Prosperity Bancshares Inc (PB) 2013 Q1 法說會逐字稿

Good day, everyone, and welcome to the Prosperity Bank first quarter earnings call. At this time, all participants under a listen-only mode. Later, you have the opportunity to ask questions during the question-and-answer session. (Operator Instructions). Please note this call may be recorded, and I will be standing by should you need any assistance.

It's now my pleasure to turn the conference over to Charlotte Rasche. Please go ahead.

Thank you, Zack. Good morning, ladies and gentlemen, and welcome to Prosperity Bancshares first quarter 2013 earnings conference call. This call is being broadcast live over the Internet at www.prosperitybankusa.com and will be available for replay at the same location for the next few weeks.

I'm Charlotte Rasche, Executive Vice President and General Counsel of Prosperity Bancshares; and here with me today is David Zalman, Chairman and Chief Executive Officer ; H.E. Tim Timanus Jr., Vice Chairman; David Hollaway, Chief Financial Officer; Randy Hester, Chief Lending Officer; and Chris Bagley, our Chief Credit Officer.

David Zalman will lead off with a review of the highlights for the recent quarter and an update on our recently announced merger and acquisition activity. He will be followed by David Hollaway, who will spend a few minutes reviewing some of our recent financial statistics, and Tim Timanus will discuss our lending activity, including asset quality.

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, Zach, or you may email questions to investor.relations@prosperitybankusa.com.

I assume you have all received a copy of the earnings announcement we released early this morning. It not, please call [Tracy Elkowitz] at it 281-269-7221, 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 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 the 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 the call over to David Zalman.

Thank you, Charlotte. I would like to welcome and thank everyone for listening to our first quarter 2013 conference call.

Some of our successes this quarter include our quarterly earnings increased to $49.305 million in the first quarter, compared to $36.487 million for the same period in the prior year, an increase of $12.8 million or 35.1%. Our diluted earnings per share were $0.86 for the first quarter of 2013, compared to $0.77 for the same period in the prior year, an 11.7% increase.

Our loans increased in the first quarter of 2013 by $83.084 million, which represents a 1.6% increase or 6.4% on an annualized basis compared to loans at December 31, 2012. When comparing this quarter to the same quarter of 2012 and excluding loans acquired in our recent acquisitions and the new production at those banking centers since the acquisition date, we showed an organic growth rate of 5.5%. And,again, excluding loans acquired in our recent acquisitions on a linked quarter basis, we had an annualized growth rate of 6%. Our non-performing assets at March 31, 2013, were 14 basis points of quarterly average earning assets, one of the lowest in the industry and a sign of strong asset quality.

We continue to see strong loan demand, although we are also experiencing a high amount of loan payoffs. Overall, we believe our customers are experiencing increasing business trends as the population and job growth in Texas and Oklahoma is outperforming most other areas of the country. However, we also believe that many of our customers are unwilling to take risk, as there are a number of unknowns with respect to tax rates, government regulation, healthcare, and the general economy.

We saw deposits increase to $11.713 billion at March 31, 2013, an increase of $3.169 billion or 37% compared to the $8.544 billion at March 31, 2012. Our linked quarter deposits increased $71.623 million, 0.6% or 2.5% on an annualized basis.

As you may recall, in the fourth quarter of 2012 we saw an unusually large increase in deposits, specifically a 26% annualized increase when comparing the deposits at December 31, 2012, to those at September 30, 2012. At that time, we expected and commented that some portion of those deposits would flow into other investments. We generally see stronger deposit growth during the last half of the year and believe that much of the deposit increase at year end 2012 was related to tax planning strategies.

Despite a declining net interest margin, we have been able to increase earnings primarily because of a bigger balance sheet. We hope to offset this declining net interest margin by continuing to increase loans, keep expenses low, and identify, complete and integrate accretive acquisitions.

As you know, we have been very busy with acquisitions. We closed Community National Bank Bel Air in October of 2012 and completed the operational integration during December 2012. On January 1, 2013, we completed the previously announced acquisition of East Texas Financial Services Inc. and its wholly owned subsidiary, First Federal Bank Texas in Tyler, Texas, and completed the operational integration of that bank during the first quarter of this year.

On April 1, 2013, this month, Prosperity completed its announced merger with Coppermark Bancshares Inc. and its subsidiary, Coppermark Bank, a $1.3 billion bank headquartered in Oklahoma City. We are currently working on the operational integration and expect that it will be completed this month. Actually, next week, I believe.

We continue to hear from bankers about the added regulatory requirements that are impacting their profitability as well as the cap on debit card fees and stress testing applicable to larger banks. We continue to see a declining net interest margin for most banks, and we believe these factors combined with management and board fatigue will continue to create opportunities for those that have the ability and the will to deal with these headwinds.

I like to say -- I would like to welcome all the new associates and customers that have joined us over the last year. We will continue to work hard for your support.

Besides a number of other honors we have received over the years, we were recently recognized by SNL, a prestigious provider of bank information, that we ranked as the second best regional bank in the nation based on their research. Honors like these could not be achieved without everyone working toward the same goal.

We are fortunate to be located in a part of the country that has a growing population and job growth increasing at rates faster than many other areas. The unemployment rate in March for Texas was 6.4%, and in the Permian basin area in West Texas it was below 4%. I think Houston was around 6%. This is compared to the national jobless rate of 7.6%.

The Oklahoma area is also doing very well, with low unemployment rates, growing population, and an overall positive business climate. Our goal is to continue to take care of our customers with new and innovative products at fair prices that benefit our customers and help make their life easier.

Again, I would like to thank our whole team once again for a job well done. Thanks again for your support of our Company. Let me turn over our discussion to David Hollaway, our Chief Financial Officer, to discuss some of the specific financial results we achieved.

Thank you, David. Net interest income for the three months ended March 31, 2013, was $108.1 million, compared with $81.8 million for March 31, 2012, an increase of $26.3 million or 32.1%. This increase was primarily due to a 42.9% increase in average earning interest assets. The net interest margin on tax equivalent basis was 3.42% for the three months ended March 31, 2013, compared to 3.64% for the same period in 2012 and 3.53% for the three months ended December 31, 2012.

Noninterest income increased $9.5 millionor 68.1% to $23.4 million for the three months ended March 31, 2013, compared to $13.9 million for the same period last year. The increase was primarily due to the American State Bank transaction. Noninterest expense for the three months ended March 31, 2013, was $55.8 million, compared to $40.5 million for the same period last year, an increase of $15.3 million or 37.8%. Again, the numbers were impacted by the American State Bank transaction.

The efficiency ratio was 42.4% for the three months ended March 31, 2013, compared to 42.2% for the same period last year and 42.9% for the three months ended December 31 , 2012. The bond portfolio metrics at March 31 showed a weighted average life of 3.5 years -- [second] duration of 3.5 years and projected annual cash flows of approximately $1.8 billion.

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

Thank you, Dave. Our non-performing assets at the end of the first quarter of 2013 totaled $18.133 million, which represents 34 basis points of loans and other real estate. This is compared to $13.015 million or 25 basis points at the end of the fourth quarter 2012. The increase in NPAs for in quarter represents 39% from the total at the end of December 2012.

The March 31, 2013, non-performing asset total is made up of $8.171 million in loans, $49,000 in repossessed assets, and $9.913 million in other real estate. As of today, $4.508 million of the March 31, 2013, non-performing asset total are under contract for sale, butthere can be no assurance that any of these contracts will close. These contracts represent 25% of the NPAs at March 31, 2013, that are under contract for sale.

Net charge-offs for the three months ended March 31, 2013, were $315,000, compared to net charge-offs of $1.913 million for the first quarter of 2012. $2.8 million was added to the allowance for credit losses during first quarter of 2013, compared to $3.55 million for the fourth quarter of 2012.

The average monthly new loan production for first quarter of 2013 was $141 million, compared to $187 million for the quarter ended December 31, 2012. The average monthly new loan production for the entire year ended December 31, 2012, was $138 million.

Loans outstanding at the end of the first quarter of 2013 were $5.263 billion, compared to $5.18 billion at December 31, 2012. The March 31, 2013, loan total is made up of 47% fixed rate loans, 32% floating rate and 21% variable rate.

I will now turn it over to Charlotte Rasche, who will coordinate your questions.

Thank you, Tim. At this time we are prepared to answer your questions. Zach, can you assist us with questions?

Absolutely. (Operator instructions.) We will take our first question from John Pancari with Evercore Partners.

Hi, this is [Rahul Patel] on behalf of John. A quick question on the loan growth and the demand that you are seeing right now. If I exclude the loans coming in from the East Texas deal that closed in Q1, it looks like the period end loan balance declined 1%. Can you discuss your loan growth expectations going forward and then maybe quantify the pay down activity that you saw inQ1 versus last quarter? Thanks.

Yes, I will take that. This is David Zalman, and that's a good question. I think if everybody didn't really understand the question, is when you take out the East Texas loan, what did it really look like?

Well, actually, we're actually doing better with the acquisitions than we have done on other acquisitions. I think if you total all of those up, you see about a 13.5% decline on all of the banks that are mentioned there. Some have been this for five or six months, some have been there for 15 months, but inprevious transactions we sometimes have gone as high as 20%, 21% reduction loan.

So at the 13.5%, where you would like to have 100%, that's still doing pretty good for us. And, again, you have -- when banks merge with you, you identify -- some credits are identified at the due diligence time that we intentionally manage our way out of those. Sometimes the terms and the conditions are different than what the customers have been used to.

Again, there's new processes the lenders have to learn, and there's a required learning curve in this. So all of these play into the reduction in the loans that you get through a merger like that. But usually between year one and two, things start gelling and you return to a growth mode. I hope I answered your question. Tim, did you have something?

I will add just a little bit more. You asked about in essence the payoffs during the quarter. While I don't have a hard number for you on that, they were significant, and they took away quite a bit from the new loans that were generated and produced in terms of what stayed on the books.

Whether that stays the case, obviously we don't know. Rates have been low for quite sometime now, and a lot of the payoffs over the last year or so have been related to low interest rates and people refinancing at rates that we were not comfortable with exposing our shareholders to. So some of that undoubtedly will continue.

Competition is aggressive. It's becoming maybe a little more aggressive than it has been. That's an issue.

But the other side of the coin is, as we said in David Zalman's remarks, the economy is good, basically, where we are, andthere is economic activity that's reasonable, and we anticipate that that's going to continue forward. A lot of it is based on the energy industry, but there's no reason to think right now that there are ill headwinds in that regard. So we are reasonably optimistic that we will be able to continue to grow loans at some kind of a reasonable pace.

Okay. That's helpful. And a question on NIM. It looks like the accretion was down modestly linked quarter. It looks like the track was around -- on NIM was around two-fifths in Q1. How should we look at accretion going forward, especially given that the Coppermark deal closed early in the quarter? And then maybe you could discuss your NIM expectations for the year.

I will take that one. First, this is Dave Hollaway. A couple things. And I assume when you say accretion, you are looking at the fair value accretion on the loan? [Aside from inflation?]

Right.

It seems a little bit, but we would love to have the crystal ball where you could -- it would be smooth quarter after quarter, but in reality that's just a bumpy number. But what you do expect is over time for that book of business that accretion should start trending down a little bit. Now, how it acts quarter to quarter, I don't know that I can tell you that.

The second part of it is you are absolutely right, Coppermark is now part of the team effective April 1 . There will be a fair value mark associated with that. What that number is today, we can't tell you, and that analysis is still ongoing, but it shouldn't be materially different than from the other transactions we have done, and so that's going to have, a positive impact on the NIM going forward.

But if you step back and kind of look at the big picture of what's the expectation of a NIM, again, we are in this low rate environment. There's obviously pressure on the margins from different avenues, but it is a good point to look at Coppermark and what they bring to the table. That part of the balance sheet will actually be a positive to the NIM.

So I guess a long winded answer to your question, but the way I would conclude it is we might see some pressure on the margin, but I don't know -- with Coppermark being put into the numbers as we go forward, over at least the next couple of quarters, maybe down a little bit, maybe up a little bit, maybe steady. That's probably the best that we can give you.

All right. That's helpful. Thank you, guys.

We will take our next question from Jefferson Harralson with KBW. Please go ahead.

Thanks. I was going to follow up on the accretable yield question. You told us there was $14 million of loan accretion. Was there a -- similar to past quarters, a security yield offset, to figure out the total [persus] accounting impact on the spread income this quarter?

Absolutely. In fact, I think there's a table in there, but that's absolutely right. If you go back and kind dig through the numbers, it's exactly right. The amortization related to that book of business is about the same that you have seen in prior quarters, and [it so happens] there wasn't a lot of material change.

I would also make an observation, if I could step back, just look at the bigger picture. Specific to net amortization on that bond portfolio, you can see -- forget ASB for a second, that part of the book of business looked at big picture total, and you can see in the press release you will notice that the overall amortization dipped a little bit this quarter, because we saw basically in March a slowdown I guess in the prepayments, which helped us from an amortization perspective. And I think, if you're looking at the quarterly numbers, you can see it decreased roughly $1 million, and a big chunk of that we saw in March.

Now, the question becomes does that continue? Do we continue to see this slowdown payments, which then translates into less amortization going forward, and again, I'm talking in the big picture here at this point.

All right, and just a follow-up with that. How much did East Texas add to the accretable yield that's going to roll through over time, and what's that balance at the end of the quarter of the accretable yield that is going to roll through over time?

That's a good question. I don't know that I have the number, but it's going to be a relatively smaller amount. Again, I don't have the exact number, but I could probably get you close if you would think about it this way, the current numbers that we have published the discounts that you see on the portfolios are 5%, 6%, 7%, something in that range. That's probably not a bad percentage if you are just doing back of the envelope on that book of business.

I think the total -- the total discount relative to that bank is about 10% or less than the total discount.

Okay. Thanks, guys.

And we'll take our next question from Jon Arfstrom with RBC Capital Markets. Please go ahead.

Good morning.

Good morning.

Just a couple follow-ups. Maybe a question for Tim or Dave Zalman, but where do you expect the American State loan balances to bottom? It seems you are maybe a little more optimistic on that.

Tim may want to jump in again. You almost need a cryptal ball for something like that. But I feel like they are starting stabilize now. And again, we did the operational integration on that probably in June of last year. So we are coming up to almost a year now pretty quick. So hopefully we will start seeing that change and down the road even grow that portfolio, but right now it may still have a little bit more declining balance. Tim, do you have a --

I think that's essentially correct. There are, I guess, two dynamics at work there. One is the portfolio that we put on our books.

There are loans in that portfolio that are performing loans. They are not credit issues. But some of them are structured in such a way that it's not normally what we would do on our side. And as those loans mature with remaining unamortized balances, we are letting some of those loans move out of the bank.

So they'll be a little bit of a continuation of that. It's not extremely material, but I think you should recognize there will be some more of that. And I think more importantly than that, and this is typical of all acquisitions really, it takes the loan staff a while to -- I guess the best way to it is get used to the way that we do things. And they have a lot on their plate initially just understanding how we operate, the way we would normally do something. There are a lot of operational issues that they have to deal with.

So their eye has probably not been on the production ball the way that it will eventually end up. And we see that starting to turn right now, but it's probably still a few months out before those loan officers can get in full production swings. But that's normal. We see that with all acquisitions. So hopefully that gives you a little more color.

Yes, I would just add to that. I mean, I don't think it's unusual at all whenever a bank merges with us, especially the size of American State Bank, the first thing all of your company -- or competitors are out there trying to call on your customers, and you are really playing a lot of defense more than you are offense.

But again, these guys are really good. The tide should turn in the near future. And so we're --I think they are all going to jump on board, the majority of all the staff is there that had joined us in the lending area. So we are excited about it. I think it will be good going forward. It just takes some time, and that's natural.

That helps. Maybe, Tim, just one follow-up on the pace of loan growth. I appreciate the average monthly production numbers. Any change in the pace of activity? Most of the other banks are reporting that it was soft in January, and it started to pick up throughout the quarter. I'm curious if you saw the same thing.

We did. Obviously, the first quarter of this year was not anywhere near as dynamic as our last quarter of 2012. But our production for that last quarter of 2012 was basically off the charts compared to what was normal. As I indicated, we did an average of $141 million this quarter, and the average for all of last year was $138 million.

And if you look at where we have been over the years, just going back to 2009, for example, our average was $75 million that calendar year. It went to $80 million in 2010. It went to $104 million in 2011, and as I said, it was $138 million in 2012. So over the last four or five years, we have reflected steady growth in that regard.

The nemesis has been the pay downs over the last couple of years. And we talked about that a little while ago. But, yes, we did see a little bit of a slow down at the beginning of this quarter. Once again, the overall economy where we operate is good. So we have every reason to believe that we should be able to sustain and even pick up some loan growth volume.

Okay. All right. Thanks for the time.

Thanks, Jon.

And we'll take our next question comes from Brett Rabatin with Sterne, Agee. Please go ahead.

Hi, guys, good morning.

Good morning.

I wanted to get a little more color if I could on the securities portfolio and just talk about how much you guys have in maturities in the next couple of quarters. And, David, what you are doing in the bond portfolio, given where rates are today, what you are thinking about the yields going forward.

I will start off. This is David Zalman, Brett. Basically our model hasn't changed at all. If you looked at our numbers, you saw we had a $400 million, $500 million position -- borrowing position, and really that evolved for two reasons.

One, if you remember -- I don't know which month it was in this first quarter, but the ten-year treasury started bumping around 2% yield, and at that time we really jumped in the market. And we thought that those were -- we started getting better yields. We bought $500 million or $600 million at that time.

Since then we haven't bought any. David Hollaway can probably give you what our pay downs are here in a minute. I don't think that's changed. Usually that's running $2 billion a year.

About $1.8 billion projected now.

About 1.8 billion projected. So we are seeing pay downs kind of like where they were.

Going forward, we really had hopes that interest rates would go up. That's a two-edged sword. One, we have a pretty big gain in our [overall] portfolio, $160 million, $170 million, something like that. So you lose the gain when the rates go up. On the other hand, hopefully it would improve our net interest margins and our earnings would go up. We were hoping about -- we looking forward to that.

Things in March really came back the other way. It kind of -- we got some cold water poured on where we saw the ten-year treasury dump to drop -- it went to 170. I think it's hovering above that right now.

But I think most people still believe and you are starting to see more of the fed governors discuss the idea that probably, at least by the end of this year, that we probably -- they are going to have to pull out of the market of $80 billion a year in mortgage -- $80 billion a month in mortgage-backed securities. And if that happens, I think you could see as much as a 1% increase in interest rates, maybe not this year, but maybe next year. And I think that would be good for everybody.

Okay. So the duration of the portfolio is still probably around three?

I think it's a little over three.

3.5.

3.5 years. What's so important, and I think that people -- you guys, like you realize it, but right now with our net interest margin at around -- what is it, Dave, 3.4% or something like that, compared to where we usually run at 4% to 4.25%, if the net interest, if we could ever get that going back the other way and this is probably what everybody says, it impacts us about $70 million a year after tax. So it's a big number if we can ever get the net interest margins back up.

Okay. Great. Thanks for the color.

Yes.

And we'll take our next question from Brad Milsaps with Sandler O'Neill. Please go ahead.

Hey, good morning.

Good morning.

Just a question on Coppermark. David, I know you mentioned that you were completing the integration next week, but I think you guys initially disclosed maybe 25% cost saves. Do you still feel comfortable with that?

The reason I ask is looking at the call report, it looks like maybe their expenses were almost two times what they typically were on a run rate basis in their first quarter. And it looks like maybe they -- maybe paid off a few things. The interest expense is a lot higher as well. I wonder if you could comment, did they hit the ground running at a faster rate than maybe initially thought because of some of those moves?

I was going to answer that, but David Hollaway is looking like he's shaking his head so much, I'm going to throw that to him.

I will jump in first. This is Dave Hollaway. Absolutely right. I mean, if you recall in previous conference calls, we talked about how the American State Bank folks jumped ahead of us and were doing a lot of these things before we got there. The Coppermark folks are kind of in the same boat.

They've have really asked -- come to us and said what can we do to help month of this along? So that's exactly what you are seeing in the first quarter. They have done some things that we probably would have done after April 1 when we signed, but they did some of those recognition of expenses then and some other things that they have done. So, yes, the answer -- the direct answer is, yes, they moved a little quicker than we might have moved, but that's a good thing.

And so as we look forward, those cost saves, maybe they would be there as we start moving forward. ButI would caution you, they are still at a higher run rate because they're -- we are running two sets of books here which will change by the end of April, and then just takes -- there's just a few more things that we will have to touch and help them with as they move forward. But absolutely they have been working with us.

I would just add that the person on our team that's really helped Coppermark is a guy named [Mike Guest] who is the President of American State Bank when we merged with them and is now their Chairman over there. And he's really helped them and gone and done a lot of the same things did he over at American State Bank. So he's been extremely helpful, and that'sthe performance -- why you are seeing that type of performance.

In terms of total cost saves, do you still feel comfortable with 25%, or doyou think as you kind of have gotten your arms around a little more you can do better than that?

Well, I would say we always tell you guys 25% but we always try for more than that.

Sure. Absolutely.

So we lay the 25% out there, but we always -- in the general part, we try to do much better than that. Or not much, but better.

Yes, understood. Great. Thanks for the color.

We will take our next question from Jennifer Demba with SunTrust Robinson.

Thank you. Good morning.

Good morning.

David, I'm curious about your acquisition pipeline, and how Dan's departure has impacted your ability to work on that pipeline on a weekly and monthly basis.

Well, Jennifer, I would say that our pipeline is very busy. I think that with Dan leaving -- he definitely added a lot to the Company as far -- especially dealing with a lot of the analysts and the investment communities, so that obviously takes time. But a lot of his duties were spread to probably the five people in this room sitting next to me; Charlotte, Tim, Dave, Chris, Randy. So all of that has been good.

Dan usually focused really sometimes on the smaller deals, and I generally did the bigger deals to begin with. So I would say that for the most part we have a lot on our plate, and we are looking at a number of deals, and it hasn't slowed us down at all quite frankly.

Okay. And are you seeing a relatively larger number of bigger bank opportunities than smaller ones right now? Or -- and has Oklahoma really opened up for you after the Coppermark transaction?

First of all, the first part of your question is, yes, we are looking at bigger deals right now. There's a few bigger deals out there that we are looking at and talking about. I would say that we are still primarily focused for Texas acquisitions. That's our first and primary deal.

On the other hand, if something in Oklahoma did come up, we would certainly look at that at the same time. And, again, we hope to grow the Oklahoma franchise, but there are some bigger deals out there right now that we are considering and looking at. It doesn't mean at all that we will ever get them, and you never know. You talk a lot, so you never know.

Do you feel comfortable -- you said you'll do operational conversion for Coppermark in the next couple of weeks. Do you feel comfortable starting on another one right now if that opportunity were to present itself?

Well, generally -- I promised all of our people that we wouldn't do anything for six months, butthey laughed when I told them that to begin with. And probably -- the ideal for us would be growing from $9 billion last year to, with Coppermark today, what is that, $16 billion or so. That's a huge jump, and for the most part you would think -- your ideal situation is probably we need to back up and just look at this for six months or so.

At the same time, you really don't want to pass -- for us to jump into a deal right now, it has to really look very attractive to us. It has to make a whole lot of sense, and so if we see a deal like that, we just don't want to miss it. So sometimes you can't always have it like you want it.

The main thing that we have to know and that we have to reassure the regulators and the investment community and people like you is that if we do another deal, that we really have our backrooms, our operations together and that we can handle it. And at that time, where preferably you wouldn't want to do that and you would like to have things rest for six months, I think we have an extraordinarily good team that really knows what they're doing and it probably would push the departments a little bit, but I think we could handle it.

Thank you.

And we'll take our next question from Chris Marinac with FIG Partners.

Yes, David or Tim, I was wondering if you could remind us on average loan sizes and if those have been changing over the last couple of quarters or if they are roughly the same as the past.

It's tipped up a little bit, I guess. Our average loan size is about $140,000, and that's been pretty close to what it's been for a year or two now. I guess if you go back -- I can't remember, five or six years ago, maybe it was closer to $100,000, but -- so it's still relatively low, and it hasn't changed much in the last one or two years.

Okay. And then as you evolving Coppermark, is it going to be similar, or would that be a lot different as Oklahoma evolves?

In terms of the average size?

Right, or just even the type of new loan deal that you pursue.

Well, I think that the kind of lending they do parallels us quite closely. So I don't think there's going to be a material change in the type of lending. They maybe do a few larger transactions relative to some of our banking centers. So that would be a good thing as far as we are concerned. But I don't think it's going to result in any kind of material difference.

Okay. And then I guess the last question, just related to Coppermark, and it's probably way premature to ask this, but just observing the runoff that you are talking about at American State earlier, would something similar like that be possible at Coppermark, or would that be less likely, given what you know?

Well, it's certainly possible. And there will be some of it. There always is. Exactly how it will compare to American State Bank, I really can't say right now, but I don't think it's going to be materially different. There might be a little less runoff, but there's going to be some runoff. There always is.

Okay. Very good. Thanks, Tim. Appreciate it.

You're welcome.

(Operator Instructions). We will take our next question from Bryce Rowe with Robert W Baird. Please go ahead.

Thanks, good morning. My question was already asked and answered. So thank you.

(Operator Instructions). I will pause for a moment to allow final questions to enter the queue. And it appears we have no further questions at this time.

Thank you, Zach. Thank you, ladies and gentlemen. We appreciate you taking the time to participate in our call today. We appreciate the support that we get for our Company, and we will continue to work on building shareholder value. Thank you very much.

This does conclude today's conference. You may now disconnect, and have a wonderful day.