S&T Bancorp Inc (STBA) 2010 Q4 法說會逐字稿

Greetings and welcome to the S&T Bancorp fourth quarter 2010 earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions)As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Mark Kochvar, Senior Executive Vice President and Chief Financial Officer for S&T Bancorp. Thank you, Mr. Kochvar, you may begin.

Good afternoon, and thank you for participating in today's conference call. Before beginning the presentation I want to take time to refer you to our statement about forward-looking statements and risk factors which is on the screen in front of you. This statement provides the cautionary language required by the Securities and Exchange Commission for forward-looking statements that may be included in this presentation. A copy of the fourth quarter earnings release can be obtained by pressing on the press release link on your screen or visiting our Investor Relations website at www.stbancorp.com. I would now like to introduce Todd Brice, S&T's President and CEO, who will provide an overview of S&T's results.

Well thank you, Mark, and good afternoon, everyone. As we announced in yesterday's press release, net income for 2010 was $40 million or $1.44 per share versus $2 million or $0.07 per share in 2009. For the fourth quarter of 2010, net income was $11.4 million or $0.41 per share compared to $10.9 million or $0.39 per share in Q3. I think all in all we're pleased with our results as we continue to experience positive trends in our asset quality metrics, and these really have been a major driver of our improved profitability. Pat Haberfield, our Chief Credit Officer, is going to review some of the highlights in more detail in his presentation. I think on a year-over-year basis, our provision expense declined to $25 million versus $72 million in 2009.

On a linked quarter basis, we recorded a provision expense of $3.5 million versus $8.2 million in Q3. I think also in the fourth quarter, non-performing assets declined 12% or about $10 million to $73 million, this is now 2.16% of loans in OREO, and I think overall delinquency numbers are trending in a positive direction, as well, and now stand at 2.32% versus 3.64% at the end of 2009. We really attribute the improvement in these numbers to enhanced processes and procedures that we've implemented in our credit administration practices, as well as an improving western Pennsylvania economy, certainly is being benefited by some of the energy industry and the activities surrounding the Marcellus Shale. But regionally, unemployment numbers fell once again this month to 7.9%. In Indiana county, there's 7.8%, so both these numbers are well below national averages.

Mark Kochvar, our CFO, is going to go over the details behind our operating results. But I think overall, the story for the quarter continues to be flat loan growth as well as a slight decline in net interest margin and also non-interest income. We also experienced increases in expenses that were a bit higher than we anticipated. I think some of these were one-time occurrences, and we expect these to settle into a lower run rate. Before I turn the call over to Pat, I do want to talk about how we restructured our Company in 2010 to better serve our markets and capture greater wallet share from existing clients, and also increase market share with new customers, as we look for new opportunities. But we basically have broken down the organization into seven distinct markets. Each of these have cross functional teams which focus on integrating our complete product mix throughout our customer base.

We understand that different markets present different opportunities, and we really can adjust our strategies to the various markets accordingly. The number of introductions that we're seeing between line of business has been steadily increasing, and again, we expect to see continued positive results in 2011. I think obviously there's been a lot of attention placed on the impact that the Marcellus Shale is going to have on the region. So far we've been cautiously optimistic, however activity is really beginning to pick up. In the eight of ten counties in which we operate, they're going to be directly impacted by this activity. So when you look at it in 2010, there were approximately 150 wells of these wells drilled in our markets, and in addition, in 2010, there were approximately 1,200 permits issued for future drilling.

So right now we're beginning to see a lot of the rig counts beginning to increase in our markets. So on an interim, our [lending] perspective really is geared towards the companies providing ancillary services to the industries and we also have experienced noticeable increase from customers in that space. I think also many customers not previously in the business are expanding product lines to provide goods and services to the sector. I think even more importantly, [royalty checks] are being distributed, these wells are coming on line. As these funds begin to circulate regionally, there's going to be an abundance of management opportunities, deposit gathering opportunities, as well as increased sales of goods and services throughout the region that's going to benefit many of our existing customers.

And realistically, royalty checks on these wells can range from $30,000, to $40,000, to $50,000 a month. So you can do the math and see the potential that this is going to have on the region. And when you look at eight of the counties that we operate in that are impacted by the industry, we have number-one market share in three of them, in Indiana and Jefferson and Clarion counties, and we also have a solid presence in Westmoreland and Armstrong counties. These five counties really are where the bulk of the 1,200 permits have been issued. So we think we're in well positioned in the markets. Really, our teams in these markets are working diligently to reach out to [vote] our own customers as well as non-customers who will be the beneficiaries of these revenue streams.

From a lending perspective, we do continue 2011 to continue to be a bit lumpy as we're going to continue to experience some run-off in our CRE portfolio. I think a lot of these are planned payouts, and we do have several projects that are in the midst of being refinanced. They've attained stabilization and now are just getting rolled into secondary markets. We are still booking some CRE projects, but we've been selective, and we've increased spreads on the new projects that we are looking at. I think on the C&I side we're seeing nice activity as a result of the focus we put on this line of business last year. We did add several lenders, and they're beginning to close some of the loans that they have in the pipeline.

And I think for the quarter ended in December, we saw originations jump significantly. And also we've seen some nice expansion in our pipeline. We also restructured and automated our small business origination process really just to better serve our customer base, and we kicked that off in the fourth quarter of 2010. And we believe the streamlined approach is going to enable our community bankers really to spend more time on sales efforts on customers who require needs under $500,000. And even though this program is in its infancy, we've seen some nice results to date and are pretty pleased with how it's coming together.

And in the non-interest income area, we're evaluating our primary checking account product to offset decreases in fee revenues that have been impacted by Reg E and we may consider rolling something out a little bit later in the year. Also, as I mentioned earlier, growing [wealth] management and insurance revenue streams is going to be a focus of our market-based approach. Again, I think we should benefit from some of what's going on regionally in our economy. So in closing, I just want to mention that we were pleased with our overall performance in 2010. We know that 2011 is going to present some challenges, but we believe that we've positioned our Company to compete from a long-term perspective. And now I'd like it turn the call over to Pat.

Thanks Todd, and good afternoon everyone. Provision expense for year-end 2010 was $25.3 million, resulting in the ending balance in loan loss reserve of $50.4 million, 1.50% of total loans. This compares to provision expense of $72.4 million with a loan loss reserve balance of $59.6 million or 1.75% on December 31, 2009. Included in the allowance is $3.6 million of specific reserves, which is a decrease of $6.9 million over last quarter. Our reserves and NPL coverage comes to 75%, again as compared to year-end 2009, which was at 66%. Our non-performing assets decreased 12% over third quarter 2010 to $72.9 million, which is 2.16% of total loans plus ORE, which compares to $82.7 million or 2.45% of total loans (inaudible) in the third quarter of 2010 and $95.4 million or 2.80% on December 31, 2009.

Additionally in the fourth quarter, OREs decreased by $1.5 million from the third quarter. We continue to aggressively manage our NPAs which is evidenced by our TDRs, or troubled debt restructurings, ending the year at $30.1 million. This is an increase of about $14.2 million over our third quarter balance of $15.9 million in TDRs. Within this classification is about $2.1 million of performing TDR loans. So I think this further reflects our philosophy to work closely with customers while we're proactively managing our problem loans and moving towards swift resolution.

During the fourth quarter 2010, the bank experienced net charge-offs of $9.4 million, of which we had specific reserves against about $8.2 million. For the year, our net charge-offs were $34.5 million as compared to $55.4 million in 2009. And when compared to average loans, 2010 net charge-offs of 1.02% as compared to 1.60% in '09. Our total criticized and classified loans decreased $2.6 million or 78 basis points over last quarter and $18.3 million or 5.2% over year end in 2009.

Our total delinquency was 2.32% in December of '10, as compared to 2.69% in the previous quarter and 3.64% December of '09. Our earlier stage delinquencies which, of course, gives us a leading indicator, the 30 day to 89 day categories, continued to perform well within expectations. Our 30 day to 89 day categories decreased to 33 basis points in the fourth quarter of 2010, which compares to 46 basis points in the third quarter of '10, and 98 basis points in the fourth quarter of 2009.

The out-of-state CRE construction portfolio at the end of the year was $366 million. This represents 10.9% of total loans and 21% of the total construction and commercial real estate portfolio. The New York loans represent 29% of total out-of-state loans, Ohio represents 20% and West Virginia 6%. The balance of the portfolio is spread over 23 states. And again, no other state's concentration is in excess of 6%. Segment concentrations in the out-of-state portfolio -- retail strip, 25%, retail properties at 11%, and hospitality at 10%.

We continue to see improvement with out-of-state (inaudible) with a decrease of $12 million in the fourth quarter of 2010 from $20 million in the fourth quarter of 2009. I think overall we're very pleased with the performance of this portfolio. At quarter end, the bank had its closure of $108 million for purchase participation loans, $34 million or five relationships of that are subject to shared national credits, of which about $5.1 million of the loans are subject to [signature] classified. Next, I think Mark will provide you more details on our financial results.

Thanks, Pat. Our performance in the fourth quarter was largely influenced by the lower provision. The majority of our charge-offs in the fourth quarter had been reserved for previously, and we experienced relatively few new problem credits. The decrease in the reserve from the third quarter was all in the specific reserves, the FAS 5 or general reserves remained relatively flat, up about $450,000. Net interest income on a fully taxable equivalent basis as well as the net interest margin rate were down slightly from the third quarter. As we've discussed previously, we are seeing and will continue to see asset repricing pressure in loans and securities through both recessed and normal maturities and paydowns. On the liability side, we don't see meaningful relief until the third quarter of 2011 when we have a $25 million [subject] piece that reprices and some higher priced CDs that [we'll have]. At the end of 2010, we lowered rates in many of our core deposit products, so we will see the benefit of that in the quarter of 2011.

Overall, margins peaked in this cycle for us in the third quarter of 2010, and barring any significant change in the rating environment, we expect our leveraged margin rate to pressures over the course of the year. Although loans show a small point-to-point increase over the quarter, average balances and the margin analysis reveal a decrease of about $17 million. This is in consistency with some temporary year-end activity to certain customers that has been paid off. Securities are also down on average by $19 million, but are up point-to-point due to some purchases late in the quarter. We do anticipate some increase in the securities portfolio during the first quarter of 2011 to help alleviate some of the margin pressure and offset projected soft loan growth.

Non-interest income was down by $338,000 in the fourth quarter primarily caused by full quarter of reduced NSF income due to Reg E changes in mid-August. Insurance is down quarter over quarter due to a seasonally stronger third quarter. Mortgage banking had another strong quarter, but we saw new originations decline significantly as rates increased at the beginning of December. Short of another decrease in longer rates and a refi pickup, we anticipate these in this business line to moderate in 2011. Expenses were elevated in the fourth quarter, up about $2.1 million from the third quarter.

About one-third of the $565,000 increase in salaries and benefits is actually from higher salaries, another one-third is from higher medical expenses, and the remainder is due to a pension adjustment that was made in our favor in the third quarter. Occupancy and FF&E was up due to timing of certain maintenance payments, a write-off of fixed assets from an inventory clean-up project, and from expenses related to the combination of two offices into one new facility that occurred in the fourth quarter. In the other category, the largest variance is due to a release in the provision for unfunded commitments of $883,000 that occurred in the third quarter compared to no change in the fourth. We were also very active in OREO in the fourth quarter which saw an increase of $521,000.

As we look at 2011, we expect that run rate of non-interest expense to be approximately $26 million per quarter. Our capital ratios continued to improve versus third quarter, due primarily to increased retained earnings and a small decrease in risk-weighted assets. We continue to explore all of our options with respect to our participation in the capital purchase program, including the newly announced small business lending fund. We haven't altered our stance as it relates to continued participation in [CPP] and we intend to be patient to ensure that we are through the crisis, that our regulators are comfortable with our plan and that any actions are accomplished in a shareholder-friendly manner. Thank you very much. At this time I'd like to turn it over to the operator to provide instructions for asking questions.

Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. (Operator Instructions) Damon Delmonte with KBW.

A quick question for you on your quarterly loans growth and commercial real estate. The loans were flat for the quarter, but you did get about 4% increase in CRE loans. Could you talk about the growth that you saw, maybe the industries and the average size of the credits?

Yes. I mean, I'd say it was a quiet quarter, Damon. David Antolik, our Chief Lending Officer, I might let him expound on that a little bit.

I think one thing to note is that during the quarter there were a lot of transfers from construction to commercial real estate, about $57 million. So part of your look may need to go back and combine those two and look at them in total. You'll see much less of a change.

Okay. That's helpful.

We haven't grown permanent CRE loans. You'll see the construction loan portfolio continue to decline, and it has declined through -- as these projects complete and convert to permanent loans.

Got you. That's great, thanks. And then looking at the provision level going forward and where your current reserve, is the expectation for the provisions to match charge-offs going forward?

Sorry, it's hard to say. We have a new [A-LLL] model that we put into place in the fourth quarter. But I guess that should be in line with our expectations that's provision will be closed to that barring any downgrades in credit over the course of the year.

Okay, then as far as this quarter's provision level, can we look at this as a run rate for the next few quarters?

Yes. There's still going to be a little bit of lumpiness in there. However again, if you look at some of the trends if you look at early stage delinquencies, you look at some of the formation of new NPLs and where the [C&T] loans are basically flat, too. I think there's some good trends. So I don't want to get too overly optimistic on that, but I think that it's heading the right direction.

Okay. And then lastly, sticking on the reserve there, what's your total specific reserve right now?

About $3.6 million.

About $3.6 million. Okay, thank you very much.

Our next question is from Mike Shafir with Sterne Agee.

I was just wondering, I know you guys have been cautious in terms of your thought process around the TARP funds. But we've had a pretty promising year it seems like in 2010 as far as operating trends, credit trends and profitability. So I was just wondering, I mean, where do you guys stand there now? And also along those lines, your total risk-based capital ratio I think is close to 17% now. Ex-TARP, approximately where would that go then?

You could take about 3.25% out to get to the ex-TARP numbers.

We originally set up the full 3%. Our balance sheet is front loaded since then. So without any additional capital rate, it would remove a little over 3% from the risk weighted ratios.

So around 13.5%?

Right.

Okay. And then in terms of actually repaying the TARP funds, I mean, have you guys -- has the thought process changed at all, or is there a scenario where -- because it doesn't seem like you would need to raise additional equity. Is there a way to repay the TARP without doing a qualified capital raise?

That's really dependent on the regulators, Mike. We've had some preliminary discussions with them. But they say come back about with a plan. The only thing I know is if you look at where some other people who have repaid are, if you look at some delinquency trends where we're spinning and if you look at where our capital levels would be, I think we could make a compelling case to get out with a pretty minimal raise. As Mark mentioned, the other thing we're looking at, too, is the small business lending fund. And maybe you do a combination of something with that to try if we want to get out of the TARP. And there are some advantages of getting rolling into that program that we're evaluating.

Okay. And then what was the mortgage banking increment on this quarter? I think last quarter was around $1.2 million.

I think it did increase $1.6 million, but there's also a lot of the pipeline, the different accounting items that were down because the pipeline was down between the third quarter and the fourth quarter.

Okay. So just as we -- you clearly touched on the fact that those are going to be coming in, as a percentage of fee income and so forth. So could we see that come down in the million dollar range for next quarter?

We probably haven't got that specific on a quarter-over-quarter basis, but we aren't looking for a whole lot of growth in interest income in 2011.

Okay. And finally on the Shale, it currently seems like it's added a lot of capital into the region. And can you maybe -- I know you had addressed a couple things, but can you guys maybe give a little more detail on specific things you're doing in terms of either providing wealth services management or dealing with some of the ancillary business providers or just the game plan around trying to monetize the influx of capital that's coming into the region?

Yes. So actually it's a little bit preliminary. I mean, we are working on a couple of things. I can't talk about them today until we get a couple more things finalized on -- [particularly] one business, and that's something we're pretty excited about. From the lending standpoint, Mike, it's just getting out. We've had clients that have opened up [queries] to service the industry, that we provide our lines of credit for. We've had other suppliers into -- that have provided a lot of the type and trucking and some of those things. So we're just seeing a lot of expansion, and also I was with some clients last week. And some other clients who currently are not in the space. But one guy started making a product that supplied the industry, and it will pick up probably $3 million or so in revenues. It's not a lot, but there's a borrowing need for them, and other companies again, just expanding a product line that they're already in that they can customize to the energy industry. So again, just a lot of positive things going on, and --

Yes. I think the key for us is you have to quantify the impact, but where we do see the benefit is providing a lot of employment stability. As you can see in the numbers, as Todd mentioned, the unemployment rate dropped in the county. We've financed a number of hotels in the region that are full. The positive impact is just tough to quantify. But the bigger economic measures are where you're going to see the quantifiables.

Thanks a lot. I appreciate all that detail, guys.

Thanks, Mike.

David Darst with Guggenheim Securities.

Could you go back over a couple of points you made? Wasn't sure I was clear on. What did you say the decline was and what's the ratio for your criticized and classified loans?

The total CMT loans had come down about $2.6 million, which is about 78 basis points over last quarter. And that increased about $18.3 million or 5.2% over year end of '09.

Okay. So 78 basis points of total loans?

Yes.

Okay.

They were pretty much flat quarter to quarter, David.

Okay. Then which quarter did you say you got some borrowings and CD repricing?

Third.

In the third, okay. And then on the small business fund, it seems that we've had several other banks that have similar fundamentals and still have TARP remaining, pretty good comparables to you are discussing -- utilizing this, as well. Is that something that you think that the current remaining banks of your size that have TARP are being encouraged to use?

I mean, they've put a lot of publicity around it. So I mean, they are trying to promote it. We really haven't had specific conversations yet with the regulators, but we intend to do that later in the next couple of weeks.

And so could you envision maybe using 50% of that to repay TARP and then some of your cash and then the small common [raise]?

So there's some of that options that we're evaluating. We haven't gotten that deep into it yet.

Excluding TARP, do you think you have enough capital to execute on your business plan and growth opportunities you got from the sale?

Yes, I think so.

Okay. How about your residential property, NPL, I think you had some that were a result of some maybe partnership disputes. Are there any of those that will be coming to resolution in the next couple of quarters?

As far as residential NPLs, I'm not sure what you mean by partnerships in the future or anything --

Okay. I'm talking about the rental bucket, which is about $11 million.

The which bucket? I'm sorry. I didn't hear that.

The residential rental properties, it's about $11 million of NPLs.

Yes. We took a pretty significant charge in Q3 on the biggest one of those, David. And it is performing, and it's in one of TDRs, generating $8.5 million right now, so you get another quarter under the belt, and you will probably see that shift if they could continue to make payments gradually as obligated.

Yes, David I'm sorry, I misunderstood what you were saying. Yes, that's definitely a TDR that was restructured. We don't have any reason to believe that performance isn't going to happen. It's occurring right now. We monitor these TDRs based on performance, and, again, after some seasoning on these, we looked to hopefully return these back to the accrual status.

Okay. So that should result in a decline in PLs, all else equal in March?

I would say probably more towards second quarter. Again the seasoning that we look at, we want to get somewhere between five, six months of seasoning. And when you look at the timing of when we did some of these restructures on these, between perhaps late third quarter and throughout the fourth quarter, as you can see by them growing, we have these, we believe structured to the point where we can expect future performance.

So I think by the timing of these, we're looking second quarter area.

(Operator Instructions)Collyn Gilbert with Stifel Nicolaus.

I wanted to clarify one thing, Mark, that I think you said. The fees, you said -- did I hear you right, non-interest income, $26 million a quarter?

That was expenses.

Expenses. Okay. All right. That makes sense. And then I think it was Todd, I think you mentioned -- anyway, one of you, some of the construction loans that you said are migrating now into CRE.

Yes.

Could you talk a little bit about the characteristics of those loans, of the types of loans and just the terms and what you're seeing there within that migration for the construction bucket to permanent bucket?

Yes, generally speaking when we would book a construction loan, a period of time for construction and final lease-up and stabilization. And in terms of product, it's all across the board. There's a fair amount of retail in there, apartments, office so it's across the board. It's a normal course of business. The key for us last year is that we weren't replacing the existing construction portfolio due to the economic conditions, but as these properties stabilize, they'll convert into either [mini-perm] or perm deals in our CRE portfolio.

Okay. And are they just the structure of them in terms of duration and -- are they five-year terms that you're looking at?

Yes, typically. Typically. They may be as long as ten years depending on the underlying lease.

Okay, okay. Good. That's all I had. Thanks.

Thanks, Collyn.

(Operator Instructions)Rick Weiss with Janney, Montgomery, Scott.

I was wondering if you could talk about the loan, the bigger picture regarding the Marcellus Shale. Does that change the way S&T does business? I know in the past you used to follow borrowers that actually left the state and moved out-of-state. Do you think you'll still have to do that, or has Marcellus Shale changed the whole ball game there?

Well, I mean, Rick, I think it's just going to have a pretty significant impact on the region And it's going to be where the impact's going to come in is people in the automobile dealerships and home repair stores. Those are going to create -- and other service businesses, those are going to create, we think, pretty some significant opportunities for us. And we've been able to differentiate ourselves in the marketplace, and we feel pretty confident that we can compete effectively in the region.

Okay. I guess it's the borrowers of the (inaudible) Pennsylvania, Florida, would you have customers make out-of-state loans as you have in the past?

We've done a lot of out-of-state the last year to two years, Rick. We have done a little bit. But we think there's enough around here to keep us busy.

Yes. And Rick, if you look at what we just went over with the out-of-state portfolio, the majority of it's in a contiguous state close to home. And again, our borrowers and the way we scrutinize and stress underwriting is that we're going to do loans with good borrowers.

The other things to point out, Rick, we do have borrowers that we've been dealing with for a number of years out-of-state, who were very, very good customers. And we'll still consider loans for those types of people. I wouldn't say we're actively out looking for establishing new relationships out-of-state, but with existing clients, we've done a little bit of that.

I wasn't trying to be negative on your existing borrowers. And then I guess the last two years, really the loans were flat or down. Certain competitors now are starting to see some loan growth. Would you think over the next year or even like two years we'll start to see loan growth again?

Oh, yes. Again, I think 2011, though, is going to be a little bit challenging just because we know that there are some of the stuff that we've been working on or embedded in the CRE portfolio that's just going to get paid out. Some like Dave said, some of these construction loans will also roll out more of the permanent market, that's starting to loosening up a little bit as well. Some other people have just -- with where the markets are, they're looking at talking to some clients, they're looking at selling some of their properties, too, because of valuations and everything. And again, on the CRE side, we're booking them, but we haven't been real aggressive in trying to grow that line of business. I think where we focus our efforts is on the C&I side. Again, we're -- pipelines building and we're seeing some activity. But I think that just takes a little bit longer to build up than the CRE. CRE tends to come in bigger chunks.

Is the pricing still rational in your opinion, or is it starting to get crazy again?

No, I think obviously on the C&I side, everybody's trying to chase it a little bit. But it's still not bad. You're probably looking at --

The spreads are still reasonable.

And on the CRE side, the stuff that we are doing, obviously we want to get paid for the rent.

All right. That's helpful. Thank you guys for having the call at 1.00 PM instead of at 4.00 PM.

You like it better at 1.00 PM, Rick?

I do. Probably same as other analysts, as well, on that one.

All right, thanks a lot.

Andy Stapp with B. Riley & Company.

All my questions have been asked except for one. And that's just what are you expecting for the effective tax rate this year?

We expect it to actually go down a little bit to closer to 24%. We have some new local housing projects that generate some tax credits, they're going to come on stream, it came on stream late last year during '11, around 24% is what we're looking for.

Okay, great. Thank you.

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

Okay. We did have two questions come in over the email. I'll let Mark address the first one and I'll handle the second one and we'll get those --

First one was regarding our strategy for making up the loss on income due to Reg E. I think Todd spoke briefly about that. We are in the process of taking a look at our options with respect to checking fees, that we may look at doing something later in the year. But that hasn't been finally decided as of yet. Second question related to the acquisition of Irwin Bank which occurred back in 2008, and whether that's been accretive to shareholders and to what extent. When you do have acquisitions like that, when we merge the entire bank into S&T it becomes very difficult to measure that going forward.

But in general, our experience has been positive, the branches, we do measure branch profitability and the possibility of the account officers from the commercial lending side. Those trends have all been much more favorable than we anticipated, and we have been able to implement a lot of efficiencies in that branch network. So we believe it has been accretive to our shareholders, but we can't put a firm dollar amount on that.

So and then the other question we had was just given some of the improved earnings, what our dividend policy is going to be going forward?Again, I still think it's going to be somewhat conservative. Obviously, conserving capital and building capital is still probably not a bad place to be, particularly until we get out of the TARP. And so we'd rather generate some of the earnings and capital internally as opposed to going to the market and doing a larger raise. So I would anticipate that probably being pretty flat for a period of time.

The other part on that is when we did cut the dividend, we didn't cut -- we only cut it by a 50% as opposed to cutting it all the way down to very low levels. So we did not decrease it as much as many other institutions did.

Right. So and just before we -- again, I want to thank everybody just for participating in the call today. We appreciate the chance to discuss this quarter's results. Before we sign off today, I just have to get a plug in for our friends up in the Punxsutawney market, and wish everybody a Happy Groundhog's Day tomorrow. Again, thanks for participating.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.