations income. These gains overcame the compression in our net interest margin. Although we did post a modest increase in interest earning assets, as well as in our commercial loan portfolio, the substitution of lower yielding investments for amortizing loans continued to take its toll as our margin contracted 11 basis points during the quarter.

Meaningful commercial loan growth remains difficult to achieve. It remains our observation that lenders are merely trading lending relationships amongst each other as competition continues to grow in the market in the face of tepid demand. It is axiomatic that until we achieve more significant growth in our commercial loan portfolio, the much desired increases in total revenue cannot be realized.

We [were ready] repurchases of 204,516 of our shares during the last three months. Although not as active as in the previous quarter. There remain 58,899 shares eligible for purchase under the existing Board authorization.

The Company continues to embrace the principle of providing value to our shareholders through leverage of our excess capital as our tangible common ratio remains robust at 9.53%. As a result, capital management remains a focus of the Board whether in the form of additional share repurchases or changes in our dividend policy. Both alternatives will be under review as year end approaches and our current repurchase authorization is completely utilized.

Now to give you some background on our improving overall credit condition, reserve positioning, and plans to stretch our market reach a bit. As promised, I will call on our Chief Administrative Officer, Joe Iantosca.

Thank you, John, for the opportunity to address the improving nature of our credit profile.

During the third quarter, nonperforming loans in the residential portfolio decreased by $2.3 million and commercial nonperformers remained controlled with overall non-performing loans declining 6.9%. Coupled with the quarter-over-quarter reduction of $1.5 million in net charge-offs, and the improvement in the 30 to 89 day delinquencies, we set the quarterly provision at $1.4 million, which still allowed for a reserve build of over $600,000.

The consolidated data section of our release discloses that performing trouble debt restructurings increased by $6.5 million as a result of the implementation of the SEC's guidance related to 1 to 4 family and consumer loans where the borrower's obligation was discharged in bankruptcy. The characterization of these loans in this manner, however, certainly does no damage to our credit risk profile or the sufficiency of our reserve position.

Regarding the New Jersey foreclosure backlog, we have continued to see movement similar to the last quarter with title finally acquired to seven properties. While this pace will not quickly eliminate the backlog, it is helpful and prevents a further buildup of loans languishing in the protracted state of foreclosure.

The New Jersey foreclosure window, still remains at approximately three years, barring major complications -- a tedious process which inflates our nonperforming assets.

Earning to loan repurchase activity we continue to build a repurchase reserve with the addition of $100,000 this quarter. This provision was made solely in response to the receipt of an increased number of repurchase requests throughout the year and quarter. And not as a result of any payments made to settle or repurchase loans.

In fact, there have been no payments made from the reserve this year. Recapping the years repurchase request activity, there were four requests outstanding on January 1. Through September 30, 16 requests have been received and eight requests were resolved at no cost. This leaves 12 requests outstanding with a principal balance of $3.8 million. Of these 12 requests, three are from the GSEs and nine are from other investors.

While these continued favorable resolutions are encouraging, we recognize that we may not always be successful in our defense of these claims. We do, though, attribute much of the success to the fact that these requests have been on prime aged loans, vintage 2005 through 2007, that performed for some time before encountering an issue. And not on all day or subprime loans that faulted very early on in their existence.

While discussing repurchasing activity, you may recall that in 2007, our subsidiary Columbia Home Loans entered into comprehensive settlements with numerous investors that defease the ability of those investors to put back loans to Columbia. These settlements represented 93% of the $480 million in subprime and all day production that Columbia sold up until it was shuttered in 2007.

We continue to seek agreement with other non-GSE investors with settlements that would preclude any future repurchase requests.

I would now like to now turn from recapping the credit metrics to a more forward-looking note. We are excited to expand our presence in Monmouth County with the planned 2013 opening of the bank's full-service financial solutions center in Red Bank. We have leased 7,500 feet square at a prominent intersection location to be named the OceanFirst Bank Building.

We will house under the same roof commercial and residential lenders, first officers, and investment services representatives along with a full service retail branch. The retail branch will be suited to the character of Red Bank by eliminating the typical teller counter and allowing for all transactions to be conducted in a more comparable, private bank-like setting. We look forward to taking this first step in delivering our extraordinary community banking to Red Bank and the surrounding communities, which will serve the long-term interests of our shareholders with the expected growth in several business lines.

With that, I will return the call to CEO Garbarino.

Thank you, Joe. In summary then, we have posted another quarter of consistent core earnings to share with you this morning. The obvious beneficiary of these earnings, coupled with our lack of meaningful balance sheet expansion, is a strength of capital position which has made us a stronger Company, helping us rebuild tangible book value. While we realize that the revenue growth we desire derived from an expanding commercial loan portfolio remains difficult to attain, we are also mindful that pursuit of this growth cannot involve the relaxation of the discipline standards traditionally maintained by the Company.

Our announced initiative of an increased presence in Red Bank, a gentrified Monmouth County town, colloquially known as Wall Street South owing to its impressive financial district, promises to provide some much needed assistance in developing new business relationships for the Bank. Pursuing multiple business initiatives as we are in the right location in Red Bank on the expanding edge of our existing market is exciting in the immediate term and holds great promise for us in the years ahead.

With that, Misters Fitzpatrick, Iantosca and I would be pleased to take any questions you have this morning.

We will now begin the question-and-answer session. (Operator Instructions). Frank Schiraldi, Sandler O'Neill.

Good morning, gentlemen. Just a few questions. I wanted to start with the big number on mortgage banking [and] gain on loan sales. Ask if you can get any color into -- because obviously there is a lag from when you originate and then sell and get the revenue on these things. If you can give us any color into how 4Q is being -- would -- should be begin to be shaping up?

I think that is going to continue to be strong because there's 60- to 90-day lag on that. We still have --

$57 million in the pipeline right now, I think, is still pretty strong for us on the residential side.

Okay, so that -- could that even be --? Is there anything in the quarter that you would think might flow out from that in 4Q or is that number pretty good run rate?

We sold $45 million, that's actually only a small increase from the prior quarter. The prior quarter was $41 million. What happened was the gain on sale margin increased from the prior quarter. So it's that actually for us it is going to probably be the historical high at 2.4%. So a lot of the increase from last quarter to this quarter was not so much in volume but it's a higher gain on sale margin. So, it appears that that margin will probably be sustained through the fourth quarter.

And volume, we don't see that, the volume changing that much. The pipeline, yes, the loan pipeline in September was $78 million. In June it was 79 million. So it hasn't changed much.

Got you. That's helpful.

(multiple speakers). pipeline all loans. So it looks like we are on track for a similar type number.

Okay. And then I wondered if you could just speak to the fee income side on the fee and service charges, the growth there linked quarter. Just speak to what is driving that.

As I said in my comments I think merchant services income was extraordinarily strong for the quarter. That was a pretty significant increase, I think, from the linked quarter.

Trust.

Trust, our trust services is finally starting to get some stride there, also, the fee asset management initiatives. We also think Red Bank will be very helpful there because that will be something of a new market for us; and because of the financial presence in the town, we think that that is a fertile market for our wealth management business.

And what else?

And retail checking fees.

Oh, yes retail checking fees has performed quite well through the year also because of the consistent increase in our core business accounts.

We have also most of our core business accounts in terms of additional color this year have not been of the consumer or governmental variety, municipal deposits. But there have really been business relationships that we've been establishing in conjunction with our commercial lending initiatives. So I think some of the fees from that start to show up also.

Great. And so you are seeing these -- these are a lot of new business relationships that when the economy turns, I would imagine you should start seeing the loan growth from and you are seeing the deposit maybe more of the deposit growth now.

Yes. As I said in my comments, most of the volume that we are doing these days is taking someone else's customers. There's not -- certainly new businesses are not being started and there's very little demand out there. So even in terms of the business deposits that you are getting, you are getting in conjunction with relationships that you are establishing, but you might be taking from a Wells or a TD or someone else in the market.

And then, John, on your comments on commercial growth. If I look at CRE and C&I growth linked quarter it looks like it picked up a bit. Are you suggesting it may -- maybe in the fourth quarter may tick back down or is this a decent run rate that you can hold in the current environment?

We think it should hold. Again the commercial pipeline has been pretty robust all year and that even goes back to last year. While demand is not tepid, it is difficult to get people to close in fund. And repayments have also been heavy. So it's -- as we take other people's customers too, unfortunately, we occasionally are going to lose a customer to someone else, usually because of a pricing or an underwriting issue that we are not willing to budge on.

But we see our ability to grow that commercial product as looking much better now as we enter the fourth quarter than it did certainly as we entered the beginning of the year. So I think the current run rate is probably representative. I know our lenders are encouraged by what they are beginning to see in the market. Demand has not picked up appreciably, but our ability to compete in the market, I think, we are feeling much better about these days.

Okay. Great. And then just one final question just on the margin, Mike, I wondered if you could give a little bit of color. Your thoughts. Margin compression was slightly above where I was looking for in the quarter and what are your thoughts going forward? Do you think obviously with deposit costs where they are I'm sure we are likely to see more compression. Just wondering if you think maybe the magnitude may come down as a sequential contraction that we saw in 3Q, maybe a little bit less than 4Q. What are your thoughts there?

Yes, I think the 11 basis points was a little bit more than we had expected for the quarter. Clearly, with deposit costs our deposit costs all at the end the quarter were 39 basis points. The good news is that was actually down 6 basis points from June 30. So we are still working that number. But clearly it is difficult to drop it that much further. On the asset side we are going to continue to see some pricing -- repricing down.

So there's going to be stress on the margin and some contraction. Hopefully we can counteract that with what John just said about some commercial loan growth. That would help us contract -- offset that a little bit. But clearly there is margin contraction but probably not to the same extent as the third quarter.

Is that 11 basis points partially indicative of a greater premium amortization in the investment securities books in the quarter?

Yes. It's -- because of the cash flows it's been substantial. The premium was, yes, MBS premium -- and let me look at -- yes, MBS premium. It was up. It's not up a lot -- 20, it was up about $60,000 so it wasn't a big increase, but yes it did adversely impact the quarter. It did go up. Part due to the premium amortization because of the cash flows on the MBS and then the mix and the balance sheet we talked about is less loans and more investments. So that's an issue as well.

Okay so you said the amortization in the quarter was up $50,000. Is that what you said from the previous quarter?

Yes, $60,000.

That's all I had. Thank you.

Travis Lan, Stifel Nicolaus.

Good morning, gentlemen. Just digging into the margins a little bit more, could you update us on what your average residential real estate yield is that is running off and also where you are seeing CRE origination yields?

The average yield that's running off. So we are talking about the existing portfolio.

Yes. So whatever the existing average residential real estate yield would be currently.

Mike is looking to see if he has that handy for you.

Well, the number I am going to give you is for the portfolio as a whole. I mean, the fixed -- the mortgage portfolio at the end of September was yielding 4.5. That is the whole portfolio. Now I'm asleep to hire coupon one payoff and the lower coupons don't. So it's hard to get -- it doesn't pay off at the same level (multiple speakers) the tranches.

Yes I understand. Just having the average number is enough because then I can just make my own assumptions about what is going to pay down.

And then if you have a number for what you are seeing CRE originations coming in at.

We are not, we are putting very little residential activity on the books. The only residential activity that goes on the books these days is any jumbo business that we do and whatever adjustable rate product that we are not selling. We haven't sold much adjustable product during the year. So (multiple speakers) the residential portfolio is inconsequential.

The commercial portfolio is generally in the mid 4% to low 5% range depending upon the term. We are not currently writing it much past the seven- to 10-year period.

That's helpful. So the CRE yields are mid 4 to low 5. That's helpful.

Maybe low 4 to -- yes low 4 to 5. Yes.

And then the pace of residential runoff has kind of accelerated the last couple of quarters. Do you have any outlook for how you think that is going to trend over the next few quarters?

We are still amazed that as many refinance -- as much refinance activity as you do and our people tell us that we are refinancing loans for second and third time over the last three or four years as rates move lower and lower. We are still bouncing along the bottom with all-time lows that many of us can remember in many generations. And so it is difficult to say when that refi blitz may stop.

It's, again, in terms of what we do internally, we have a pretty aggressive modification program where we will modify an existing residential loan rather than lose it to a competitor and cut the red tape and get a little premium over what the market rate might be. But you are talking about 30-year fixed rate which is the product of choice for most people these days, really bouncing along in the low to mid 3% range which is very, very attractive in terms of consumers looking to lower their debt service cost.

So it is difficult to forecast any type of minutiae in that type of activity. That's -- we think is going to be there as long as rates bounce along at those levels. In the past when we have seen them bump up over 4% to those lofty levels above 4%, we see activity drop off a little bit. But we haven't been there for quite some time.

Thanks. And just two more. Do you have an update or do you have you ever need an explicit reserve to loan target, put that out there? I'm not sure if you have or not.

No.

That's not how we -- that's something you would do at the end. You do your calculation that are models that we apply consistently and then when you go at the end, you look at the numbers and you look to see if they make sense based upon trends and what not. But [it did no targets].

Then, John, just for you. If you were to complete the buyback, do you still think that that an additional buyback would be a good use of capital given where the stock trade is currently and your ability, you need to grow capital in this environment?

You raised a good question and we've discussed that, our Board is aware of that. And as I tried to relate in my comments, it is something we take a look at. We realize there's several capital management alternatives that we can have under consideration. Additional buybacks are certainly something that we would be taking a look at down the road as we complete the existing authorization.

At the levels we are trading at now, there is some dilution to book value. We think in the past that that has been acceptable to except that nominal dilution for the improved use of the capital and the effect that it has on our current earnings per share calculation. But that is something that we'd have to take up when and if that opportunity presented itself. And we haven't made any decision on it as of yet.

Thank you.

(Operator Instructions). Timur Braziler, KBW.

Good morning. Most of my questions have been answered. I just have a couple stragglers here on asset quality trends. Can you maybe go over some of these trends you are seeing in the early-stage delinquencies and any migration if any on the classified assets?

On the early-stage delinquencies, we have seen a reduction quarter over quarter in the 30 and 89s primarily in residential. We are not seeing a specific trend. We think that reduction was a natural occurrence. We don't see any specific trends nor do we see any specific migrations out of the 30 and 89 upstream.

In general, I think our residential delinquencies have shown a general pattern of slow improvement over the entire year. That's not been exclusively from month to month, but generally from quarter to quarter I think you'll see that. And then those short-term delinquencies can bounce around as you know a lot with seasonal influences. But overall, we see a general improvement in the overall delinquency credit metrics. And our metrics on the commercial side have really been rock solid. So that has been consistent good news. That goes right back over the last four or five years. There is very little variance there.

That's great color, thank you. And on the residential nonperformers right now that $25.5 million remaining, how granular is that portfolio? Are there any other chunky call it $2 million credits that could really move that number lower or is it really going to be a low and slow type of process?

There's nothing of significant size remaining in that. Nothing north with $2 million.

Sorry if I missed this in your remarks, but the 12 remaining repurchase requests outstanding, what's the outstanding balance there?

(multiple speakers) just go back and -- $3.8 million.

$3.8 million. Great. And lastly maybe, John, you could provide us with a little bit of an update on how the search for a COO is going.

Searches are a tedious process and while we would like to get it done as quickly as possible it is much more important to get it done well. So we are engaged in a search. We are moving through a list of candidates and we would hope it would be concluded as expeditiously as possible. In terms of targets, I think we are certainly looking at early in to 2013 on a hopeful basis, but there's no guarantee of that obviously.

And has anybody actually come in for interviews or is it too early for that part yet?

We are not talking to people directly in house. Again we have a search firm engaged that is conducting interviews and that we are receiving information on that. But we have not moved into the shortlist prospects as of yet.

Great. Thanks for the info. Nice quarter.

Just on the 1 to 4 family, I just reviewed the list. There's only one loan over $1 million -- $1.3 million. So every other loan is below 1 million. There are some relatively high balance commercial loans that might move the needle if they came out.

Okay, perfect. That's very good color. Thank you.

Matthew Breese, Sterne, Agee.

Good morning. Just wanted to touch on the securities portfolio. Could you give us an idea of what type of securities you are buying this quarter and the yields that they are being brought on?

A mix, CMO, MBS, CMOs all agencies which is about 130 to 150 yields. We've also been purchasing muni securities with one to three -- generally to three-year yields that are probably about 1%. And then 1% although those are not high. There's a lot of small pieces with the munis. They are not -- our total portfolio is just a little over $20 million since a lot of the pieces we buy are [300, 400], they are all New Jersey-based so they are small pieces. So they don't, they are not high volume. And then there's some agency notes that a relatively modest yields at 60 basis points or so.

So they are not they're not clearly they are the excess liquidity, it is all a lot of good investment opportunity. We haven't gone out long. We tend to stay relatively short. That is why we have the CMOs. They have an average life of about three years as opposed to buying an MBS which might extend longer.

So given yields where they are and it seems like the portfolio in aggregate was about flat from last quarter. What do you see that looking like in the quarters ahead?

The investment portfolio?

Yes.

Well, clearly, there is going to be continued cash flow. So but there's cash flow in the mortgage-backed securities as well. So we are -- although there was a relatively -- there wasn't that big of an increase this quarter versus last quarter because we didn't have the same kind of mortgage loan decrease. So I guess it would depend on our success in growing commercial loans and it also would depend on the extent of the prepayment. But our design, clearly, is to grow loans and not investments. That's clearly our goal.

Yes and that investment portfolio for us over the last probably 10 years has really been in a liquidity portfolio more than anything else. It takes care of some excess liquidity, but it is not something that we actively manage as a profit center in the Company.

And when you look from -- I'm just looking, it's really very modest increase here. When we look at investments and MBS as a whole, went down MBS is down $15 million for the quarter and investment is up $23 million. So for the quarter there's only an $8 million increase in securities. So that really what's been moved -- didn't move up that much during the quarter.

Right, right. The total portfolio is right around a quarter of the balance sheet right now. I just -- it sounds like it is going to hold flat as you grow [loans].

Right.

So with that being said, there is a lot of moving parts in the loan portfolio, residential continue to come down. You're incrementally more optimistic about the commercial side of things. How much net loan growth do you think we could have over the next six to 12 months?.

Difficult question. As John said, we have to take -- there's not a lot of growth in the marketplace if we have to take it from competitors who are all competing on price and trying to take hours. So the focus is on commercial. We have to take opportunity from competitors. We are excited about this Red Bank location that we talked about earlier. It is kind of a market for us. It's a relatively new market -- it is a new market for us but we see a lot of opportunity there. We are going to have commercial lenders staffed up there full-time to brook that market. So that will be helpful.

And we also have had some consumer loan growth this year because we've got some new product, a first lien product that has done pretty well.

But the one to four family they are prepaying and the loans that we are originating are being sold. So as much growth as we may expect in commercial and consumer there's going to be no growth in mortgage. In fact it is going to be runoff in mortgage because we are not originating loans at 3.5 and we are not going to keep them. We are selling them. So on balance there's not going to be a lot of loan growth because there's a runoff in the one to four family, but we are hopeful that we can have reasonably good growth in commercial and consumer.

And then (technical difficulty) Red Bank. New territory, I think last quarter you'd said you had a total of five commercial lenders. Just curious. Are you hiring anymore to work that territory?

Yes. (multiple speakers). We would take as many good lenders as we see in the marketplace. That's -- we are constantly recruiting loan officers on the commercial side. So I think as you said last quarter we reported five. I believe we had one additional hire this past quarter, but I think we can easily accommodate eight to 10. Not that that is a target, but I think that we -- if we saw quality people that were available that had become disenfranchised or dislocated where they were currently operating, we would certainly not hesitate to hire them, bring them on board. Especially those in the slightly new areas, I think I characterized on the fringe of our existing market.

Getting back to your question about loan growth though, if you look at the -- each quarter this year I mean the overall portfolio has really experienced some runoff, but it hasn't been as severe as it was in 2011. I think that we are gradually starting to hit some strides, starting to keep some of those some of that loan portfolio in-house. The quarterly runoff in terms of the entire loans receivable entry on the balance sheet is much smaller than it has been in recent years.

I agree. My last question getting back to the repurchase request, it sounds like there's $3.8 million in total repurchase request. And it also sounded like you said with the settlement with Columbia Home Loans, 93% of subprime stuff had been settled. How much of that $3.8 million was, or if it was, previously settled?

Nothing that was previously settled. We don't have anything outstanding on anything previously settled. And everything in that $3.8 million is prime aged.

Understood. Thank you.

(Operator Instructions). Ross Haberman, Haberman Management Corporation.

Good morning, gentlemen. John, a quick question. This new Red Bank operation, how big a drag will it be this year and/or how big in terms of production, deposits do you need to grow to hit a breakeven?

I will characterize it broadly and then I will give it to Joe because Joe has really run the numbers on that pretty closely. But we don't think it is going to be significant. It is lease location. The [full up] expenses are going to be relatively modest. The staffing will be built up over a period of time. We will have to spend some significant marketing dollars in terms of reinforcing our brand since it is kind of on the fringe of our existing market. But we think that it will repay dividends rather quickly.

Joe has got some actual numbers on it and in terms of quantifying it in the income statement, Mike, what do you feel?

Well, we expect clearly it is going to be dilutive in the first year. We think based on our model it will be about $0.02 to $0.03 adverse impact to EPS next year. And then it would gradually go down from there. Maybe a $0.01, $0.015 next year and then it will start breaking even in the third year.

And for that area, is one branch enough or if it is successful quicker or more than usual would you consider a second location?

Yes. You are very perceptive there and you may even be familiar with the area. I don't think this will be an outpost by any stretch of the imagination. But I am also not going to refer to it as a hub and spoke type operation because I don't think you are going to see six or seven offices around it. But there is going to be some additional support that is going to be added over a period of time. But we are very selective with that.

What really drove this rather quickly was the availability of this space right in the downtown area in the center of the financial district. And that's space was just too attractive for us to pass up. We can feel around it with one or two locations over up period of time. There's nothing immediately on the drawing board right now.

And just one further question about that. Who would you say is your top two or three direct loan competitors in that market as well as the deposit -- you know --?

Usual suspects, you know.

Investors has done very well on the deposit side there in the recent months, in the recent years. You have got the TDs, the Wells and Bank of America. Not everybody is in that pond.

Best of luck. Thank you.

(Operator Instructions). Showing no additional questions in the queue, this will conclude our question-and-answer session. I would like to turn the conference back over to John Garbarino for his closing remarks.

Thank you, Denise, and again, once again I will just thank everyone for their interest this morning as we finish up what we view as a pretty solid successful third quarter and we look forward to speaking to you again early in 2013. Thanks again for your interest.

Ladies and gentlemen, the conference has now concluded. Thank you for attending today's presentation. You may now disconnect.