WesBanco Inc (WSBCP) 2018 Q1 法說會逐字稿

Good afternoon, and welcome to the WesBanco, Inc.

First Quarter 2018 Earnings Conference Call.

(Operator Instructions) Please note, this event is being recorded.

At this time, I would like to turn the conference over to John Iannone, Vice President of Investor Relations.

Please go ahead, sir.

Thank you, Denise.

Good afternoon, and welcome to WesBanco, Inc.'s First Quarter 2018 Earnings Conference Call.

Our first quarter 2018 earnings release, which contains consolidated financial highlights and reconciliations of non-GAAP financial measures, was issued yesterday afternoon and is available on our website, www.wesbanco.com.

Leading the call today are Todd Clossin, President and Chief Executive Officer; and Bob Young, Executive Vice President and Chief Financial Officer.

Following the opening remarks, we will begin a question-and-answer session.

An archive of this call will be available on our website for 1 year.

Forward-looking statements in this report relating to WesBanco's plans, strategies, objectives, expectations, intentions and adequacy of resources are made to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

The information contained in this report should be read in conjunction with WesBanco's Form 10-K for the year ended December 31, 2017, as well as any documents subsequently filed by WesBanco with the Securities and Exchange Commission, which are available on the SEC and WesBanco websites.

Investors are cautioned that forward-looking statements, which are not historical fact, involve risks and uncertainties, including those detailed in WesBanco's most recent Annual Report on Form 10-K filed with the SEC under Risk Factors in Part 1, Item 1A.

Such statements are subject to important factors that could cause actual results to differ materially from those contemplated by such statements.

WesBanco does not assume any duty to update forward-looking statements.

Todd?

Thank you, John.

Good afternoon, everyone.

On today's call, we'll be reviewing our results for the first quarter of 2018.

Key takeaways from the call today are the successful completion of our merger with First Sentry Bancshares as we continue to execute upon our well-defined growth strategies; strong year-over-year growth in pretax earnings supported by solid expense management; continued benefit from our shale energy-related core funding as deposits, excluding CDs, demonstrated robust growth of 5%; and strategically balancing loan growth while maintaining high credit quality standards, which will ensure the long-term success of our company and shareholders.

We're pleased with our performance during the first quarter, which reflected strong pretax growth of 11% as well as the benefit of the new lower federal corporate tax rate.

Excluding merger-related expenses, we are in fully diluted earnings per share of $0.76 on net income of $34 million.

In addition, we generated solid profitability ratios with the core return on average assets of 1.37% and the core return on average tangible equity of 17.2%.

Our consolidated and bank-level regulatory capital ratios remain well above the applicable well-capitalized standards, promulgated by bank regulators in Basel III capital standards.

During February, we announced an 11.5% increase in our quarterly dividend rate to $0.29 per share, the 11th increase since 2010, representing an increase of 107% over that time period.

This recent increase was the result of our record core earnings during 2017, strong capital and liquidity positions, solid execution on well-defined operational and growth strategies, and the recent change in the federal tax law.

Our long-term success remains dependent upon continued execution of our well-defined operational growth plans.

As a reminder, our long-term growth strategy is focused on several key pillars: building a diversified loan portfolio with an emphasis on commercial and industrial and home equity lending; increasing fee income as a percentage of total net revenues over time; maintaining a high-quality retail banking franchise; and franchise-enhancing acquisitions.

And these pillars would not be possible if they were not built upon 2 strong legacies of our franchise: an unwavering focus on delivering positive operating leverage while making necessary growth-oriented and risk-prevention investments; and maintaining our strong culture of credit quality, risk management and compliance, principles upon which our company was founded nearly 150 years ago.

On April 5, we announced the consummation of our merger with First Sentry Bancshares and the appointment of Geoffrey Sheils, the President and CEO of First Sentry, as our market President for Huntington, West Virginia, and the surrounding area.

In addition, First Sentry's Chairman of the Board, Robert Beymer, will become Chairman of Huntington market advisory board for WesBanco, which will be comprised of the First Sentry Board members to help ensure a smooth transition in the regional market.

This merger fits perfectly with our strategic growth plans as it combines 2 institutions with solid credit quality and a strong focus on client service and community banking.

Furthermore, I'm pleased to welcome the customers and the employees of First Sentry to the WesBanco family as we provide our newest customers with a broader array of banking services as well as provide new and expanded opportunities for our newest employees.

Total year-over-year loan growth for the quarter continued to reflect the impact of our stated strategies related to our residential mortgage and consumer loan portfolios.

When excluding these categories, loan growth in our focused categories was 2% over the last 12 months as commercial real estate paydowns during the quarter returned to a more historical level.

While this low single-digit loan growth was a little below expectations, we continue to believe that, at this late point in the economic cycle, not appropriate to take outsized lending risks as we continue to see questionable terms being offered by others.

That said, our commercial and residential loan pipelines are solid and growing at quarter-end, remain optimistic on the opportunities as we continue to diversify and strengthen the quality of our overall loan portfolio.

We have maintained strong market positions across our legacy and major metropolitan markets with substantial market share in West Virginia, Columbus, Louisville and Pittsburgh MSAs.

During the first quarter, when excluding the impact of our strategy to reduce higher cost certificates of deposit, we realized robust year-over-year deposit growth of 5% with majority of this growth occurring in demand deposits.

Those demand deposits now represent approximately 51% of total deposits.

Further, the continued benefit from the shale energy-related deposits in our legacy markets remains a core funding advantage that allows us to take target-lending opportunities in our higher-growth metropolitan markets.

It's important for our long-term success we continue to invest in our company as we become a larger organization.

Our target of $2 of return for each $1 of investment ensures that we deliver positive operating leverage on our growth strategies.

During the first quarter, we demonstrated both strong positive operating leverage and expense management, which resulted in an efficiency ratio of 55.1%.

In fact, since 2012, when we expanded our Western Pennsylvania market, our efficiency ratio has improved by 450 basis points.

Lastly, I'd like to commend our community development team for their exceptional work.

During February, we were awarded multistate New Market Tax Credits from the U.S. Department of Treasury's Community Development Financial Institutions Fund totaling $40 million of investments, which would provide a federal tax credit of $15.6 million over 7 years.

The WesBanco CDC serves the urban and rural areas across our footprint in the states of Indiana, Kentucky, Ohio, Pennsylvania and West Virginia with the goal of promoting meaningful community-driven investments and funding a wide variety of businesses providing critical social and commercial services to low-to-moderate income residents.

I'd now like to turn the call over to Bob Young, our Chief Financial Officer, for an update on our first quarter financial results.

Bob?

Thanks, Todd, and good afternoon to all of you.

We reported strong year-over-year growth in both pretax and advertised earnings, as Todd mentioned, and we displayed solid expense management both quarter-over-quarter as well as year-over-year.

For the 3 months ending March 31, 2018, we reported net income of $33.5 million and earnings per diluted share of $0.76 as compared to $25.9 million and $0.59, respectively, in the prior year period.

When excluding merger-related expenses, net income would have increased 28.7% to $33.7 million, and earnings per diluted share would have increased 26.7% to $0.76.

For the first quarter, core returns on average assets and average tangible equity were 1.37% and 17.2%, respectively.

And just as a reminder, our first quarter results exclude the impact of the First Sentry acquisition since it closed after the end of the quarter on April 5.

Turning to the balance sheet.

Total assets as of March 31, 2018, grew to $10.2 billion year-over-year, driven by an increase in the securities portfolio as we refocused on growing total earning assets since we are crossing the $10 billion asset threshold with our acquisition of First Sentry.

Total portfolio loans of $6.3 billion were flat compared to the prior year as we continued our efforts to prudently manage our loan portfolios to encourage growth in our focus categories without sacrificing credit standards.

During the past 12 months, total commercial loans increased 1.8% and home equity loans rose 3%.

However, they were offset by the targeted reductions in the consumer portfolio as we reduced its risk profile as well as increased secondary market loan sales as a percentage of residential mortgage loans originated, which caused a reduction in the amount of 1 to 4 family mortgage loans held in our balance sheet.

While seasonal factors negatively impacted the residential mortgage market nationwide, including WesBanco, our year-over-year decline of 2% in originations compares favorably to the 10% decline experienced nationally.

Despite this slight decrease in originations, the percentage of residential mortgages sold in the secondary market during the first quarter increased to approximately 57% compared to 44% last year.

Total deposits, excluding CDs, increased 5.1% year-over-year due to strong growth in interest-bearing and noninterest-bearing demand deposits, which reflect the strength of deposit gathering through our new and legacy markets.

We'll turn now to net interest income and margin.

The net interest margin continues to reflect the benefit from the increases in the Federal Reserve Board's target federal funds rate over the past year, partially offset by higher funding costs as well as a flattening of the yield curve.

As was noted last quarter, the first quarter's margin of 3.38% reflects a 6 basis point reduction related to the lower tax equivalency of the state and local municipal tax-exempt securities resulting from the Tax Cuts and Jobs Act.

Excluding this reduction as well as purchase accounting accretion in both periods, the core net interest margin improved 4 basis points year-over-year.

The increase in the cost of interest-bearing liabilities is primarily due to higher rates for interest-bearing public funds as well as certain Federal Home Loan Bank and other borrowings.

We continue to believe that our core deposit funding advantage is helping to contain our overall deposit funding costs.

When including the growth in noninterest-bearing deposits, our total funding costs have only increased 10 basis points year-over-year despite four 25 basis point federal funds rate increases since March of '17.

That said, we still expect deposit betas to increase during the remainder of 2018 as the Federal Reserve continues to raise interest rates.

Now a discussion of noninterest income.

For the quarter ended March 31, 2018, noninterest income increased 4.8% from the prior year to $24 million primarily driven by higher bank-owned life insurance, trust fees and electronic banking fees, which more than offset lower mortgage banking income and other income.

The higher bank-owned life insurance revenue was due to higher debt benefits received during the period.

Trust fees, which increased 5.9% year-over-year due to equity market improvements and organic growth in trust assets, is seasonally higher during the first quarter as compared to the other quarters primarily due to increased tax preparation fees.

While the volume of residential mortgage originations sold in the secondary market increased 26% year-over-year, reported mortgage banking income declined $400,000 due to a $500,000 reversal in the mark-to-market on mortgage loans held for sale and commitments that benefited the first quarter of 2017.

Excluding last year's benefit, mortgage banking income would have increased 6.8% year-over-year.

Lastly, other income increased $900,000 due to income in the prior year period from certain joint ventures that were inherited from a prior acquisition required to be dissolved as well as lower commercial customer loan swap income, which varies quarter-to-quarter depending upon eligible loans and customer demand.

Let's turn to operating expenses now.

Total operating expenses were well-controlled during the first quarter of 2018 as strong discretionary expense management continues to be demonstrated with most categories decreased both year-over-year as well as sequentially.

Excluding merger-related expenses in both years, noninterest expense during the first quarter of 2018 increased just $400,000 or 0.8% compared to the prior year period.

The slight increase in the prior year quarter is primarily due to higher salaries and wages from normal compensation adjustments implemented in mid-2017 as well as the reclassification from employee benefits of about $700,000 related to the service cost component of the pension plan due to a new accounting standard that was adopted January 1.

Let's talk about credit quality and capital.

Overall, our credit quality and capital ratios continue to be strong and reflective of our legacy of credit and risk management.

We continue to demonstrate strength across key credit quality measures as these measures declined to the lowest levels in more than 5 quarters.

Further reflecting the consistent high quality of the loan portfolio, the provision for credit losses decreased from $2.7 million in the first quarter of 2017 to $2.2 million in the current quarter.

It is important to mention that our credit quality measures have been at or near historic lows over the last several periods and, as such, certain changes from quarter-to-quarter might vary in comparison to one another, but given these low historic levels, they would not necessarily suggest a material change in the direction of overall credit quality.

Before opening the call for your questions, I would like to provide some current thoughts on our outlook for 2018.

It is important to remember that the yield curve continues to be pressured with a 2-year to 10-year Treasury spread around 50 basis points at quarter-end and slightly lower than that as we speak today.

Lower spreads generally result in lower margins for the industry, and despite our general asset sensitivity, we are not immune from such factors.

We currently do not anticipate much overall change in our net interest margin during 2018 considering expected lower purchase accounting accretion and higher anticipated deposit betas from a potential 2 or 3 additional rate increases offset by loan repricing.

Asset mix changes might result in a slight decrease in net interest margin from higher securities levels.

We will continue to focus on expense trends to ensure positive operating leverage while positioning the company for long-term growth.

We are planning our normal midyear merit increases and expect marketing expense to be relatively consistent with the overall level during 2017 but spread somewhat more evenly throughout this year than during 2017.

Regarding a recent closing in a merger with First Sentry, we are planning the data processing and branch conversion for later this summer.

We still expect cost savings of approximately 38% with approximately 75% phased in during the last half of 2018 and the remainder attained during 2019.

And just as a reminder, we anticipate a substantial portion of the merger-related costs to be incurred during the second quarter.

We also currently anticipate our effective full year tax rate to be approximately 18% subject to changes in certain taxable income strategies that may be implemented in future periods, including the potential benefit from the New Markets Tax Credits we were just awarded.

In addition, we continue to anticipate that, over time, some portion of the benefit from the recent federal tax reform may result in lower-than-normal loan yields and higher deposit costs as such benefits are competed away by our industry.

We're now ready to take your questions.

Operator, would you please review the instructions?

(Operator Instructions) And your first question will come from Catherine Mealor of KBW.

[Maybe] my first question is with securities book build this quarter.

Can you just give us a little bit of color around that?

And maybe question one is, what's going to be average yield of what you're putting on from that and then also your strategy for size of the securities book moving forward.

Yes, I'll have Bob cover the yield part of that.

But I'll tell you that, as we talked about in prior quarters, the plan wasn't to continue to shrink it down to low -- really low levels.

We're going to build it back up again.

It was to try to stay in that mid-20s percent range.

So we're there, a little -- maybe 1 percentage point or 2 at the high part of the mid-20s right now.

And that was really driven by crossing $10 billion and wanting to get a little bit of additional size associated with that and the lack of loan growth in the first quarter, but that doesn't signal a continued increase in the securities book.

I think we're still comfortable in the mid-20% range.

Just wanted to get a little ahead of the curve as we cross $10 billion.

So in answer to your question about incremental yields that we're getting today on new purchases just here in the month of March, I don't happen to have February with me.

The yields we were typically getting on, on Fannie and Freddie CMOs were in the -- around the 3.2% area and then in mortgage-backed pools of about 20 basis points lower than that.

So hopefully that answers your question, Catherine?

Yes, it does.

And then Todd, can you talk a little bit more about your outlook for loan growth?

It feels like your commentary about how you're just managing the credit risk, it's just a little different.

Is there anything incrementally that you're seeing in your markets right now that is driving that commentary?

Or is it more just kind of the -- just to remind us how -- your conservative culture and things like that?

Yes, I think pretty close to it.

Actually, just last week, I read all the reports from all the different markets.

On each commercial loan group, there's a report every quarter.

I would look at this way.

I'm kind of trying to manage it from a holistic standpoint, right.

So we're trying to be disciplined on deposit, pricing and on expenses and on loan quality.

And we think long term that that's really the healthy way to look at it from an earnings perspective, but I would have liked to have seen more loan growth over the last quarter-or-so.

It's just -- I think at this point in the business cycle, we just don't want to take a lot of great risks.

We've seen a lot of long-term rates out there, 10-, 15-year fixed rates on commercial real estate projects, even from some pretty big banks, which kind of surprises me.

And structure, a lot of things that are -- there are low recourse or no recourse, a lot of speculative projects, and we're passing on those.

I mean, we're doing enough of that, obviously, to stay busy, but we're just finding, particularly I think because the two 10-year spread's shrinking.

As Bob mentioned, it's down below 50, and the lower that goes, it seems the more people are stretching to show some kind of net interest income growth, and we just think some of those risk areas are pretty high.

The indirect area, in particular, if we just look at -- in that and look at the spreads that are out there that banks are getting right now and back out your cost of funds and look at what's left in the credit costs and underwriting costs and marketing costs and people costs.

There's no spread in it.

So I know banks are growing some of those areas, but we just don't see the return in it.

So happy with the continued mix shift that we're seeing in terms of more heavily weighted toward C&I and home equity.

When you look at our total balance sheet remix over the last year, I just -- I'd like to see more in C&I, but it just seems like customers are being pretty conservative right now.

You would have expected more because of tax reform but also -- I think people that I'm talking to and reports I'm reading, there's people a little concerned about tariffs and what does that mean or doesn't that mean even for pretty small companies that are in the supply chain, and they're just not willing to be aggressive.

So there is loan growth out there, and we see it.

We look at it.

But it doesn't fit the risk parameters that we like or the returns.

So we're going to continue to be disciplined and, at the same time, really manage the expense base and manage the deposit rates and fees and everything else.

So we continue to focus on overall profitability but not stretch at the 10th year of the cycle.

The next question will come from Austin Nicholas of Stephens.

Maybe just on the First Sentry deal.

How are things going there?

I know you had some prepared comments, but any changes to the initial loan marks?

I don't know if you've gone through those specific analyses yet.

I'll have Bob jump in if he wants to.

But yet to see -- obviously, we just closed it in the last couple of weeks, but nothing of any kind of significant note.

I mean, I think everything is still operating the way we had modeled it, and we feel like we're at or ahead of the curve on pretty much all those different categories, and the integration between the 2 companies and the leadership we're getting out of their teams that's staying with us has been really, really good.

So that all feels good.

But regarding the economics, I think we're right on track with what we're expecting.

Yes, and we don't -- we have a third party engaged to assist with the loan mark, and we'll have that wrapped up primarily by the end of the second quarter.

So more on that as we move forward.

I don't at this point anticipate any significant change to the loan market we socialized or discussed with you at the time of announcement, which was around 2.5%.

The only other item that I would suggest has changed a little bit would be that they didn't have, in their investment portfolio, a mark-to-market of any substance at all back as of 9/30 when we last looked at their balance sheet.

And I would expect that as we mark that year on April 5 that, that would be a little bit negative, but that would assist us going forward because you have accretion on that portfolio going forward.

We did substantially restructure that portfolio after closing, so we're really investing in some different types of securities with more current yields as well.

And that's pretty small, as you guys know.

That whole deal was only 5% of our company.

So pretty small.

Okay.

Great.

And then just maybe on deposits.

What was the -- maybe what was the level of the shale inflow that you saw -- or shale-related, I should say, inflow deposits this quarter?

And then maybe how are those looking as we're going into the second quarter?

And I don't know if there's correlation with the natural gas prices there.

Yes, there is a little bit.

And we've seen that over the last few years.

It'll tend to track with that a little bit, but we've -- we were saying we were running in the low 7 figure number about 1 year, 1.5 years ago when prices were low, and now we're up into the low 8 figures, $20 million range the last quarter-or-so.

And that seems to be pretty stable right now with prices.

So that's kind of the way I'm looking at it at this point is, if it stays at these levels, which you don't know what's going to happen with the price of gas, that's the $20 million a month number for us.

Got it.

Okay, great.

That's helpful.

And then maybe just one last one on M&A and future opportunities.

I guess, given that the bank will be close to $12 billion in assets, mid- next year once the Durbin hits -- starts to come through.

Maybe could you refresh us what your M&A strategy is from here?

Yes, we're very consistent with what we've said in past meetings.

We think it makes sense to get to $12 billion or $13 billion over the next year or 2 combination of organic growth and the right opportunity if it comes along from an M&A perspective to get us there.

But 6-hour drive time of Wheeling, something that could be in market, where you can get a bit of an expense opportunity or preferably in a market that's growing pretty quickly, too.

So those are all criteria we talked about before.

And we'll be prudent with regard to that in terms of accretion and earn back expectations and everything else but that no change from what we were looking at in the past.

(Operator Instructions) The next question will be from Russell Gunther of D.A. Davidson.

Just a follow-up on the loan growth commentary.

Todd, could you give us a bit of color in terms of any of your markets, in particular, where you're seeing this kind of increased competition?

It's really across the board.

You'll get different competitors in every market, right, so you pick couple of our big cities.

You've got major regional banks and different banks in each of the cities, and then other banks our size and some smaller community banks.

But you tend to see some of the really long-term fix rates from some of the community banks.

So although we've seen a little bit of that from the bigger banks here very recently, but most of that comes from the smaller banks that aren't focused -- I don't think as intently on public earnings.

But that's -- those would be the -- where we see that.

The structure items would be more midsize banks to a little bit bigger than midsize, where you're seeing recourse being left off early, little more speculative nature of things and some of the larger banks have just completely gotten out of the market, and we hear that as well, too.

So multifamily things, like that, I think, are the areas we talked about in the past that tend to get to the most focus.

We're still in those areas, but we're just being very prudent about how we're approaching it.

Okay.

I appreciate the color there.

And then just as it relates to the Dodd-Frank reform, have you guys had a chance to look at that?

And any expectation for a benefit to WesBanco or how you're thinking about that?

Yes.

I think if it does go through and become law, we're watching it pretty close.

Obviously, the biggest impact on us would be the stress testing reporting, but even that is not a big impact.

As you know, we've been building the expense of preparing for that into our run rate over the last 3 years-or-so, and it's basically in there.

And we've worked hard to get other expenses out of the company to keep that mid-50s efficiency ratio as we crossed over $10 billion.

So we've been added -- able to add the software expense and the people expense, and the analytic expense.

We've been able to add a lot of that in there without it showing up in any quarter or any particular year.

If that does get moved up to banks over $100 billion in size, that would -- really banks our size are having to file that, but we've invested a lot in it, and we think it's a good tool to have anyway just to run your bank, whether you're required to do it or not.

So we've got that investment made.

We're going to continue on with it.

And we'll be prepared to submit our filings when we need to, or -- which, I guess, it'd be middle of 2020 at this point given that we crossed in the second quarter.

Or if we're not asked and required to submit it, then we're still going to prepare and still use it as a management tool.

That's really helpful.

And then just last question maybe for Bob.

With the tax rate guide you gave around 18%, is that inclusive of any anticipated or of the anticipated impact from the tax credits?

No, it does not.

That's current.

We're still finalizing the actual agreement for the New Markets Tax Credit.

So I have not made an assumption about an additional reduction in the effective tax rate in the current year.

It is reasonable to expect such, but it depends upon loans that we generate over the next few periods and how that factors into the calculations.

So more on that later in the year.

I don't expect that to be a material amount, Russell, but -- at least in the first year, but it's certainly a good thing, and it will generate a nice base of credits over the next 7 years.

The next question will come from Steve Moss of B. Riley FBR.

Want to follow up on the M&A question.

Just kind of wondering what are you seeing in terms of deal flow these days, acquisition opportunities?

Has it picked up or has it slowed down here?

Actually, pretty consistent, quite frankly.

I mean, I think the investment bankers would tell you that there's more movement toward negotiated deals than auctions, but there's still a lot of volume out there.

I'm just going by what I read and what I see.

So -- but there's opportunities.

I think people are looking in the future and wondering when's the recession going to hit.

Is it going to be 2 years or 3 years or whatever?

And a lot of banks have succession issues they've got to deal with and those don't go away.

So a lot of those items are still there, and people are trading at a pretty good premium right now compared to where they were a couple of years ago because of some of the tax reform and whatnot.

So I think all those things would continue to drive M&A opportunities going forward, and I don't see any slowdown from activity levels that I'm seeing.

Okay.

That's helpful.

And then, I guess, question for Bob, just on the purchase accounting accretion expectations.

How should we think about it as the year goes on?

Is it a slow fade?

Or is it a little bit more of a significant drop as we head towards like fourth quarter?

The current purchase accounting, which was 2 basis points less this quarter than first quarter of last year, 6 this quarter, 8 last year.

So when you're down to 6, you're thinking about a slow fade.

You're not thinking about that going up or down materially.

So 5 going to 4 would be our projection for the rest of the year, 1 quarter to another.

That doesn't include First Sentry yet.

But as Todd mentioned earlier, at 6% the size of the company, we don't expect significant marks to influence the income statement throughout the rest of the year.

And the amount of earnings accretion from that deal is still projected to be what we disclosed back in November.

The next question will come from Daniel Cardenas of Raymond James.

Just a quick question on the credit quality front.

I mean, the numbers have been trending in the right direction here.

Maybe if you could give us a little bit of color as to whether there are any areas categorically that maybe you're a little bit more concerned about.

And then a quick follow-up, how should we be thinking about charge-offs going forward?

They've been very well behaved here.

I mean, do you see any significant alteration there?

Sure.

We don't have any significant category or concentrations in particular categories.

We've got all that publically disclosed in terms of what we have out there.

But we're not seeing any concentrations build in any particular areas, whether it'd be an industry or a geography or anything like that.

So from a concentration standpoint, really no changes there.

I think with regard to future charge-offs, and it kind of gets back a little bit to the loan question.

This is a great market to push out problem assets in, right.

So yes, if you can be sharp on that and have some deals that maybe you're not even 100% sure of this still doing okay but don't quite hit the risk-return categories you want.

Those are getting snapped up by other banks.

So I think that bodes well for us.

We feel good about the charge-off rates that we've had and have had historically.

And we'll flow with the cycle rates, so you're at some pretty low levels right now.

You should be at some low levels at this point in the cycle.

When that cycle turns, it'll turn for everybody.

But our plan would be to be on the better side of that top quartile in terms of credit quality, top quartile in terms of past dues, charge-offs, all of that.

You don't get a lot of credit for that today because it's -- we're still in a very strong economy.

But there'll be a point in time when that really starts to become meaningful again, and we want to be in the top quartile of that when that happens.

So we're being opportunistic with regard to pushing out a deal here or there where it doesn't make sense, but we're not seeing any kind of build in any particular areas, nothing for us to be concerned about at this point in time.

It'd just be the national economy on what may or may not happen in the future that we'd be impacted by along with everybody else.

I just might suggest -- I would refer you to the MD&A of the recently published Annual Report.

We use this when we go out on the road, but there's some really -- some excellent write-up in there on the credit risk, distribution of loans by market area, by type of property, by C&I NAICS code.

There's a discussion there about multifamily, about energy, the hospitality industry.

So that the -- while time limits us from being able to go through that industry by industry here in response to your question, I would suggest that that's a fairly good write-up and one that I haven't necessarily seen a lot of other annual reports for companies of our size do, so kudos to our Chief Credit Officer for helping us write that.

And we do manage those.

We don't just act and then report what we did.

We manage to it within the categories that we really want to be in those.

So as Bob said, those are pretty accurate in terms of what we've done historically, and we see no big change in direction in terms of our approach.

Ladies and gentlemen, this will conclude our question-and-answer session.

I would like to hand the conference back to Todd Clossin for any closing remarks.

Thank you.

As I kind of addressed in some of the Q&As, we remain focused on our disciplined growth, expense management and increase in our long-term shareholder value, looking at both, obviously, earnings growth and dividend growth and remaining well positioned for success in any type of operating environment that might come at us.

I think we got the right teams and products in place across our franchise.

We talked about the strong legacy of credit quality and risk management.

We are slightly asset sensitive balance sheet and have demonstrated the ability to manage expenses appropriately.

So I think we've got some good flexibility in our approach going forward.

I want to thank you for joining us today and look forward to seeing you at an upcoming investor event.

Thank you.

Thank you.

Ladies and gentlemen, the conference has concluded.

Thank you for attending today's presentation.

You may now disconnect your lines.