Prosperity Bancshares Inc (PB) 2011 Q2 法說會逐字稿

Good day, everyone, and welcome to today's program. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. (Operator Instructions). Please note this call may be recorded.

It is now my pleasure to turn the conference over to Mr. Dan Rollins. Please go ahead.

Thank you. Good morning, ladies and gentlemen. Welcome to Prosperity Bancshares' second-quarter 2011 earnings conference call. This call is being broadcast live 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 with me today is David Zalman, our Chairman and Chief Executive Officer; Tim Timanus, our Vice Chairman; and David Hollaway, our Chief Financial Officer. David Zalman will lead off with a review of the highlights of the recent quarter. 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 activities, including asset quality, and finally, we will open the call for questions.

During the call, interested parties may participate live by following the instructions that will be provided by our call moderator, Lisa, 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 Tracy Schmidt at 281-269-7221, and she will be happy to 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 risks, 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.

Now let me turn our call over to David.

Thank you, Dan. I would like to welcome and thank everyone for joining us for our second-quarter earnings announcement. I'm very excited and proud to be able to announce such positive results for the second quarter of 2011, especially in a time when our industry is facing so many challenges.

We posted earnings of $35.1 million for the 3 months ending June 2011. That's compared to $31.7 million for the same period in 2010, which represents a 10.5% increase. Our earnings per share for the second quarter of 2011 came in at $0.75, compared to $0.68 for the same period last year, representing a 10.3% increase in earnings per share. Our net interest margin increased to 4.06% in the second quarter of 2011. That's compared to 4.02% during the first quarter of 2011.

Our asset quality continues to be one of the best in the industry, with a non-performing-asset-to-average-asset ratio of only 15 basis points. Our net charge offs decreased to $2.8 million for the 6 months ending June 30, 2011, from $6.8 million for the same period last year; that's a 59% decrease. Our allowance for loan losses was $51.9 million as of June 30, 2011, with non-performing assets only at $12.7 million for the same period.

We continue to see past-due loans and charge offs decline. The majority of our customers have seemed to be more profitable compared to the last few years, although they are still concerned about the country's economic conditions and also the political climate. Last fall, we embarked on a plan that challenged our associates to grow the bank organically, increasing loans $1 billion before the end of 2012, and we are well on our way, reporting an annualized increase in loans over the last 2 quarters of 10.3%. We continue to grow non-interest-bearing deposits, up over $212 million or 13.4% compared to the same quarter last year, as well as other, more profitable transaction accounts.

Our total deposits have grown 5.7% on an annualized basis during the first half of the year. Additionally, as we have reported in past quarters, our transaction accounts continue to experience significant growth, while our certificates of deposit have decreased $412 million over the past year to approximately 28% of deposits at June 30, 2011. Again, that's compared to 33% for the same period last year. The majority of this decline was due, and factored in when we bought Franklin Bank from the FDIC, and the Texas branches of US Bank and First Bank, which were all more heavily weighted with time deposits.

Our tangible-common-equity-to-tangible-asset ratio continues to increase significantly, and is now 6.46%, up from 5.19% in the same quarter last year, all because of strong earnings that the Company has produced. Our team is actively calling on existing customers and new customers and knocking on doors. Over just the last 60 days, we have made contact with 6,000 customers. We intend to take advantage of these challenging times for a lot of banks, and continue to grow our bank with our healthy, strong balance sheet.

Again, we owe all of our success to our team of associates and Board members who have helped grow the Company in the right direction with all of their hard work, insight, and dedication. And for that I say thank you. We would also like to thank all of our customers for their business and loyalty to the bank. Thanks again for your support of our Company.

Let me turn over our discussion to David Hollaway, our Chief Financial Officer.

Thank you, David. Just a few more details on the financials. Net interest income for the 3 months ended June 30, 2011, was $83.6 million compared with $80.6 million for the same period in 2010, an increase of $3 million or 3.8%. Non-interest income increased $234,000 or 1.8%, to $13.53 million for the 3 months ended June 30, 2011, compared with $13.296 million for the same period in 2010. Non-interest expense decreased $535,000 or 1.2%, to $42.514 million for the 3 months ended June 30, 2011, compared with $43.049 million for the same period in 2010.

The efficiency ratio was 43.6% for the 3 months ended June 30, 2011, compared to 46% for the same period last year. Our capital ratios at June, 30, 2011, reflect a 7.24% Tier I leverage ratio, a 14.72% Tier I risk-based ratio, and a 15.93% total risk-based ratio. Our bond metrics at June, 30, 2011, reflect a weighted average life of 3.1 years, an effective duration of 2.9, and projected annual cash flow of approximately $1.2 billion.

With that, let me turn over the presentation to Tim Timanus for some detail on loans and asset quality. Tim?

Thank you, Dave. Our non-performing assets at the quarter ended June 30, 2011, totaled $12.68 million or 0.35% of loans and other real estate, compared to $12.888 million or 0.36% at the end of the first quarter of this year. This represents a decrease of 1.6% from March 31, 2011. The June 30, 2011, non-performing asset total was made up of $3.824 million in loans, $15,000 in repossessed assets, and $8.841 million in other real estate. As of today, $2.146 million or 17% of the June 30, 2011, non-performing asset total are under contract for sale, but there can be no assurance that any of these contracts will close.

Net charge offs for the 3 months ended June 30, 2011, were $1.229 million, compared to net charge offs of $1.524 million for the 3 months ended March 31, 2011. This represents a 19% decrease. $1.4 million was added to the allowance for credit losses during the quarter ended June 30, 2011, compared to $1.7 million for the first quarter this year.

The average monthly new-loan production for the quarter ended June 30, 2011, was $118 million, compared to $101 million for the first quarter of this year. This represents a 17% increase. Loans outstanding at June 30, 2011, were $3.665 billion, compared to $3.573 billion at the end of the first quarter of this year, representing approximately 10% annualized growth. The June 30, 2011, loan total is made up of 43% fixed-rate loans, 25% floating-rate loans, and 32% variable-rate loans.

I'll now turn it over to Dan Rollins.

Thank you, Tim. As you have heard, we are very proud of our team and the efforts they exhibit each day. Our loan and deposit growth plans are working, and we believe we can continue to build shareholder value going forward.

At this time, Lisa, I believe we are ready for questions.

(Operator Instructions). We will take our first question from the site of Jennifer Demba with SunTrust Robinson. Please go ahead.

Thank you. Good morning.

Hi, Jenny.

Question on the loan growth that you had and that you've had the last couple of quarters. A lot of it has been income residential mortgage. Can you just talk about, David, what your thoughts are on growing the commercial and commercial real estate book in a more meaningful way?

Well, Jennifer, we have talked about it, and yes, we are -- a good portion of growth was in the one-to-four family, but let me say that we still feel that that's a very good area to grow in. We've been very successful in that.

Again, we're not doing 30-year fixed rate mortgages, and probably I would say even one day if Fannie Mae and Freddie Mac are not around in the top position that they're in, I think you'll see more and more banks get into this type -- this area. But having said that, we are going to focus more probably the next quarter at trying to focus more on commercial and C&I and maybe come up with many pricing products for that area, too, to try to increase that area of growth.

Okay. And can you talk -- your securities yield has bumped up a little bit. Can you talk about what you're buying?

You know, I think that -- again, Dave may want to jump in on this too -- but again, we're not really buying anything different than we've been buying. Again, that majority of our portfolio is made up of Fannie Mae and Freddie Mac mortgage-backed securities. You know, we're trying to keep the average life of around 3 years.

Dave, you may want to jump in. Maybe the amortization has slowed down a little bit or something.

Yes, you know, when rates drop off -- back 6 months ago when rates dropped off, the pre-payments picked up, which then accelerated the amortization. With rates turning up just a little bit, that has slowed down, so the amortization slows down a little bit. So, nothing real significant in there in terms of what we're buying, in fact, in the yield.

Just slowing down a little bit because of interest rates and causing the rate and yield to increase.

Okay. Thanks a lot.

And our next question comes from Ken Zerbe with Morgan Stanley. Please go ahead.

Thanks. So, obviously you said the strong growth in the resi mortgage portfolio, would you mind just going over the, I guess, the profile of who your typical resi mortgage borrower is and how that, if any, overlaps with your commercial portfolio? Thanks.

It's a good question. And I should have pointed it out with Jennifer when she asked the question.

You know, when we're making 1-to-4 family residential long loans, we're doing it to people in our market. It's not coming from a mortgage company. These are loans that are generated within the banking centers, and I would say that every 1 of the loans that we make is usually a customer of ours, and if it's not, we get them to be customers.

I would say -- again, this is an approximate number -- but I would say 80% to 90% of every loan that we make in the 1-to-4, we turn them into a customer with their checking accounts, and then we try to cross-sell car loans. We also try to cross-sell their business loans and their commercial loans at the same time. This is really a product that we have used over the last 15 or 20 years to really develop long-term relationships.

Our experiences or my experience has been that usually when you finance a home for somebody, it's just a lot different. I mean, there seems to be a lot of loyalty when you finance a home for an individual. And they generally, if you do a good job at it, they generally will bring you their other businesses going forward.

All right. That helps.

Then just in terms of the outlook for acquisitions and how that plays into the $1 billion of potential loan growth, I know there's probably some trade-off there, but getting to your $1 billion, are you making the implicit assumptions that acquisitions are less likely going forward, or maybe just comment on the outlook for M&A going forward? Thanks.

Ken, you know, probably, in the past we've been known as a serial acquirer, some people said. Again, we haven't done a deal in some time. On the other hand, I would just tell you we will make a deal, it's just, again, I don't consider this all bad because in the past, we'd be in conference calls like this and everybody would say, well, you didn't grow the bank organically, you know? And we'd say, well, we did grow organically, but it's hard to see when you are making an acquisition all of the time.

On 1 hand, I think it's been kind of nice. We've been able to show the analysts and the investment community that we can grow the bank organically and we have continued to do that. But having said that, there's no question we will -- we're still in the game of acquiring banks.

Let me clarify for you, Ken, your specific question, I think was, is our $1 billion loan growth goal, does that include acquired loans at some point? The answer to that is, very quickly, no. Our $1 billion loan growth initiative was $1 billion of organic loan growth between the end of last year and the end of 2012, outside of any acquisitions. So, any acquisition would be on top of that $1 billion goal.

I guess it is more rounded. If you did a decent acquisition, does that take focus away from organic growth in order to integrate the acquisition? Or, can you actually do a decent deal and get the $1 billion at the same time?

That's a great question, Ken, and I would answer it like this.

If we're buying a good bank or a clean bank, it shouldn't detract us from -- it should not detract us from building and growing the portfolio the extra $1 billion. If we take on a bank that's probably -- that we're going to have to really work very hard in cleaning it up, that probably would affect us to some degree.

That makes sense. Okay. Thank you very much.

And our next question comes from Michael Rose with Raymond James. Please go ahead.

Hi. Good morning, everyone.

Hi, Mike.

I wanted to go back to the loan growth guidance again. Based on my math, it looks like you would need to average about $125 million in loans outstanding over the next 6 quarters. So, with the production at $118 million this quarter, do you expect kind of loan growth to ramp, and what do your pipelines look like? You know, outside of, obviously, resi mortgage, where is that going to come from, do you think, and is there any geographic flair to that?

I think we said when we first came out with our loan growth plan, Mike, that we were going to need some tail winds at the back end of this to get there. I think when we came out at the beginning, clearly economic conditions are going to drive some of this. We are ramping up, but your math, I think, is fine. I think that's right. I think our expectation all along was we were going to need some economic tail winds and we were going to have some back end load to get there. So, I think our expectation is we want to continue to see loan growth accelerate.

Okay. And If I can on the margin, you know, I think it's continued to surprise some people as you've grown loans. Do you have kind of a near-term outlook based on what you see for the NIM? Thanks.

The response is pretty much what we've said the last few quarters, that again, a pretty -- a stable margin look with -- depending on how much good loan growth we can have, would give it a positive by itself. I think if you look over the last 3 quarters, that movement that you see, that dynamic's in play. All that we're doing continues to apply as we move forward. So, stable margin with some hopefully positive bias up, just depending on the loan growth.

Okay. Thanks, guys.

Thank you.

We'll take our next question from Jon Arfstrom with RBC Capital Market. Please go ahead.

Thanks. Good morning, guys.

Good morning, Jon.

Just a follow-up on that. How's the loan pricing environment? I heard it's a little more competitive in the middle market and above in Houston, but curious what you're seeing on both commercial real estate and commercial.

Jon, David.

I think it is becoming more competitive, but it's probably 2 categories. In the smaller areas, I mean, it's probably not as competitive, but when you start looking at loans that are probably $2 million, $3 million and above, it does become more competitive.

We've seen some of the larger banks, especially -- the larger the loan, the more competitive it is. I mean, if it's a real large loan, we've seen some of the larger banks start throwing out LIBOR plus 175. So, it's getting real competitive.

On some of the smaller loans where a lot of the banks have had floors in the past of maybe 5, or 5.5, we're seeing some of those floors drop at the same time. So, I think the market is becoming more competitive.

Tim, you may want to jump in. You're involved in the loan process a lot with me, also.

I think what you just said is completely correct. The competition is spotty. It's certainly not across the board, but we are starting to see some of the larger banks come back into the market with aggressive pricing, and it typically is the larger loans.

I would also say on some of the municipal deals that we've been bidding on, there seems to be more and more municipal deals that are coming out. I guess the cities and states are in more of a need of money. Some of the larger banks there have been extremely competitive in that area.

That's correct. And then, actually, some of the smaller, local banks have been very competitive there, also.

Right.

Tim, as long as you're front and center, you mentioned 6,000 customer contacts. I think you said in the last 60 days. Is that primarily commercial contacts? And I don't know if you have it, but how would that compare to maybe, you know, what you saw a year ago, perhaps?

Jon, Dave Hollaway. I can jump in.

That's just an internal program that we start up. That's a calling on all of our customers. It's not focused on commercial, retail, or anything like that. That's just a general overview program that we need to get in front of all our customers, make sure we're doing what we do, and then ask for some more business. It's about developing and continuing to develop a full relationship.

I think probably the biggest difference is, David, that we're monitoring now how many calls are being made, and people are being rewarded based on what they're doing in the production in their calls.

Right. But the answer is not specific to any one type of customer.

Okay.

And then Dan Rollins, just a question on M&A. Give us an idea of the quality of the potential acquisitions that you're seeing now. And I know we've discussed this on probably every call for the last 7 or 8 years, but any preference for size of transactions that you're looking at right now.

I think our preferences are the same as they've always been. They are a little different, depending on who you talk to in the room, here. David has always had a preference for a larger transactions. I think we can do smaller transactions. I think we all like good transactions, regardless of what size they are.

As we look out there today, we do think there's some opportunities for us. We think there are opportunities for us both within our direct footprint and potentially as neighbors just outside of our footprint, and so we continue to hopefully be able to reel some of these in. The pricing expectations are still pretty high out there, on some cases, but I think we'll be able to find a way to make it work for us.

Okay. You've always been able to get these deals done, even when pricing expectations have been high, and I guess I'm curious if -- we've seen commercial real estate mend, we've seen C&I loan growth pick up for the industry. Just curious, are you getting to the point where you're more comfortable with regular weight type deals?

I think the Texas economy is continuing to rock along here, relatively healthy. There's not been any glaring real estate weaknesses. We're a real estate lender, you know that. I don't think we see any big, huge holes in the real estate market anywhere in the state of Texas, and so that benefits us.

Okay. All right. Thanks a lot, Dan.

Thank you.

And our next question comes from Brett Rabatin with Sterne. Please go ahead.

Hi, guys. Good morning.

Good morning, Brett. How are you?

Good.

I wanted to ask, on the fee income side, if you could address interchange and just if you view what's going on with the industry an opportunity, perhaps, and if you might have any mitigating efforts on the debit card income?

Yes, Brett. Dave Hollaway.

I'm working those questions backwards. Absolutely, we're looking at what are the various things we can do to mitigate this impact when it comes. Obviously, in a big picture way for everybody, when you are over $10 billion, it's hard carded that you are impacted.

Obviously, even if you are under $10 billion to think that you're going to escape the impact of this is probably a little naive. But, I think it gives us a little bit of time to look at these mitigation strategies that we have.

To answer the first question, again, if we were over $10 billion and looking at the interchange and how it would affect us on a dollar basis on the debit card income, you're talking about $5 million for us. And that's pre-tax, obviously.

So, yes. We are looking at that very hard, and over the next 12 months as we see this go into real time, we will have to come up with some plans, and we do have various things we're looking at. But hopefully, the bigger banks will get out first and put some of these charges out there and kind of create -- get over the head winds before we have to come out.

So, we want to play follow the leader?

We do. We don't want to be the leader.

We have a little bit of time, because we're not $10 billion in size yet. Right there, but we're not there yet, so we probably don't come under the same guidelines.

Correct.

Okay. Thanks for the color.

Thank you, Brett.

We will take our next question from Chris Marinac with FIG Partners. Please go ahead.

Thanks. Good morning, everybody.

I had the same question that Brett did, so I'll ask a different 1, which is about good will. David or Dan, as you look at various acquisitions, how important is good will today compared to four or five years ago in looking at M&A? And is there any brackets around your tolerance of either payback time or how you think through it?

You know, I'll take it first, Chris.

We've been doing this for a long time, and to me, good will is a number. But, when we make an acquisition, we really look at the cash flow of what we're buying and how long it will take to us -- how long will it take us to get our money back. So, good will has never been as big of an issue for me.

When I'm buying something, I want to see how fast it is going to take to get my money back, even personally. And so that's been a driver for us. Cash flow's been the driver for us.

Now, I know a lot of people feel differently about that. In fact, when you see we're trading at our tangible capital -- what we're trading in tangible capital, and there's some people that question that. But at the same time, we try to make good deals when we get our money back, anywhere from 6 to 8 years, basically.

Franklin was 2?

Yes, Franklin we got our money back in 2. To me, it's a dynamic that I have seen that has worked for the last 15 or 20 years. We started off when -- we see earnings right now at $3 a share.

You could have gone back 10 years ago, and I don't have the numbers in front of me, but it might have been $1 a share. So, this strategy has really increased our earnings. It's really let us do what we've been able to do. So, I think that's just the way to approach it.

I think that's right. Does that answer your question, Chris?

It does. I was going to make, I guess, kind of a rhetorical question that opportunities and the ability to get returns are, I'm presuming, wider today than if you'd go back 5 years ago.

Absolutely. I think clearly pricing metrics, when you look at multiples and you look at the good will that people are generating when they are doing transactions, is lower. You know, the marks you are going to take can increase good will some. I think there's good opportunity for us.

The question is, you know, as David said, what we're looking for is, you're really buying an earning asset, you're buying an earnings stream in our modeling, and we want to make sure that the earnings are going to be there.

Very good, guys. Thanks a lot.

And our next question comes from Scott Valentin with FBR Capital Markets. Please go ahead.

Good morning. Thanks for taking my question.

Good morning, Scott.

Regarding the margin, you guys mentioned kind of a stable margin, maybe upward bias on the loan growth. How much more room is there to cut deposit costs or funding costs to kind of help out with margin?

Yes, I mean -- this is Dave Hollaway. I'll take that first.

We do still have some room to do that if it's an absolute must. I mean, again, we are in a competitive market, but if rates are going to stay down the way they are, most of our competitors are starting to drop their rates significantly. So, the short answer -- and I think David wants to jump in -- I do think we have some room if we need to.

Yes, Scott. Really, and I've mentioned this before, in the past, when we're trying to reward our customers that have been with us for a long time, in the past, a lot of times when interest rates have gone up rapidly, sometimes we have not been able to go up on interest that we pay as quick or as much as some of the competitors have done in the past.

Now we've been in a position where our earnings have been good and we're meeting our earnings expectations, and so we haven't had to push it. But if you really look at the rates that we're still paying on 6-month CDs and 1-month CDs and money markets, we're probably still 15 or 20 basis points more than we really probably have to pay right now.

So, yes. The answer to your question is, we do have some room to cut if we need to if rates stay low.

That's very helpful.

And then, just a philosophical question, I guess. The trade-off between maybe -- and this doesn't appear apparent yet -- but looking forward if we stay in a low-rate environment, margin versus that interest income, and to the extent that you guys are getting good loan growth, but if loan growth were to slow for some reason, would you guys continue to grow the securities book and just take the margin compression to drive earnings, or would you guys think maybe not grow the balance sheet, maybe, I don't know, do something else with the capital?

To me, it's not even a question. I have complete confidence that we'll continue to grow the loan portfolio. We've been, again, doing this for 20 years, and we've always been able to grow the portfolio.

Even good times and bad times. If we are focused on this, our loan to deposit ratio is so low and we have so many customers, and we have a good reputation out in the communities, we can continue to grow.

I guess I wasn't following your exact question. I think, you know, when you look at the first quarter, deposit growth outpaced loan growth in the first quarter, so both the bond portfolio and the loan portfolio both increased in size in the first quarter, but because deposit growth outpaced loan growth, the bond portfolio grew.

This quarter, deposit growth was well under loan growth, and so that changes that dynamic. I think as we look forward, we would anticipate that we would continue to grow deposits.

Well, you do grow deposits and again, I guess, if you want met just to answer exactly, you're asking the question, well what -- just what would happen if you didn't grow loans? Well, the question is, we would still go back into the bond portfolio. That's the simple answer.

That's right.

Okay. And just a final question.

On the loan growth, is it, I mean, do you think it's organic or do you think you're taking market share? It's probably a combination of both, but maybe is one way or one comprised more than the other?

You know, again, Dan, and I disagree sometimes on this. I think it's a combination. I think it's the combination of organic growth, because I think even though when you turn on the TV and the radio, everybody is saying that the end of the world is coming and things aren't as good.

We do see that our customers now -- commercial customers seem to be picking up business. Their earnings are doing better and they are expanding a little bit. So, I think some of your existing customers are growing, and so we're doing that. On the other hand, we're taking business from other people.

I think market share's a big part of that. But there is some organic growth in there.

Okay. And I imagine the market share's coming from the bigger players or some of the struggling community banks?

All of the above.

I think so. I'm seeing deals that I'm going to call on a customer next week that's really from a bigger regional bank. It's a larger credit, $20 million. At the same time, I see a credit coming from a small competitor that's maybe $1 million. I think the answer to that is we're hitting all fronts, really.

That's right.

Okay. Thanks for the color.

Thank you.

And our last question comes from Matt Olney with Stephens. Please go ahead.

Good morning, guys.

Good morning, Matt.

Thinking about loan growth again, can you give us any more color on the pace of loan production during the second quarter? It seems like you said back in 1Q got off to a slow start but then picked up toward the end of the quarter.

I think we were relatively even across the quarter. I don't know that there was any big grow, and Tim's turning to check numbers right now, but I don't think there was anything that would say 1 month was better or worse than the others by any huge margin. It was all relatively close.

Is that right, Tim?

That's absolutely correct. There's not a whole lot of difference between the 3 months.

Also wanted to ask about the expenses. Looked like the FTE head count was up slightly. What are your thoughts on that going forward?

I think the head count, you know, we got down to probably as -- we cut as much as we can. We're hiring additional people right now. We're getting an opportunity, but again, that's considering everybody. It's not a lot, but we're still focusing on hiring people that -- what we have an opportunity people are asking to interview with us, and we're hiring additional lenders and stuff like that. We're still going to grow the bank right now, so to do that, we need to bring some of those. We're going to take advantage of the situation while we can.

I think we've hired 2 or 3 new lenders during the quarter. Probably 6 or 7 or 8, year-to-date. They're coming from smaller community players, and they're coming from larger regional and national players.

So, as David said, we're picky. We like to pick people that are good, customer-focused generalists, general lenders that will fit well within our footprint and fit well within our processes. And I think we're doing that 1 at a time. There are some good opportunities out there. I would anticipate that we will hire some more in the coming quarter.

I wouldn't count on us hiring 10 or 15 people at a time. That's really just not our style. It's all been onesies and twosies, and we look at everybody on an individual basis.

But our head count's up 3. We went from 1,672 to 1,675. It's relatively flat, would be my answer to that.

And you already addressed the interchange question a few minutes ago, but some of your peers have talked about the new FDIC guidance on overdraft and asset fees that could be impactful on some of their revenues. Is it also something that you're seeing from your perspective?

Yes, this is Dave Hollaway.

Yes, I agree. I think all those new rules came down again and we've had to make some changes to make sure that we're in the spirit of things. But overall, that's not going to be as material to our numbers, because all of the real changes have happened over the last year or so.

So, you can see that in our -- when you look at our real numbers, you can see it's already impacted us. So, I think we're probably ahead of that curve somewhat. But there will be a little bit of it. I don't think it's a material amount.

Great. Thanks, guys.

Thank you, Matt.

And we have no further questions at this time.

All right. Thank you, everyone, for participating. We look forward to talking to you as we're out on the road over the next few months. We appreciate the support of our Company. Thank you very much for participating.

And this concludes today's teleconference. Thank you for your participation. You may now disconnect.