Prosperity Bancshares Inc (PB) 2008 Q2 法說會逐字稿

Welcome to today's teleconference. At this time, all participants are in a listen-only mode. Later, there will be an opportunity to ask questions during our q-and-a session. Please note this call may be recorded. I would now like to turn the call over to Dan Rollins. Please go ahead, sir.

Thank you. Good morning, ladies and gentlemen. Welcome to Prosperity Bancshares's second quarter 2008 earnings conference call. This is call is being broadcast liver over the Internet at www.ProsperityBankTX.com and will be available for replay at the same location for the next few weeks. I'm Dan Rollins, President and Chief Operating Officer of Prosperity Bancshares. Here today with me is David Zalman, Chairman and Chief Executive Officer, Tim Timanus, Vice Chairman, and David Hollaway, our Chief Financial Officer. David Zalman will lead off with a review of the highlights for the second quarter of 2008. He will be followed by David Hollaway, who will spend a few minutes reviewing some of our recent financial statistics. Tim Timanus will discuss our lending activity, including asset quality, and, finally, we will open the call up for questions.

During the call, interested parties may participate live by following the instructions that will be provided our call moderator, Jimmy, or you may email questions to investor.relations@ProsperityBankTX.com. I assume you have all received a copy of the earnings announcement we released earlier this morning. If not, please call Whitney Hutchins at 281-269-7220 and she will fax a copy to you.

Before we begin, let me make the usual disclaimers. Certain of the matters discussed in this presentation may constitute forward-looking statements for the purposes of the federal securities laws and as such may involve known and unknown risk, uncertainties and other factors which may cause the actual results, performance or achievements of Prosperity Bancshares to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.

Additional information concerning factors that could cause actual results to be materially different than those in the forward-looking statements can be found in Prosperity Bancshares' filings with the Securities and Exchange Commission, including forms 10-Q and 10-K and other reports and statements we have filed with the SEC. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. David?

Thank you, Dan. And I would like to welcome everybody joining us today. Before I start the presentation, I'd like to say that there is no bombshells that we are going to drop on you this morning. There's no monsters to scare you, so scoot back in your chair and enjoy the presentation.

Among our successes in this quarter, we saw increased earnings. Second-quarter earnings increased 1.93% to $23.4 million from $23 million for the same period last year. Our diluted earnings per share were $0.52 for the second quarter of 2008 and 2007. Our return on average assets for three months ended June 30, 2008 was 1.43%. Our return on average common equity and return on average tangible common equity for the three months ended June 30, 2008 were 7.96% and 26.93%, respectively. The efficiency ratio was 46.17%.

I am pleased to announce that on June 1, 2008, we completed the acquisition of 1st Choice Bancorp Inc. and its subsidiary, 1st Choice Bank. With two full-service banking offices in the Houston area. One location is in Pasadena and the other is in the Heights area. We are very excited and honored that 1st Choice decided to join our team, and we welcome all of their customers, directors, shareholders and associates to Prosperity Bank.

Our deposits at June 30, 2008 were $5.3 billion, an increase of $520 million, or 10%, compared with $4.8 billion at June 30, 2007. The linked quarter deposits increased 7% from $4.9 billion at March 31, 2008. Excluding deposits assumed as part of acquisitions, linked quarter deposits increased 1%. While a few banks are offering rates well above the market, for the most part customers now realize there is usually a reason for this, and they generally limit what they will put into those banks to the FDIC insurance limit, if they even continue to bank with those entities.

We continue to believe we will benefit from our strong asset quality and balance sheet in acquiring new deposits in these more turbulent times. Our net interest margin increased to 4.10% in the second quarter from 4.03% in the first quarter. As we mentioned in our first quarter conference call, as our deposits are repricing, we expected to experience some margin improvement, and that is exactly what happened. David Hollaway will be able to provide additional color on this subject.

Loans at June 30, 2008 were $3.31 billion, an increase of $132 million, or 4.2%, compared with $3.18 billion at June 30, 2007. Linked quarter loans increased 4.8%, or $151 million from $3.16 billion at March 31, 2008. Excluding the loans acquired in acquisitions over the past 12 months, linked quarter loans decreased 1%.

As I'm sure everyone remembers, Texas United Bancshares, our last large bank acquisition, operated a very active mortgage lending department that generated traditional portfolio mortgage loans, held for sale mortgage products, one-time close construction loans, and direct construction loans to builders on a contract and speculative basis. We decided to exit this line of business early in 2007, and are continuing to see these loan balances that were put on in these areas decline.

Going forward, we are continuing to monitor construction loans and remain selective as to the strength of the overall borrower. Our builders are reducing the amounts they are borrowing, and we are looking to reduce our exposure in this area as well. Having said that, we are seeing lending opportunities on strong credits that in the past were going to nontraditional lenders, simply because we were unwilling to match the aggressive terms and conditions. As these alternative sources dry up, borrowers are returning to more conventional financing such as ours.

Our nonperforming assets to total assets at quarter end June 30, 2008, were 22 basis points as compared to 33 basis points in the quarter ending March 31, 2008. We are pleased with the progress and are optimistic as we look forward. I believe our asset quality ranks among the best in the industry, due to strong underwriting and an experienced loan team.

As we reported last quarter, we own Fannie Mae and Freddie Mac preferred stock with a par value of $24 million. During 2007, the net book value of the preferred stock was reduced by approximately $10 million, due to an other-than-temporary impairment charge in accordance with FASB 115 to $14 million. The market value of the Fannie Mae and the Freddie Mac preferred stock was $11.8 million as of June 30, 2008, resulting in an unrealized loss of $2.2 million as of June 30, 2008.

We believe and agree with US Treasury Secretary Paulson that these GSEs should continue to exist in their current state. Their regulator has stated that they are adequately capitalized and these securities continue to perform according to their contractual terms. We will continue to monitor this situation and take any action, if necessary.

In wrapping up, I would like to repeat a comment that I made last quarter, and that is, we do not have any CDOs, SIVs or other esoteric products that are continuing to cause strain in the liquidity markets. While we do offer some mortgage-related products, we do not operate a mortgage company. We do not have a factoring company or an asset-based lending group. We do not participate in indirect lending programs. We do not participate in shared national credits. And, finally, we are not involved in subprime lending.

Our management team has many years of experience, and if economic conditions do change in Texas, I feel very confident in the abilities of our team has and I am confident we will be able to navigate through these trying times.

In closing, I would like to say thank you for your support and confidence. I am very confident in our model and our continued success. We have a great group of bankers. We will continue to grow and prosper. We are proud of our past and intend to stay the course. We plan to continue our focus on organic growth, and we plan to continue to pursue accretive acquisitions.

Although we want to grow, we will not take our eye off the ball when it comes to asset quality and building shareholder value. We intend to continue building loans, focusing on our customers, rewarding the people that produce results, and also building shareholder value, and honor our service commitment by greeting the customer with a smile, calling the customer by name, and finding a way to say yes.

Thanks again for your support of our Company, and let me turn over our discussion to David Hollaway, our Chief Financial Officer, to discuss some of the specific financial results we achieved. Dave?

Thank you, David. Net interest income for the second quarter 2008 increased 5.1% to $54 million, compared with $51.3 million in the same quarter last year. And this was primarily due to an increase in average earning assets of 5.1%. Non-interest income for the three months ended 6/30/08 increased 5.6% to $13.1 million, compared with $13.8 million in the same quarter last year. This was primarily due to a decrease in gains on sale of held for sale loans and trust in investment income. And in both cases, these decreases reflect our exiting business lines we acquired in the TXUI transaction, exiting both the mortgage banking function and the trust business they had back in 2007.

Non-interest expense for the three months ended 6-30-08 increased 2.6% to $30.9 million compared with $30.1 million for the same period last year. This increase was primarily attributable to the four acquisitions we completed since January of 2007. The tax equivalent net interest margin was 4.10% for the second quarter '08 versus 4.09% for the same period last year, and 4.03% for the first quarter 2008. And, again, looking at our 6/30/08 asset liability model, we still see margin expansion over the next few quarters, and as David mentioned earlier, a lot of this is coming from our ability to be able to reprice our liabilities down.

Our bond portfolio metrics at 6-30-08 reflect a weighted average life of 4.2 years, and an effective direction of 3.4 years. The projected annual cash flow is approximately $420 million. And one last comment on capital ratios -- all of our capital ratios surpass the regulatory well-capitalized thresholds. At 6-30-08, our Tier 1 leverage ratio was 7.9%. The Tier 1 risk-based capital ratio was 12.7%, and total risk-based capital ratio was 13.7%. Our tangible capital ratio was 6% at 6-30-08, compared to 5.5% at 6-30-07. And with that, let me turn over the presentation to Tim Timanus for some detail on loans and asset quality.

Thank you, David. Nonperforming assets at quarter end June 30, '08, totaled $11,651,000 or 0.35% of loans in other real estate, compared to $17,554,000 or 0.55% at March 31, '08. The June 30, '08 nonperforming asset total was comprised of $4,857,000 in loans, $139,000 in repossessed assets, and $6,655,000 in other real estate.

Of the $11,651,000 in nonperforming assets at June 30, '08, we anticipate that approximately $4,600,000 will be removed within the next 30 to 60 days based on existing contracts for sale and collection efforts, although there can be no assurance that these contracts will close, or that these collection efforts will be successful.

Net charge-offs for the three months ended June 30, '08 were $1,164,000 compared to net charge-offs of $1,643,000 for the three months ended March 31, '08, for a 29% decline. $1 million was added to the allowance for credit losses during the quarter ended June 30, '08, compared to $1,167,000 for the first quarter of 2008. The average monthly new loan production for the quarter ended June 30,'08 was $103 million, compared to $94 million for the first quarter ended March 31, '08. Loans outstanding at June 30, '08 were $3,313,000,000 compared to $3,162,000,000 at March 31, '08. The June 30, '08 loan total is made up of 41% fixed rate, 31% floating and 28% resetting at specific intervals. I'll now turn it over to Dan Rollins.

Thank you, Tim. As David said, I am pleased to report that we completed the acquisition and the systems conversion of the two former 1st Choice Bank locations in Houston that we purchased in June. We believe these locations are a natural fit to our existing presence, and we've completed the consolidation of one of our existing locations into one of the 1st Choice locations. These locations are operating today on our computer system and under our banner, and everything seems to be going well with those locations. At this time, I think we're ready to turn it over to questions. Jimmy?

(OPERATOR INSTRUCTIONS) We'll take our first question from Brent Christ with Fox-Pitt. Please go ahead.

Good morning, guys.

Hi, Brent:

Can you talk a little bit more about the underlying dynamic in terms of the loan growth this quarter, more so on an organic basis. It looks like the construction balances were still pretty flat, even with the acquisition of 1st Choice, and just wondering a little bit more in terms of what's driving that.

Good question, Brent. When you look at the organic number, we were down about $30 million organically. When you look at the different categories of loans, the construction loans that 1st Choice brought to the table was about $20 million, so, while construction loans fell about $6 million from period end to period end, $20 million in there was 1st Choice construction credits. So, in reality organically we shrunk the construction portfolio about $26 million, which represents basically all of the organic shrinkage in the portfolio.

And where do you see that portfolio trending over the next 12 months or so?

The construction portfolio?

Yes.

Yes, I think David made a comment in his comments a minute ago that we continue to look at the construction credits, and really all credits very carefully. But, just the markets that we're in -- the builders that we have are actually dawdling themselves back some. Construction has moderated from the exceptionally fast-paced from the past. So, we would expect that construction portfolio to continue to shrink.

Yes, Brent. David Zalman. As I mentioned earlier, we would like to see -- we would like to shrink our construction portfolio on the other hand -- I put the caveat in there that every time we try to shrink it we're getting more and more opportunity to see real quality credits that we haven't got to see in the past, simply because nontraditional sources from some of these credits have dried up, and, so, that's the only caveat I would put in there. We're really getting to see a whole lot more credits than we normally got to see and sometimes they're pretty good.

Okay. And then, another question on credit quality you mentioned that there's about $4.6 million of MTAs set to be removed in the next 30 to 60 days, and could you just update us in terms of if included in that number is some of those lumpier foreclosed assets that you had last quarter, and to the extent you resolved any of those this quarter.

There were four of those big pieces that came on in the fourth quarter of '07, and two of them came off during the quarter and two are still there, and Tim, you can address where we are on those two.

That's correct. There's two that are still there, one of which is under contract. We hope that contract will close. The other is set for foreclosure in early August, so we're still trying to deal with that one.

Gotcha. So, within that $4.6 million, probably $2 million or so is related to one of those four credits. Is that fair --?

That is correct.

Okay. Thanks a lot, guys.

Thank you, Brent.

We'll take our next question from Erika Penala with Merrill-Lynch. Please go ahead.

Good morning.

Hi, Erika.

Could I just get a little bit more color on what you're hearing from the -- your developer clients? I know you mentioned that they are dialing down in terms of further build-out, but what are they seeing in terms of sales activity?

Erika, this is David Zalman. I'll address that. I guess sometimes you have to determine which one you're talking to. But, overall, I think most people -- most of them agree that there is a slowdown. If you look at quarterly conference calls last time and the time before that, almost everybody said that the slowdown was just strictly in the, what we call starter homes, or lower end homes, but I think that everybody will agree that there has been a slowdown. On the other hand, the slowdown that they're telling me really just takes us back to a time of a couple of years back when we -- which was really, in my opinion, a normalized build rate. And, so, I think that's where we're at today.

The Texas economy is -- the thing that's really helping us -- it's still growing. The Texas Workforce Commission pointed out that we have -- we grew 47,700 jobs in June, and we've added 245,000 jobs in the past 12 months, so our annual job growth rate on an annual basis is 2.4%, which is really still bringing people into the Texas economy, and they're looking for houses. In fact, if you look at the overall prices of homes, what they're showing is in all of the markets that we're in, all of the prices actually saw a little bit of an increase with the exception of Fort Bend County and the Dallas Metroplex.

But overall, if you had to average the price of homes, how they did, seasonally adjusted, we're still seeing a 1% increase in homes. So, having said that, I think basically I made a long story out of this, but I think what we're really seeing now is that it's not really what it was a year or so ago, but we're back more at a normalized rate, and if the Texas economy continues to stay where it is, grows and brings -- continue bringing people in, I think we're in pretty good shape.

Does that answer your question?

Yes. And, just a followup, so the developers that are holding these -- and thank you so much for the added construction disclosure, by the way. The folks that are with the raw land, or partially developed loans, they still have enough cash even if they're not finishing the project to service the debt, and just hang onto the land without having to dispose of it? At the rate were to think about it?

No, I wouldn't go down that road. The developers are still developing products -- product, and builders are taking lots down. You're -- the way I understood your question was it sounded like developers have stopped construction in the middle of a project. And, we're not experiencing that here. We are experiencing some slowdown and the takedown on lots, so, if the developers took down 50 lots last year or the year before when it was red-hot, this year they're taking down half that.

I think Erika's probably referring to some of the type of lending that was out there with a lot of the mortgage companies, and, yes, there was some of that where people were buying lots and speculating that they would sell it to somebody else and flipping it. And you're still seeing some of that, and you're still -- we're still trying, I think the market's trying to clean and cleanse themselves of that.

Not in our portfolio.

Well, there -- I'm not saying there's not -- there was still some stuff from our past Texas -- where they had a mortgage company and we still see periodic loans like that, so I see where Erika's coming from.

I think it's important to emphasize that we see the quality developers that have good product still with reasonable demand, albeit maybe not as strong a demand as it was within the last couple of years, it's still reasonable and they're still selling product. Now, the lesser quality developers that have poor product, they may be having more problems, but we don't see that we have very many of those that we're doing business with.

Let me come at it a different way. I think you were asking about do people have cash to hold, and I think when you talk about the quality of the borrower that we're banking today, and the way we've underwritten loans in the history of our Company, I think we actually are looking at the borrower. We're looking at what their overall total consolidated cash flow of all of their entities are, and that is our expectation that our borrower would be able to cash flow and support their projects if things slow down.

Okay. And just one more question to followup on -- David mentioned the lending opportunity that you have going forward. You mentioned that there's opportunity to -- on the construction side. But is there also opportunity on the term commercial mortgage side, specifically refinancing loans that were once done by the conduit lenders?

I don't know about the refinancing. I just would say primarily new projects. We're definitely getting to look at new projects. And, yes, it's probably more in that area than it is even on the construction side. I think that's probably the area that we're seeing the most of.

I agree. I think maybe you misunderstood some of what he was saying. We're seeing a lot of construction opportunities. The opportunities that we're seeing are probably predominantly more new activity coming in.

Yes.

And what your question about refinance activity. I don't know that we're seeing a whole lot of refinance going on. For people to want to refinance a project, typically you want to see rates move down substantially and we really haven't seen that rate movement, so there's not a big incentive to refinance a lot of projects today.

Yes, I'd say if you're seeing refinancing, it's probably for another reason.

Yes.

Right. Or, they can't -- the conduit doesn't exist anymore and so they have to go through traditional lending sources. Okay. Thank you for your time.

And we'll take our next question from Brett Rabatin with FTN Midwest. Please go ahead.

Hi, good morning, guys.

Hey, how are you?

Good. I guess I haven't seen too many banks (inaudible) -- that was interesting. So, obviously in Texas things are good enough where you don't have to have additional capital, which is great. I wanted to ask on the Fannie/Freddie stuff, the unrealized loss there, how do you think that plays out? Are you guys looking at the OTTI-type thing, or what's going to happen with that, assuming nothing changes with valuation?

As far as what do you think our feelings are about what will happen with Fannie Mae and Freddie Mac?

Well, just --

You made an assumption that nothing happens with valuation. That's a pretty big assumption to start with.

Well, there's obviously no way to know what's going to go on with those securities. It's -- they could be up or down a bunch, there's no way to know. Let's just say they're static. What do you guys end up doing? Do you just go ahead and adjust it or will you just hold it until -- ??

This is David Hollaway. I'll jump in before Zalman does. But, yes, that's the million dollar question. You've seen so much volatility in the pricing and all the headlines over the last couples of weeks. It's a hard call sitting here today to say, well, we're going to go right or left, because with some of the things that happened, especially with Paulson coming in and saying they want to maintain these entities as is. You take that for what it's worth.

You can go one way, but the bottom line is we live under accounting rules, and one of them is the other-than-temporary impairment concept, and with the pricing down today, it's dropped off dramatically from 6/30. There will become a time where we have to address that specifically from an accounting perspective. Is it at the end of the third quarter or is it the end of the year? I can't tell you at this point, but absolutely, depending on the facts over the next couple of months, we may have to write those things down. But, as of today, I don't know if we could make that call one way or the other.

Dave, I would think that we're going to get a lot of -- a lot more clarity. I think Bush announced this morning that he's going to acquiesce and give in and sign that Congressional bill that includes Freddie Mac and Fannie Mae, and I think this morning, again, you saw their common stocks increase dramatically, which they have over the last three or four days, and I think [even yesterday evening], we saw some real upticks in this preferred stock, so, I think within the next three months we'll have some real clarity on this deal.

And, so, that's why again, just to reiterate, that's why I want to be very clear. We had $24 million on our books at yearend. We did do an other-than-temporary impairment of about $10 million, took it down on our books to $14 million at 6-30. The unrealized loss related to that $14 million was $2 million, about $1.4 million after tax and equity. So, if you're doing the exposure to capital, if you took the worst case scenario and said that the common shareholders and preferred shareholders get wiped out, then our exposure is roughly about $12 million as we sit here today.

Okay. Thanks for the color on that. And, then, I was also curious on the construction piece. I don't know if you guys had available geography-wise, where you have the single family construction and land and -- it sounds like those portfolios are still relatively fine, but I was just curious geography-wise if you had a breakdown of where they might be.

It's all over the state. When you look at what our team's doing, when you look at the total portfolio, a little less than half of it's in the Houston metropolitan area, because that's our biggest base, and, so, I think you can extrapolate out from there and assume that half of the construction piece is in there. We've got construction in the Dallas/Fort Worth metroplex. We've got construction in the Austin market, and we certainly have it down in the South Texas market also. So, I think we're spread out.

Okay. And then, just lastly on the margin -- I'm curious if there might be any change. Obviously, the securities portfolio is a little bigger at quarter-end. Any thoughts on balance sheet management, aside from the loan growth that you might have? Are you guys going to look to maybe slow balance sheet growth going forward, or should we expect you to leverage with the present yield curve, or what's your thoughts on that front?

A couple of things. One -- again David Hollaway here. I'll jump in before Zalman, but one of the things that we're seeing, it's interesting, is with all the chaos in the markets these days, and, again, we are not paying up on rates. We're not -- we never paid the top rates, we're not doing that today, but what's interesting is with all the chaos, we're seeing -- we're getting a lot of opportunities from the deposit side. Just people looking for safety, if you will. Looking for -- they're doing their homework. They're researching it on the FDIC site or wherever, and they're looking for places to park their money.

So, we're seeing a lot of opportunities with people bringing in deposits, and this is not where we're having to pay top rates. They're just parking it in the bank, and, so, when this is happening, we can't just leave it sit in Fed funds. We need to go ahead and try to invest it short term and then hopefully over the long haul we'll lend it out, and that's been our mantra all along. So, that's what you're seeing when you look at our balance sheet, and I don't know, David, you might want to mention you've also tried to jump in a little bit on --

Yes, first of all the overall segment is we're not going to leverage the balance sheet. The only thing we have done is that we have such an amount of liquidity that turns every month -- or every year from loans and our securities, that we are able to buy up. Sometimes, you may see us leverage up to $100 million in Fed funds just for the coming month from the roll-offs. If we don't have it to go into loans, we have securities rolling off. You may see us leverage up a little bit because we have a pretty good spread there. That's about all, really.

Okay, great. Thanks for the call. Good quarter, guys.

Thanks.

We'll take our next question from Ed Timmons with Sterne Agee. Please go ahead.

Hey guys. Good quarter.

Ed, how are you?

Pretty good. Just to followup on the last question here. Can you just remind us, how much in CDs do you have repricing this quarter, and rates still around 2.50 or so?

A couple of things. One, you can look -- in terms of the rate on the CDs, you can pick that up if you're looking at our press release on the net interest margin on the back page. But the direct question is, we still -- most of our CDs are short, so we'll be -- about 50% of them will be rolling over in the next six -- one to six months again. So, the rates that you see in the fourth quarter which Dan, you're looking at -- what --?

3.97% was the second quarter.

So, that would give you a sense.

But he was asking what the current rate is.

Right. So that would give you a sense. In our markets today, CDs we're 3% down. So, you can see there'll be a little bit more opportunity and it's also interesting with the yield curve normalizing, and, again, you can pick this up when you're looking at those net interest margin pages on our press release. One of the things you pick up and you can see what's helping our margin, at least one aspect of it is, is take a look at the yield on our securities versus the yield on the CDs. If you look at current quarter versus a year ago quarter, you can see that the spread between those two has picked up dramatically, and that's just because we're no longer in that inverted yield curve which was causing a huge squeeze on our margin last year.

And then on the loan side, can you just talk a little bit about pricing and spreads and how they've reacted this quarter. It seems like your loan yields are holding up better than a lot of your peers. Is that just better pricing because of the increased opportunities, or are you guys walking away from credits that may be not priced as well?

No, Ed, we -- pricing has always been very important to us, and we've walked away even if you look where other banks were really growing their portfolio, and ours was not growing organically as much. Pricing and having margin is very important to us. And that's just one of the things that we're going to stick with.

Getting paid for the risk we're putting on the balance sheet.

That's right.

So, I guess, the answer is we're actively managing that and watching that, and we're not putting low risk -- low price product on --

The reality of it is your growth may not be as large as some of our competitors, but the profitability will be better.

Does that help you?

That does. Thanks, guys.

Thanks, Ed.

We'll take our next question from Dave Bishop with Stifel Nicolaus. Please go ahead.

Hi Dave.

Hey, how are you guys doing?

Good.

Most of my questions have been answered, but maybe you can talk about - obviously you've closed on 1st Choice here. What are you hearing in the market in terms of bank M&A there? Are you seeing more sellers here? What's the philosophy, maybe? Obviously, Texas is outperforming the rest of the country, but if some sort of distressed deposit or asset sale will come down the pike, what would the philosophy be there?

I think all of the investment bankers are on summer vacation. It's pretty quiet.

Dave, this is David Zalman. We are seeing more opportunities today than we have in a long time, and I would say if you're asking what we're doing is we're analyzing all of them. I think that you're going to see there -- as everybody knows there's probably going to be some issues and you might see some banks that may need some assistance and that's an opportunity. You may see other banks that are larger banks that are in the markets that may want to get out of the markets. I think you're -- even let's think of Wachovia and some of those. They said that they're looking at -- I think everybody is -- I think everything's on the table right now, and I think there's going to be a lot of opportunities, and basically what we're doing right now is just we're holding pat looking for the right opportunity. We have a number of opportunities, but we're looking for the right opportunity.

Does that help you?

It does. Thank you.

Thank you, Dave. Appreciate it.

(OPERATOR INSTRUCTIONS) We'll take our next question from Jennifer Demba with SunTrust Bank. Please go ahead.

Hi, Jenny.

Hi, how are you? Actually, my question was asked by the last caller. Thank you. Good quarter.

And it appears that we have no further questions at this time.

Great. Ladies and gentlemen, thank you so much for participating in our conference call this morning. We appreciate the support that we receive from you all and we look forward to visiting with you again soon. Thank you all for participating.

This does conclude today's teleconference. You may disconnect your lines at any time. Thank you and have a great day.