Synovus Financial Corp (SNV) 2012 Q3 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Synovus third-quarter earnings conference call.

At this time all lines have been placed on a listen-only mode and we will open the floor for your questions and comments following the presentation.

It is now my pleasure to turn the floor over to your host, Mr. Pat Reynolds, Director of Investor Relations.

Sir, the floor is yours.

Thank you, Kate, and I thank all of you for joining us today on our call.

During this call we will be referencing the slides and press release that are available within the Investor Relations section of our website at Synovus.com.

Kessel Stelling, Chairman and Chief Executive Officer, will be our primary presenter today with our executive management group available to answer all of your questions.

Before I begin I need to remind you that our comments may include forward-looking statements.

These statements are subject to risk and uncertainties and the actual results could vary materially.

We list these factors that might cause results to differ materially in our press release and in our SEC filings which are available on our website.

Further, we do not intend to update any forward-looking statements to reflect circumstances or events that occur after the date these statements are made.

We disclaim any responsibility to do so.

During the call we will discuss non-GAAP financial measures in reference to the Company's performance and you can see the reconciliation of these measures to the GAAP financial measures in the appendix to our presentation.

Finally, Synovus is not responsible for and does not edit or guarantee the accuracy of earnings teleconference transcripts provided by third parties.

The only authorized webcast is located on our website.

We do respect the time available this morning and desire to answer everyone's questions.

We ask that initially you limit your time to two questions.

If we have more time available after everyone's initial two questions, we will re-open the queue for follow-up questions.

Now I will turn it over to Kessel Stelling.

Thank you, Pat, and good morning, everyone.

I want to add my thanks to all of you for joining and participating in our third-quarter earnings call.

Again, as Pat said, I will handle the prepared presentation and our team is ready and able to answer any questions any of you might have at the conclusion of the formal presentation.

Well, the story of the quarter, again, is our fifth consecutive quarter of profitability and we are pleased to report that.

Our net income available to common shareholders was $16 million for the third quarter of 2012 compared to net income available to common shareholders of $24.8 million for the second quarter of this year and $15.7 million in the third quarter of 2011.

Net income available to common shareholders was $62.2 million for the first nine months of 2012 compared to a net loss attributable to common shareholders of $131.5 million for the first nine months of 2011.

As we said in our press release, earnings driven by growth in pre-tax, pre-credit cost income.

As you will see on page four of the deck, we are pleased to report an increase in pre-tax, pre-credit cost income of $4.9 million sequentially.

Also pleased to report net interest margin expansion of 3 basis points to 3.51%.

I will talk a little bit more about that later in the deck.

Again, reported sequential quarter total loan growth of $51.7 million, net loan growth of $239.6 million.

A major milestone for our company as we have been talking about reaching stabilization for many, many quarters and certainly pleased to see both reported and net loan growth for the quarter.

And we will talk about the mix and where a lot of that came from later in the slides.

On page five, as I just mentioned, our fifth consecutive quarter of profitability.

It's our fourth quarter where pre-tax, pre-credit cost income have exceeded credit cost.

If you will look to the right you will see pre-tax, pre-credit cost income of $112 million for the quarter compared to just $107 million the quarter before.

Again, we will talk about some of the components as we go along.

An increase in credit cost, $86 million compared to $70 million a quarter go.

As Kevin Howard mentioned on the last call, we do a semiannual adjustment on our reserve factors.

Those factors were $18 million less than last quarter.

Other factors go into certainly the provision line, market-to-market costs, retail charge-offs, loan growth, providing for loan growth, which is a good pressure to have certainly, as well as OREO costs, inflow costs, disposition, and other.

Again, Kevin Howard will be happy to take more questions on that as we go through today.

On page six, again graphically illustrating the expansion in our net interest margin, 3.51% compared to 3.48% last quarter and 3.47% a year ago.

Our yield on earning assets was down 5 basis points.

The effective cost of core deposits down approximately 7 basis points to 0.34%.

So, again, pleased to see the expansion in our margin.

A lot of pressure there; our team has done a great job to hold the line and actually provide a little lift there.

On page seven, great story about loan growth and a great story about loan mix, and I will take them both.

As you will see at the bottom of the page, we had reported sequential quarter loan growth of $51.7 million.

Again, as I referred to earlier, a major milestone.

That compares to a decline of $163.6 million a quarter ago, a decline of $402.7 million in the third quarter of 2011, so major movement there.

On a net loan growth basis, again that excludes the impact of loan sales, transfers, loans held for sale, charge-offs, and foreclosures.

That net number was a positive $239.6 million for the quarter compared to a positive $29.2 million last quarter and a negative $132.1 million in the third quarter a year ago.

As excited as we are about loan growth, I am also pleased to report this continuing shift in mix that we have talked about and invested so heavily in.

C&I and retail loans grew $212 million sequentially, or 6.6% annualized.

Our commercial loan pipeline continues to strengthen and you will now see that C&I and retail loans make up some 66% of our portfolio compared to 34% for the commercial real estate.

Again, that was a target that we had set several years ago.

We had set a target of 65%.

We have now moved that mix north of 65% and pleased with the growth and diversity of the portfolio.

We have had tremendous production around the system, but we have been talking a lot about our corporate banking group, so I would like to highlight that on page eight.

Continued growth out of that group, the group closed the third quarter with outstanding -- loans outstanding of over $1 billion at $1.011 billion.

That is up $553 million from the third quarter a year ago, just quarter over quarter up $220 million -- $222 million or 28%.

Again, an area of our company where we have invested heavily and that group has partnered with our line bankers throughout our footprint to generate some very positive results for our company.

On page nine, talk a little bit about deposit mix; continued improvement in the mix there.

Brokered deposits declined $1.2 billion, or 57.4%, from the third quarter 2011 and now represent only 4.4% of our total deposits compared to 9.3% a year ago.

Our total deposits decreased $718 million versus the second quarter of 2012 and $2.3 billion versus the third quarter of 2011.

That is primarily due to the planned reductions in brokered and time deposits.

The sequential quarter decline also reflects a $212 million decline from a planned strategic reduction of a large demand deposit clearing account.

If you will again look to the graphs, you will see that the combinations of NOW savings, money market, non-interest-bearing now represent about 78% of our total deposits compared to 69% third quarter a year ago.

So, again, improvement in the mix there.

We just got FDIC data out in the last week or two about market share, and we are really pleased that we continue to enjoy top-five deposit market share communities that represent about 80% of our banking franchise.

So, again, coming off several years of tough news and tough results, our depositors have been incredibly sticky and loyal to our company.

And our teams have done a great job maintaining and actually growing market share in many of our communities.

On page 10, again continued decline in the effective cost of our core deposits.

You will see the third quarter 34 basis points compared to 41 basis points a quarter ago and 62 basis points just a year ago.

So continued improvement again in our core deposit cost.

On page 11 I want to give a little color to our fee income initiatives that contributed to growth in core banking fees, and I will try to break some of that out for you.

Number one, service charges on deposit accounts were up $1.7 million for the quarter, or 9.2%, from the second quarter of 2012.

We continue to see great performance from our mortgage company.

Mortgage banking income was up $1.3 million, or 16%, from the second quarter of 2012.

New fee income initiatives contributed approximately $3.6 million in additional core banking fees during the third quarter of this year.

I also want to highlight to help you reconcile the difference.

In the third quarter we had a $944,000 loss from private equity investments which are a part of our core operations.

That compares to a $7.3 million gain in the second quarter of this year, so that will help you reconcile the variance of the reported number.

The third quarter of 2012 also includes a $6.7 million gain from investment securities sales compared to a $4.2 million gain in 2012.

So that leads you to total reported non-interest income of $73.2 million in the third quarter compared to $76.5 million in the second quarter.

But non-interest income, excluding the investment securities gains that I just talked about and excluding the private equity investment gains, it was actually $67.5 million in the third quarter compared to $65 million in the second quarter of the year.

So a lot of numbers there, but pleased with the components of our fee income that reflect the ongoing efforts of our management team and our bankers in the field to appropriately price our products and services, while we continue to sell our loans and solidify our deposit base.

On page 12 I would like to talk about expenses.

We talk about it in great detail on every call.

Very pleased that more expenses are down $11.6 million, or 6.5% sequential; down $12.3 million, or 6.9%, versus the third quarter of 2011.

You can see from the graph on the left, employment expense is down about $2 million.

Headcount is down 114 over the prior quarter.

Our total reported third-quarter 2012 non-interest expense is down $16.8 million, or 8.1% sequentially; down $31.1 million, or 14%, versus the third quarter of 2011.

There are a lot of factors that go into this decline in expenses.

Our team has been very diligent about continuing to take cost out of our organization through process improvement, through efficiency of workgroups.

We will continue to work diligently to drive the expense base down over the coming quarters as we have previously stated on these calls.

On page 13 we are pleased to report that NPL inflows declined for the sixth consecutive quarter, down 48.3% from the third quarter of 2011, down 7.6% from the second quarter of 2012.

The decline is in line with our expectations and we anticipate that this trend will continue.

However, as we have stated before, due to the elevated level of substandard credits and the composition of the accruing substandard portfolio along with just our overall lower level of inflows, in any given quarter the level of inflows could increase.

But over the long term, again, we expect that this trend will continue downward.

On page 14 you will see the continued steady decline of our non-performing assets.

We ended the quarter, third quarter, with NPAs of $899 million compared to $961 million just a quarter ago and compared to $1.164 billion in the third quarter of 2011.

Our NPA and NPL ratios are illustrated in the top right.

Our NPA ratio has declined from 5.71% in the third quarter of 2011 to 4.51% today and our NPL ratio has declined from 4.34% in the third quarter of 2011 compared to 3.55%, again at the end of the third quarter of 2012.

So continued decline and we are pleased, certainly, to see that.

On page 15 our charge-offs are below 2% for the third consecutive quarter.

Charge-offs of $96 million, 1.97%.

I will just point out charge-offs are down 30.3% from the third quarter of 2011 and 38.6% year-to-date.

Our past dues on page 16 remain at low levels for any cycle.

As we said last quarter, the 0.47% would be difficult to maintain but we were pleased to see total past dues at 0.55%.

Total past dues past 90 days 0.05%.

Again, we think this is a good sign and indicator that our loan portfolio continues to heal.

On page 17 we have talked about improvement in loan growth and we have certainly talked about improvement in a loan mix.

I want to talk a little bit about the improvement, continued improvement in our loan portfolio risk distribution, and that is graphically illustrated, as you will see, on page 17.

We ended the third quarter with total pass credits of $16.573 billion.

That compares to the same category of passed credits last quarter of $16.2 billion and the third quarter a year ago of $15.760 billion.

That is an increase of almost 6% in the pass credits of our portfolio.

And while the pass credits have increased certainly, the other categories I want to highlight the declines there.

Special mention, the green part of the bar.

Special mentions ended the quarter at $1.494 billion, down from $1.652 billion a quarter ago and down from $2.095 billion just a year ago.

Our accruing substandard loads ended the quarter at $965 million, down from $1.067 billion last quarter and down from $1.375 billion the same quarter a year ago.

Then our non-performing loans ended the quarter at $700 million, down from $755 million a quarter ago, down from $872 million just a year ago.

I will refer you to page 26 and beyond in our appendix for more detailed info on the overall improvement in our portfolio with greater attention and detail on special mention loans, potential problem commercial loans, TDRs, NPL inflows by geography, and much more data.

Again, Kevin Howard will be happy to take questions about those slides or any other slides later.

On page 18, again call your attention to our capital position and our capital ratios remain solid.

I will talk about the first three ratios as a group, because they all three had a slight decline.

Tier 1 capital ended the quarter at 13.23% compared to 13.35% in the second quarter.

Tier 1 common equity ended the quarter at 8.73% compared to 8.80% in the second quarter of 2012.

And total risk-based capital ended the quarter at 16.17% compared to 16.31% in the second quarter of 2012.

Those three ratios, again, still strong, had slight declines.

Primarily impacted by loan growth, which is again a good pressure to have, as well as increases in unfunded commitments which are not on our balance sheet.

We had increases in tangible common equity to tangible assets, 7.35% compared to 7.12% in the second quarter, and our Tier 1 leverage ratio increased to 10.97% compared to 10.66% in the second quarter of 2012.

So, again, solid capital position and pleased there.

I now want to talk about our DTA valuation and its effect on TARP repayment, or it's correlation to TARP repayment.

We have tried to be clearer than last quarter as we continue through this cycle, and so on page 19 you will see that we evaluate the deferred tax asset valuation allowance position every quarter.

Based on our analysis as of September 30 we continue to maintain a full valuation allowance against that deferred tax asset.

However, based on the improvement in core profitability, credit quality, and earnings projections, we now believe that substantially all of the DTA valuation allowance may be reversed as early as the end of fourth quarter of this year and should be reversed no later than the end of the second quarter of 2013.

As we have said before, TARP repayment is likely to follow the DTA valuation allowance reversal.

There are a number of factors, as you know, that could affect timing, including our future performance and certainly discussions with our regulators.

But based on our view now of the deferred tax asset, the valuation, the timing, and our own performance, we believe that TARP repayment will be as early as the second quarter of 2013 but no later than the beginning of the fourth quarter of 2013.

As I have said before that TARP repayment will come in the form of existing cash from our parent, cash that we will dividend up from the bank to the parent with regulatory approval.

And then any shortfall, again if there is a shortfall, we would access the capital markets to flood that gap.

Again, the timing we believe is as early as second quarter of 2013, no later than the fourth quarter.

The components of how we will deal with that will be clearer as we get further along in our discussions with our regulators and as we get clearer in our own performance over the next couple of quarters.

And we will certainly update all of you as we can about our TARP plans.

So at that point, operator, I will be happy to pause and we will open the floor to questions about any areas that I covered or any areas in the appendix or any areas that are not in our deck but that are on the minds of our analyst community.

So I will pause now for questions.

(Operator Instructions) Steven Alexopoulos.

JPMorgan.

Good morning, guys.

If we look at the $222 million of loan growth and corporate banking on slide eight, how much of that growth was from participations in loan syndications?

Steven, this is D. A little less than half of it would be either participations or what you would call the syndications and then a little greater than half of it would be tied also to other large corporate debt and the single housing group.

Okay, thanks.

Secondly, Tommy, could you help us think about the tax rate after the DTA is ultimately reversed?

Steven, it should look very much like the corporate statutory tax rate.

It should be within a percentage point of that on a go-forward basis after DTA recovery.

So around 35%, Tommy?

Yes, wherever they tax rates land, but that would be current.

Okay, thanks for taking my questions.

Ken Zerbe.

Ken Zerbe, Morgan Stanley.

First question was can you tell us how much the planned, I guess, strategic reduction in the large demand deposit had in terms of the impact on NIM this quarter?

It actually had very little impact on NIM this quarter.

It was a late quarter event and that alone will not have a big impact on the quarter going forward, because of the nature of the account.

It isn't something you could fund long-term investments with or loans.

Okay, so negligible impact this quarter and next.

Okay.

Then second question, just in terms of the expenses, obviously you are making good progress there but is the level of core operating expenses this quarter something you can sustain?

Or is there anything unusual where we might see a pickup going into fourth quarter?

Ken, I would say that I wouldn't use the third quarter as run rate, but I would say that the four quarters would be closer to the third quarter than the second.

We are down $12 million.

Some of it a few one-time, one-off situations that helped that, but a lot of it is just from core and strategic activity on pushing expenses down.

So I would call it closer to where we are now than where we were a quarter ago, but really can't guide it any further.

We are just continuously pressing on that lever.

Understood, that is helpful.

Thank you.

Kevin Fitzsimmons.

Sandler O'Neill.

Good morning, everyone.

Kessel, can you just dig a little deeper into how and why you feel comfortable giving a little more of a detailed time horizon on the DTA valuation reversal and the TARP repayment?

A big part of this is getting regulatory approval to be able to dividend up from the bank to the parent.

Is some of this based on just conversations on that front and you are feeling more comfortable in getting some kind of sense that they are comfortable with a timeline?

Or is it just getting closer and this is really the timeframe that you expected a few quarters ago?

Thanks.

Kevin, thanks for the questions.

Let me try and tackle all that.

I said to Tommy in the hallway before I left last night the one thing about the timing -- one thing that is certain about the DTA timing is that it is uncertain.

But it has been a continuing process for us and it is one that involves a lot of factors, as we have said -- continued credit improvement, continued confidence in our ability to forecast future earnings for sure, and a lot of modeling and work with our accountants along the way.

So I would say our degree of confidence in the timing and our specificity about the timing would be based on just progress in that process, progress in our modeling, progress in our performance, and certainly conversations, detailed conversations with our accountants.

At the end of the day, it is management recommendation that would require the concurrence of our accounting firm.

They are with us along the way in this process, so our degree of confidence is certainly influenced by conversations with them.

Now as that effects TARP repayment and our confidence that we can dividend cash up, I know our regulators are on the call and so I would just say this.

It has always been a part of our plan that we would dividend cash from the bank to the parent to ultimately repay TARP.

One of what we knew was a key threshold for our company was that classified assets to capital would need to get below 50% to make that request and have reasonable assurance or reasonable probability of approval.

We have made tremendous progress in that category as well and have a high degree of confidence that that ratio will continue to trend down in the fourth quarter and in quarters beyond, allowing the capacity for the bank to dividend the cash up the parent.

So it is progress and it is a lot of performance and a lot of conversations, again, with our auditors.

And we, again, will -- I said on the TARP repayment and I want to be clear about that -- it has been a long journey and we are happy to be where we are today.

But this next step will require certainly additional modeling and additional negotiations with all of our primary regulators to exit in a way that is satisfactory to them, but that is also efficient and satisfactory to all of our other constituents.

Great.

Kessel, just on that topic, can you just remind us what level of cash you have at the holding company at this point, and of that amount how much do you view as really the portion that you would want to keep on an ongoing basis to be able to handle any kind of servicing requirements you have?

Thanks.

We have got about $371 million cash at the parent right now.

We have historically maintained a two-year operating coverage of cash.

Of course, as we repay TARP that annual obligation goes down as well.

So I am going to look at Tommy; I don't think we have been specific with guidance as to how far down we will take that cash.

But $371 million today and we can take that down further certainly as we exit the TARP program.

Okay, thank you very much.

Christopher Marinac.

FIG Partners in Atlanta.

Kessel, just wanted to ask about the balance sheet, would it grow at all in the next year.

Then also just your thoughts about doing any larger asset sales, if those are available and if the pricing makes sense.

Yes, Chris, we are not going to declare victory on the stabilization.

Again, we were pleased to see reported growth and certainly the large net growth, but as we continue to sell assets that will put pressure there.

And, certainly, we have the same concerns as many of our fears about fiscal cliff and just the economy in general.

So, again, we have said we think we had bottomed out this year.

Could there be a little more pressure?

There could, but right now we are cautiously optimistic that we can continue to see stabilization and loan growth going forward.

As far as additional asset sales, as I have said before, really in every quarter we are in market with a number of assets.

Kevin Howard, D. Copeland, and team do a really good job of the evaluating just market conditions and the economics of the offers that are out there, so in any given quarter we certainly could accelerate.

We have done it before.

Again, it would be based on just our thought on the economics of the transactions that were in front of us.

Okay.

So you're open to that if the pricing is there?

I was more curious if the pricing has improved (inaudible) [position to] change?

We are open, again, in any given quarter to that.

I will look to Kevin about just his thoughts on pricing.

Kevin, maybe you could give color on what you have been seeing in the market there?

We have seen pricing at least stabilize on dispositions.

There is a slide in the appendix, I think it is slide 32, that shows we have had improvement on unpaid balance during the quarter.

That can fluctuate, but at least we have seen stabilization.

It is still a hard process.

There is plenty of capital buyers out there, and as Kessel mentioned, we have guided previous quarters $100 million to $150 million.

We are always looking at avenues of opportunities to accelerate dispositions and the affect of how efficient that would be.

But we are starting to see at least stabilization where our assets have been, places like Florida, Atlanta, and South Carolina, so that has been helpful.

Great, Kevin.

Thank you very much, guys.

Emlen Harmon.

Good morning, Jefferies.

So that we could just, Kevin, just maybe touch on the direction of the provision going forward.

I know last quarter I think you talked about just the reserves settling out around kind of 2% of loans over the near term.

Does that still stand after you took a look at the reserve this quarter?

And just post review, just any more comfort where that reserve goes longer term?

Couple of things.

As Kessel mentioned, that bump we had in the total credit cost was the effect of the semiannual factor update, but for that we would have had a slight decrease.

But going forward we do expect credit cost to continue to improve.

That would be absent some acceleration in our disposition strategy.

Excluding that we think they are going to go forward.

We think the provision will improve.

We are good to see the ORE expenses move again in the right direction.

That has been working its way down.

But we do expect, we are getting near -- me and Tommy have mentioned before on previous calls that we are moving towards -- as we move toward 2% there is a case that we can continue to improve our special mention, our substandard assets.

We made good progress again there this quarter that you could see it move to 2%.

It may be a touch below that right now.

We want to obviously see our other credit metrics continue to improve and say on that track, but moving into next year we are expecting, while charge-offs, as you can see, have been a little stubborn in the last -- we are glad they got below 2% over the last two or three quarters.

We do expect to see some positive direction there, again, excluding asset disposition acceleration.

We expect that to move more toward about 1.5% in the middle of next year, and so we are going to see progress going forward in all of those columns, credit cost columns.

Great, I think that addresses it.

Thank you.

John Pancari.

(inaudible) on behalf of John at Evercore.

A small question regarding the OCC guidance around the (inaudible).

What was the impact this quarter on your reserves or any charge-offs [this quarter]?

Your question (technical difficulty) we couldn't hear it.

Can you repeat it?

Yes, my question is around the OCC guidance around the Chapter 7 bankruptcy.

What was the impact this quarter?

I think [from the guidance] -- the question I think -- it was hard for us to pick up; this is Kevin.

It sounded like around the OCC guidance and what effect that may have had, is that correct?

Right.

Okay, good.

It came out fairly late in the quarter, the OCC guidance that we received.

We have done [an analysis] over that over the last couple of weeks, and based on our understanding of the guidance there would be little impact, if any, on new NPLs, provision, or TDRs.

So that is our study of the guidance we got.

Okay.

Separately on the deposit costs.

This quarter it declined 10 basis points to around 54.

How low can that go going forward?

John, I would say that we have had a good run on moving core funding down.

It is about a third of what it was two years ago.

Based on the low level of landing in the third quarter and really the fact that loans are growing and we will be more interested maybe in adding some funding, I would say that we are fairly close to the end of being able to move the deposit costs down like we have.

All right, that is it for me.

Thank you.

Nancy Bush.

NAB Research.

Good morning, guys.

Question for Tommy.

Tommy, could you just remind us, now that we are sort of looking at reversal of DTA within the next few quarters, how this -- sort of the mechanics, how this finds its way into regulatory capital and how quickly this would be recognized?

Would it be recognized over a number of quarters, all at once, or how does this actually happen?

Nancy, great question.

On day one it flows through the income statement as a negative tax expense in a positive way through the tax line.

That immediately falls into tangible common equity.

Over 300 basis points pickup, just round numbers, in improvements there.

The out-of-the-chute regulatory ratio impact is more modest and takes more time.

Then without being too prescript we would just call it a little less than 0.5 percentage point movement on the key regulatory ratios.

As you progress and your balance sheet changes, your earnings and performance change; then that would expand.

And it would literally take, certainly we will just call it several years, to gain the whole impact of it.

It really just depends on the earnings trajectory and what is going on with the balance sheet.

Modest impact going forward, but it grows every quarter.

So does it find its way into tangible book value immediately?

Yes.

Okay.

Second question, also for you, Tommy.

The other expenses which came down with the big decrease this quarter; are there significant sort of consulting/professional fees in there and are those going to be coming down over time?

We hope it is all coming down over time.

In the quarter I guess we had the movement in employment expense, some of that is sustainable as we continue to push on that lever.

We had reductions in travel, telecom expense, and some of the discretionary spend.

So some of it is sustainable, some of it is more events within the quarter.

But actually just about every line in the G&A category with any sort of meaning moved down.

We will continue to manage the professional expenses that you are asking about to the best of our ability.

I was just wondering about -- you mentioned, Kessel mentioned modeling as being something that you are getting better at.

I am wondering is that an internal process or is that be done with external folks.

It is actually both.

We have added some internal talent and borrowed some external talent to ramp that up and it made big improvements.

Great, thank you very much.

Thank you.

We have no further questions in the queue at this time.

Okay.

Thank you, Kate, and I want to thank all of you for participating in the call.

I will just maybe sum up our quarter's results with the obvious -- our fifth consecutive quarter of profitability with some significant reduction in expenses, some margin expansion, overall credit improvement, loan portfolio growth, and growth in our pipeline.

And, again, strong market share in markets across our footprint.

So I think the takeaway there is we have come through this cycle as a strong, healthy franchise and excited about the days ahead.

I want to thank again all of you for participating.

I want to add a special thanks go to the many team members we have on this call who have persevered and stuck with this company through some very tough times and continued to serve our customers with a passion every day.

To our Board members and affiliate directors who, again, are strong supporters and have been rock-solid supporters of our company through the crisis.

To all of our customers who continue to amaze us with their loyalty and their support of our company.

And then to the many shareholders who are on this call I just assure all of you that our team is as passionate as ever and as energized as ever to now take this company through the next couple of big events, which would include the recovery of our deferred tax asset, the repayment of our TARP obligations, and growth and success in the future.

So thank you all and I hope you all have a great day.

Thank you, ladies and gentlemen.

This does conclude today's conference call.

You may disconnect your phone lines at this time and have a wonderful day.

Thank you for your participation.