Truist Financial Corp (TFC) 2003 Q2 法說會逐字稿

Good day. I would like to turn the program over to your host, Mr. Ed Milligan.

Thank you and good morning and welcome to the second quarter, 2003 earnings call for Main Street Banks. I hope by now you've had an opportunity to review our quarterly earnings release which was disseminated to the public at 8:00 this morning and we look forward today to discussing that performance with you. This is our cautionary statement that our presentation may contain forward-looking statements and using methods other than GAAP has generated some financial information. As you can see, we plan to follow our standard format by discussing recent developments of the company followed by a review of our second quarter results and then the key factors driving that performance.

We'll conclude with an opportunity for you to ask questions of our presenters, either by telephone or via the Internet at web cast at MainStreetBank.com. That's web cast at MainStreetBank.com. I'm joined again this quarter by Sam Hay, our President and Chief Operating Officer and Bob McDermott our Executive Vice president and Chief Financial Officer. After I finish my remarks, Bob will present our quarterly financial results and then Sam will provide some color on the factors affecting that performance.

Well, in May of 2000, we adopted a three-year vision at Main Street of becoming a $2 billion bank and performing in the top (inaudible) of our nationwide peer group and today we have realized that vision. We are the largest and highest performing community bank in metro Atlanta which, of course, as you know, is a great market. We currently have 27 banking offices in 17 high growth communities across the northern arc and assets currently are $1.9 billion. Our performance ranks us in the top 15% of our peer group nationwide by any measure. We could also continue to rank near the top of all publicly traded banks and total shareholder return for the last five years.

Here is a list of our six covering analysts. And even though we have -- have had a good run in our stock in 2003, we believe we continue to represent a valuation opportunity relative to our high performing peer group. We've been traded on the NASDAQ market since 1997. As I said, we closed a little under $25 yesterday but fortunately our shares are up about 30% year-to-date. You can see our 52 week trading range and we're trading near the top of our range. Our market cap of $472 million and volume of 20,000 shares daily are both up significantly and we hope that will continue to make Main Street more attractive for institutional investors.

In recent developments, we declared a quarterly cash dividend of 12 cents per share on July the 9th payable on August 6th, the shareholders of record on July 23rd. We completed the first colony acquisition and their computer conversion in May and both of those were very successful in the second quarter. We had the opportunity to present at the Gulf South Bank conference in May in New Orleans, Main Street was featured as a little giant on the little giant series on Bloomberg TV in May, focusing on small companies with big performance. We're recently listed in fortune magazine as the 54th fastest growing small business in the country.

We'll have an opportunity to present later this month in New York at the Keith Woods annual Community Bank investors conference and then in August at the SunTrust Robinson Humphrey financial services earn conference in New York as well. Well, as we stated in our earnings release this morning, the second quarter was another strong one for our company. We announced net income of $6.4 million, up 28% from 2002. This equates to diluted cash earnings per share of 36 cents versus 31 cents for 2002, an increase of 16%. This exceeds analyst consensus estimates of 35 cents for the quarter.

Asset quality remains very strong as you will see in more detail in a moment, continuing our very strong and consistent trend. We achieved stellar loan growth, both organic and through our mergers and new relationship managers that have joined Main Street Bank. And we also reiterate our comfort with our full year 2003 consensus estimates this morning. And as you can see, those are for the third quarter and in September of this year, 36 cents, high of 36 cents and a low of 35 cents, six covering analysts and as year-end of December of '03, $1.41 with a high of $1.43, a low of $1.40. I would now like to turn the program over to Bob McDermott who will give you more detail on our performance.

Thank you, Ed. The first slide I would like to cover is on net income. As you can see from the graph at the top of the page, though our net income has consistently grown from the second quarter of last year through this current quarter. On a link quarter basis you can actually see that our net income is up roughly $634,000 or 11%. If you look at the chart at the bottom of the page, just reiterate some of the information that Ed mentioned this morning in the press release. Net income for the second quarter of last year was $5 million versus $6.4 million for this quarter. So we increased our net income $1.4 million or 28%.

Operating income, which we're defining simply as net income plus the add-back of our intangible amortization, which was roughly $1,06,751 for the quarter, equates to an operating income for the second quarter of 6.5 million versus operating income for the second quarter of last year of $5 million. That is an increase of $1.5 million with 30% on an operating income basis. On a per-share basis, you could see our diluted share income went from 31 cents in the second quarter of last year to 35 cents in the second quarter of this year for a 4-cent increase or roughly 13%. Again, on an operating diluted earnings per-share basis, we increased from the same 31 cents in the second quarter of last year to, as Ed mentioned 36 cents for this quarter. That's a 5% -- a 5-cent increase or roughly 16% increase.

The next slide that I'd like to talk about is our loans outstanding. You could see our period end loan outstanding of net earned income again has risen significantly since the second quarter of last year. On a link quarter basis, our loans increased 334 million or 32%. If you include the first colony acquisition that as Ed mentioned closed in the middle of May, which accounted for $288 million of that growth, organically we still grew loans for the quarter $46 million. Skipping to the table at the bottom of the page, you could see as Ed mentioned for the year we had excellent loan growth. Total loans outstanding increased from $861 million to 1.383 billion for an increase of $521.5 million and that was a 61% increase. If you exclude the John's Creek transaction that closed in December as well as the First Colony transaction that closed in May, you can see organically we continue to ride a very strong wave and actually show a 27% increase in loans outstanding for the quarter. Very similar story on the deposit side.

You could see for the five quarters at the top of the graph, that we had very strong deposit growth since the second quarter of last year. Again on a link quarter basis, deposits grew 268 million or roughly 24%. The majority of our deposit growth in the quarter did come from the First Colony acquisition. If we exclude First Colony, our deposits actually declined $15 million and the reason for that was aggressive earnings margin management and I'm going to talk about that in a minute. If you look at the chart at the bottom of the page you could see Main Street Bank as a stand-alone, grew total deposits from $938 million to $1,406,000,000 or an increase of $468 million, a 50% increase in our deposits.

During that same period again excluding the Johns Creek and First Colony acquisition, you could see our total deposits grew from $938 million to $1.123 billion. That's an increase of $185 million or organically 20%. What we're most proud on this slide is organic low-cost core growth. Organically our low cost core growth grew 39%. You can see in the same time frame our time deposits only grew 3% and you'll see what the impact that had on the margin. We continue to aggressively manage our margin, being very selective on the CD front and really trying to focus on our low cost core deposits.

The next slide focuses on our net interest income on a tax equivalent basis. On the graph at the top of the page you can see very steady income growth in our margin. On a link quarter basis our net interest income grew roughly $3.1 million or 20%. During that same period, our earning assets grew $218 million or 7%. Again, in a link quarter environment, when again the Fed has taken some rate action, we've actually seen our net interest margin increase quarter-over-quarter seven basis points from 4.95% to 5.02%. So again, very good margin growth on a link quarter basis.

If you look at the chart at the bottom of the page, what you could see is our net interest income quarter-to-quarter or from the second quarter of 2002 versus the second quarter of 2003 actually grew $4.7 million or 35%. Again, our net interest margin in the second quarter of 2002 was 5.08%. You could see in the second quarter of this year it was 5.02%, so over the year despite a lot of Fed action, our net interest margin only declined six basis points or a little more than 1%. Again, the majority of that increase is come from actively managing our CD portfolio. We had a very good quarter of CD repricing that the market allowed us to keep the majority of those CD's while bringing down the margin impact of that.

On credit quality, Sam Hay is going to talk about this a little bit more detail in a moment, but you could see our ratios remain strong, our net analyzed charge-off for the current quarter was 40 basis points, very much in line with the last five quarters. Our non-performing assets as percentage of assets finished the quarter at 38 basis points, again very consistent for the last five quarters. Our reserve for possible loan losses is a percent of our period end loans outstanding was consistent with the last several quarters, and we had a 1.47% for the actual quarter.

Page 16 illustrates our non-interest income. Again, it's the graph at the top of the page shows steady increases over the last quarter on a link quarter basis, you could see that our non-interest income actually grew $358,000 or almost 7%, so a very strong non-interest income growth. Focusing your attention to the bottom of the page, you could see at the chart, our non-interest income in the second quarter of 2002 was $4.6 million. We had an increase of $1 million up to $5.6 million in this quarter. That accounted for a 22% increase during the period.

The majority of this growth came from three major segments: income from our SBA Lending Group, which increased from roughly $200,000 to $500,000; mortgage origination fees, which increased from $600,000 to $900,000; and then our insurance agency, which had another very good quarter increased from $900,000 to $1.9 million. And those percentages, related percentages are 150%, 50% and 33% respectively. As Ed mentioned in his press release, we continue to re-invest into our core franchise and then our non-interest expense is up for the current quarter because of the first colony acquisition in some merger-related expenses. You could see on a link quarter basis, our non-interest expenses up roughly $1.7 million or 15.5%.

If you focus at the bottom of the page, what you could see is our total non-interest income increased from $9.4 million to $12.8 million, or roughly $3.5 million. That's a 36% increase. The majority of that increase or roughly half of that increase, $1.8 million of that increase came from added personnel. The added personnel came from both the Johns Creek and First Colony Bank acquisitions. Our Hometown acquisition that was completed earlier last year on the insurance side and then our growth in some of our DeNovo branching strategy as well as investing in our infrastructure. With that I'm going to turn the remainder of the presentation over to Sam Hay.

Thanks, Bob. Before I get into the key factors affecting our performance for the second quarter, let me refresh your memory on some of the performance objectives that we have set over the last few years for Main Street Banks. Some of this will not be any different for most of you, but there is some slight differences in the presentation of this information. Because of intangibles, which we have put on our balance sheet as a result of the First National Bank of Johns Creek and First Colony acquisitions in the last six months or so, we will begin focusing going forward on cash earnings and on returns based on tangible assets and tangible equity. So we keep our objectives in place in terms of our ROA and ROE at 160 and 18% but are changing the format a little bit in terms of cash, return on tangible assets and cash return on tangible equity.

In addition, we were revising our EPS gross targets to speak in terms of cash and EPS. Dividend pay out doesn't change; fee income doesn't change in terms of goals. We also will be looking at cash efficiency more in the future as well since intangible and precision will be affecting that ratio as well. And we continue of course to strive for superior asset quality, maintaining our history of superior asset quality as well as top core top peer performance. We mentioned also a couple of our guiding principles, which have not changed in the last year or so as well. We are excited that we are solidifying acquisition at the Atlanta's market and later in community banking.

We believe we have been executing on that goal very well in the last few years and believe that we now can solidly claim the title as Atlanta's community bank. We have done that by focusing heavily on strong internal growth in loans and deposits as well as limited acquisition strategy. Last fall we told you that we would be focusing more heavily on internal growth. In fact, we're predicting that about 80% of our growth would come from internal sources. I think if you look back at Bob's comments on loan and deposit growth, loan growth year-to-year being 27% on a stand-alone basis without any acquisitions and low cost core deposit growth being 39% on a stand-alone basis.

We believe that we are executing very well on our projections for heavy internal growth for the future. Now let's turn to some of the key factors that affected our performance in the second quarter and I would like to update you in each of the functional areas or operating areas in our company as to recent news as well as some news that will affect our performance going forward. In the sales and marketing area as most of you know that our sales culture is very strong at Main Street Banks. A few pieces of news. You know that we have announced plans to open a banking center in the Buckhead area of Atlanta on August 1st and plans are still in place for that opening. During the quarter we consolidated two offices in the large store and (inaudible) all into one new office and are excited about the efficiency as well as the increase service that will come from a larger full-service facility in that market.

We also hired nine new sales professionals during the quarter. That includes banking relationship managers, mortgage lenders, as well as investment consultants for our brokerage function as well. During the third quarter, we'll be taking advantage of some opportunity to use some efficiency to continue to fund our DeNovo branching strategy by closing three small banking centers during the quarter. One of those is in the Athens market, one is a grocery store facility in the Covington market and also one smaller facility that came to us through the Johns Creek acquisition and a market known as midway, which is -happens to be midway between Alpharetta and (inaudible).

We are also excited to announce that during the quarter we have greatly expanded our corporate services division. This is an area that has been focused on cash management and treasury services in the last couple of years but we have expanded it significantly with the addition of a new manager for that area and I'll speak to that in just a few minutes. Corporate services also launched during the quarter a payroll service for small businesses that we believe in the coming few years will leverage our small business niche very well. Turning to fee income for a few minutes, we're really excited about our prospects for fee income.

And are excited about the future just as much as our historical record in growing fee income on an organic basis. Fee income was up 22% over the second quarter of last year and as Bob mentioned, certain components of that have -- the growth has come heavily from mortgage original nations, insurance commission growth and particularly the SBA area where we have far more than doubled our revenue in that area and are very excited about the prospects for that business.

Also during the quarter we were able to hire a new highly experienced mortgage manager, a manager for our mortgage division. His name is Todd Hall. He came to us from the BBNT organization and we're excited about Todd's experience and expertise and the opportunity to continue to grow our Mortgage business in compliment with the footprint of our banking franchise. As I mentioned, too, we also hired a manager for our Corporate Services Division. His name is Mark Edward. Mark comes to us from the Wachovia organization. He has had experience in cash management, in correspondent banking as well as Investment Banking and we're very excited about the talents that Mark will bring us as we grow our corporate services division to expand our cash management and treasury management efforts as we start this new payroll service an as we beef up our Electronic Banking and begin to do some correspondent services as well on a limited basis.

Turning to merger and acquisition activity as Ed mentioned to you at the beginning of our call, we did complete the First Colony Acquisition on May 22nd. We're proud to tell you, too, we did finish the conversion, the system conversion of First Colony on June 20th and believe that it has been the best conversion that we have ever conducted so far, excited about the feedback that we're getting from our new teammates as it affects system issues as well as from our new customers as well.

We're also very proud of at the progress that we have made on the goal that Ed mentioned back at the first of the call of completing our Northern Arc strategy in the lucrative northern markets of Atlanta, both with internal growth in the last year as well as through our acquisition activity. We continue to have an appetite for insurance agencies that compliment our banking footprint. And at this point as many of you have heard in us in the last few months, we are not actively seeking bank deals at the present as we chosen to make sure that we have integrate our new teammates and gotten system issues put to bed before we look to do any significant banking activity in the M&A field. I would like to mention a few items in terms of staffing as well as support functions for the company.

We are excited to announce that we have hired a new manager for our service center to support our growth going forward. His name is Rick Blair, and Rick comes to us from the Wachovia organization. We're excited about the experience and talent that he brings to us, and the support that he will give our operations and service center as we have strong plans for internal growth in the future. We have just about finished our staffing for our data processing function to support our conversion to the Jack Henry Silver Lake system, which we have announced previously will be done in May of 2004. We also have embarked on a construction project to expand our service center to meet the banking and also business line growth, particularly for fee income businesses that we expect in the coming few years.

We are continuing to rollout new customer service standards as well as training for all of our people and have just recently finished the rollout of a new MCIF system and a new incentive measurement system that will give all of our salespeople on-line or web-based access to their performance and their production on a daily basis. Bob mentioned that our asset quality continues to be very strong. Our analyzed charge-offs, net charge-offs through the second quarter are 26 basis points for this year.

Non-performing assets continue to stay very good, finishing the quarter at 38 basis points. We are very excited about our outlook for asset quality. We believe that our non-performing assets will continue to be maintained at very good levels. Our delinquency trends are good and as we have told you in the past, our portfolio is heavily collateralized, 98% of it is, the buck of which is of course real estate, much of which is owner occupied real estate. We have no shared national credits and we continue to keep the largest credit relationship in the Bank at less than 1% of our loan portfolio.

We also continue to be excited about the outlook for our business in general. The Atlanta economy seems to be perking along fairly well. We still predict recovery in the Atlanta economy this year. Albeit a slow one. We're excited to project continued -- continue to project strong double-digit loan and deposit growth and are still pleased to tell you that we are lending to what we think are very stable commercial and residential real estate sectors and of course have very strong focus on owner occupied commercial real estate loans as well. Our fee income prospects have really never been brighter, particularly with the addition of some new management staff for that area as well as the new business lines that we are creating to continue that growth.

And our outlook for margins continues to be very strong. We would project margins will stay fairly flattish to (inaudible) as we use write protection, as we enjoy continued repricing and promotional money market and promotional CD dollars as well as use loan floors very aggressively to offset both lower margins that have come in from our acquisitions as well as the most recent Fed cut. We should say that we believe that margins will stay flat, of course, as long as our interest rate environment stays fairly stable. Further rate reductions certainly may squeeze us some.

To close out our presentation, why invest in Main Street? Many of you are familiar with the rational that we have provided to you in the past about why we believe Main Street Banks continues to be a buy. We think that we really are a unique combination in terms of high performance, very strong growth. We have been using a disciplined acquisition strategy. We think we have a great franchise in one of the best banking markets in the country, and that we are filling a competitive void in that market both for our customers as well as the potential acquisition targets.

We think we've got a great management team that can carry our organization several years and several billion dollars into the future in assets, and we also continue to believe that we are a valuation opportunity relative to a high performing peer group that we follow on a regular basis. Looking at the next slide, you will see that we still compare favorably to this group. We would rank third in performance in this group and are now are ranking third in valuation as well. Comparing our earnings and our performance to the top four of this group excluding Main Street, says that there are still several dollars in our stock. We believe that this continues to be a strong rational for our stock as a buying opportunity despite the strong run-up we've had this year. Now I'd like to turn the presentation back over to Ed Milligan for closing remarks.

Thank you, Sam, and thank you, Bob, for your presentations. As you've heard, our management team continues to be very optimistic about our operating performance and our strong growth in future opportunities in the dynamic Atlanta market. We're now ready to take any questions you may have either by E-mail at webcast@mainStreetbank.com or through our coordinator who will give you those instructions now.

If you'd like to ask a question, please press '*1' now on your touch-tone telephone. To withdraw yourself from the queue, you may press pound. Once again to ask a question today, please press '*1' on your touch-tone telephone. One moment while we queue for questions. We'll take our first question actually from Jennifer Demba of SunTrust Robinson Humphrey.

Good morning. I was wondering, two questions. I was wondering if you could give us the organic loan and deposit growth from the first quarter to the second quarter excluding the First Colony acquisition? And then secondly I'm wondering how much of your CD's actually repriced during the second quarter and what do you have left going forward?

Jennifer, I'll answer that. Between the first quarter of '03 and the second quarter of '03, loans grew organically $334 million or -- I'm sorry, $46 million or roughly 4.5%.

Okay.

Organically. And then deposits grew excluding First Colony roughly or decreased roughly $15 million or 1%. And again, that was mostly because of our repricing of the CD's. What we had, we actually had a 4% CD special that came on 18 months ago that is running off through this second quarter and will continue in the third quarter. The run off in the second quarter was roughly 70 million and we have about 30 million left of that that we'll reprice down to the current levels.

The other major thing that we have going on in this quarter is the money market reprice. What we did was we went out with a guaranteed 3% money market over a six-month period of time and that was about a $50 million portfolio. Only about $15 million of that repriced were lower levels, so we still have about $35 million of that to reprice in this quarter.

Great. Thanks.

You're welcome.

We'll take our next question from the site of Christopher Marinac of FIG partners. Go ahead. Go ahead, please. We'll take our next question from John Pandtle of Raymond James. Go ahead.

Good morning, everyone.

Good morning.

I have two questions. First if you could talk about your branch strategy. You mentioned the three consolidations. If you could update us on maybe the next 12 to 18 months what you expect in terms of denovo branches and would this complete your expected consolidation of existing branches and then the second question was if you could comment on your securities portfolio. If there were any major movements in those balances this quarter in terms of sales, run off and then additions.

John, this is Sam Hay. I'll speak to the branching issue a little bit. As we announced about a year ago our intention is to -- in the coming few years is to open between two and four denovo bank facilities on an annual basis. And we would continue to, I guess, to reiterate that as a projection. We are now looking at several locations continuing to focus on the northern arc of Atlanta because we believe that we still have significant opportunity.

As most of you know, our small business strategy means that we'll certainly never try to have banking facilities on every corner and not try to obviously execute on a retail strategy. But if you look at our footprint across the northern arc, you find there are still several pockets, several sub markets that we ought to want to be in and certainly do want to be in. We aren't prepared, I guess, to announce any particular markets at this point but we do have our eyes on several markets and will be announcing those, as we are able to secure property as well as get construction plans in place. I think what you will find in the coming few years is that we do have opportunity to gain some efficiency and to close certain limited service facilities and use that overhead and that capital more profitably in some of our new full-service and potentially higher growth locations. So you're not likely to see much increase or very little increase in the total number of banking facilities that we have in place but simply a redeployment of the footprint as it exists today.

John, it is Bob McDermott. Let me handle the securities question. First, yes, we've had some pretty healthy runoff of our investment portfolio or our existing portfolio that was in place by, you know, at the end of the first quarter. Our mix in the portfolio is like most institutions about 50% mortgage back and then we have about 30% -- I'm sorry, about 30% agencies, about 30% mortgage backs and then the rest in CMO's and immunities. On the mortgage side because of the recent refi craze, we have had significant prepaid on that portion of our portfolio. What you will see though from the tables that we released today is that on a period end basis our actual investment securities portfolio increased from the end of the first quarter at roughly $221 million to $290 million at the end of this quarter. Because of some mark-to-market kind of -- you know, in the caring and accounting environment that we're in because of the mark-to-market, what first colony did was they sold the majority of their investment portfolio before we actually acquired them.

So, our Newport portfolio is pretty much what we've put on. It's very short in life. Our weighted average life for our existing portfolio is about 30 months, so we haven't extended at that all and that 30 months has been very consistent with our investment strategy. The other thing is, Sam alluded to, we have two swaps in place and then we put a floor in place this quarter. The two swaps roughly $85 million in their prime swaps and the two strikes are 669 and 530 and then we have $100 million floor with a 375 strike so, we feel we're in pretty good position going forward, but we think most of the run off of our mortgage investment portfolio is pretty much done.

Okay, just a quick follow-up. What was the premium amortization in the quarter on the securities, do you have that number?

Yeah. In the quarter -- just a second. It was on the investment portfolio?

Yes.

It was only $45,000.

Oh, okay.

So, it was virtually nothing.

Okay, very good. Thank you.

Thank you.

Thank you.

Mr. Milligan are we done with that questionnaire?

Yes.

I was just wondering. We'll take our next question from David Schiff of FTN. Go ahead, please.

Hi Good morning. I was wondering if you could comment on your just on your loans 90 days past due. Seems like they popped up a little bit. Do you going to put any more under the provision for that or just give me some clarity on what is going on there?

We believe that we remain very well reserved. This is a couple of relationships that came to us through the First Colony Acquisition and we believe we are very well secured on those relationships. In fact, the majority of the increase has come from just, just a few relationships that we're still collecting some payments on and believe we're very well secured. Properties are listed for sale and we're very hopeful and excited about the values being very stable. So, we are not concerned and believe that this is very much a one time flip up in our delinquencies.

Are they residential?

No, they're not. Generally they're commercial real estate properties of various kinds. Most of them would be commercial in nature.

Okay, thank you.

Thank you for the question.

Our next question is -- we're back to Mr. Christopher Marinac of FIG partners, go ahead.

Hi, Good morning. I want to talk a philosophy about buying turn around banks and particularly if the turn around would be just related to interest rate risks not credit card. Would that be a strategy you would be open to?

Chris, this is Sam Hay. You know, that is something I guess we have never really considered. I think turn around still have to be considered turn arounds regardless of the reason. I think we would have to say how much interest rate risk would you be talking and what kind of cost and real risk would you be looking at. You know, if the bottom of the pit could be measured, you know, then it is certainly we might look at but generally our philosophy has been stay away from turn arounds and associate ourselves with high performing people and high performing organizations.

Okay, fair enough. Then I guess as a general rule, is -- should we look at pricing more indicative of the last transaction with First Colony or do you have any revised thinking on the pricing going forward?

I think it depend, Chris, on the caliber of the bank and the market they're in. I think First Colony would -- this is Ed Milligan. We felt it was clearly the prime bank in the high Suburban Atlanta market and the returns they have generated and the growth they have generated, not many banks out there can equal that. So, i wouldn't necessarily say that that would be a benchmark for future pricing, but we felt like that was just a great fit for us and very complimentary and probably the highest performing bank in the market that we were desiring to enter.

Okay, great. Thanks, guys.

Thank you.

We'll take our next question from Ariel Whitman (ph)of Sandler O'Neill.

Good morning, gentlemen. Most of my questions have been answered but I just wanted to ask if you could comment about the uptick and charge off I knew this ran into NPAs last quarter but the type of relationship and did you charge off 100% of it or you expect to get recovery in?

Hai Ariel, this is Sam Hay, we do expect some potential recoveries in this relationship. The increase in charge-offs even though our total levels still of course is very, very nominal, we think, and very manageable for us. The increase was due primarily to one relationship but now has a balance of about 1.03 million and we believe that we are very well secured on the relationship now. So we think that is just a one-time occasion with one relationship where we did have to take a six figure charge-off but feel very comfortable about that relationship going forward.

Okay, thank you.

Sure.

Once again if you would like to ask a question, please press '*1' now. It appears, Mr. Milligan, we have no further questions. I'll turn the program back over to you for any closing remarks.

Well, thank you for those excellent questions and thank you for taking some of your valuable time to be with us this morning. We appreciate your continuing interest in Main Street Banks. Thank you and have a great day.

This concludes our conference call for today. You may now disconnect your lines, and thank you for participating.