Synovus Financial Corporation (NYSE:SNV)
Q4 2008 Earnings Call
January 22, 2008 4:30 pm ET
Richard Anthony – Chairman and Chief Executive Officer
Fred Green – President and Chief Operating Officer
Kevin Howard – Chief Credit Officer
Mark Holladay – Executive Vice President, Chief Risk Officer
Tommy Prescott – Executive Vice President, Chief Financial Officer
Good afternoon ladies and gentlemen and welcome to fourth quarter earnings 2008 conference call. (Operator Instructions) It is now my pleasure to turn the floor over to your host Richard Anthony. Sir, floor is yours.
Thank you very much. I want to welcome each of you to our fourth quarter conference call. We distributed our press release about 30 minutes ago so I am confident you have that in your hands and we will not cover everything you saw in there but I will make some remarks initially, followed by Tommy Prescott our CFO and then Fred Green our Chief Operating Officer.
First a reminder that we will be making some forward-looking statements that are subject to risks and uncertainties. There are factors that could cause our results to differ materially from these statements and they are set forth in public reports we file with the SEC.
What I would like to do in starting the meeting is first of all acknowledge and make reference to the reported net loss for the quarter which excluding the goodwill impairment charge was $195 million. It is pretty obvious we took a pretty conservative stance in the quarter in a couple of respects. The two big items that will get your attention would be first of all the goodwill impairment charge and secondly the large provision that we had pre-announced actually early in the month of January.
Just a couple of things to say about the goodwill impairment. We came in with a balance sheet, came into this period with a balance sheet that had about $483 million in goodwill. The general industry conditions, the decline in market caps for banking companies have resulted in impairments throughout a number of regional banks as we have noted in recent earnings releases. We are left with a very nominal amount of goodwill, some $40 million on our balance sheet and actually started with probably a lower percentage of goodwill in relation to the size of our company than many others who have been in the acquisition business.
At any rate, we will have a cleaner balance sheet without the goodwill attached to it and that charge was announced earlier today. Secondly, on the provision, we had stated around the 2nd of January that we expected a much larger than normal provision somewhere in the range of $350 million. The number as the results were finalized was $364 million.
I have in front of me some information that really breaks this $364 million down in a couple of different ways and I want to share this information with you. First of all, of the $364 million some $231 million would be related to charge offs that were taken in the quarter. Now of that $230 million $168 million relates to impairments on loans that have moved into the non-accrual category.
There were other charge offs that really were more of the normal write downs that you would see totaling some $62 million. Now, one side of the pie chart has to do with charge offs and the impact those charge offs have on the provision and that is what I just covered. The other part of the pie chart that I’m looking at has to do exclusively with reserve building. You noticed in the press release that our loan loss reserve has increased to 2.14% of loans compared to 1.68% at the end of the third quarter.
Now in this reserve building component we took a targeted look at the Atlanta construction and development portfolio. We reassessed it. We clearly had a conservative lean indicating aggressive action and $47 million of the $133 million in reserve build was related to Atlanta migration into higher risk rates. These loans in most cases are accruing loans but move into higher risk rates.
Now we had migration that took place, negative migration, in other parts of the portfolio. The non-Atlanta segment of this migration resulted in a $51 million portion of the provision. So here you see we have $98 million related to migration, about half in Atlanta and about half in other parts of the portfolio.
We took a conservative lean in our reserve factors, our unallocated reserve was increased in the quarter and we made an additional provision based upon qualitative factors that given the deterioration that continued in the economy and in the residential real estate market required reserve building. So these so called reserve factors ended up with about a $25 million additional provision.
Finally, there was about $11 million in reserve building tied to loans that went into non-accrual that we did not have time to do an impairment. We just couldn’t get the updated values. So when that happens we feel like the provision needs to be taking that into consideration so we put specific reserves on those properties until they can be impaired.
In summary, the total provision of $364 million was broken down in that manner.
The last thing I will say about this conservative lean and reassessment that was done in December is that we had some other real estate write downs of about $25 million that was in the P&L related to other properties that we are holding and other real estate. I hope that helps and I felt like that would give you more color on the provision that took place in that recent quarter.
I want to shift now to what I think is a real positive that continues in our company. Deposit gathering and liquidity. Our year-over-year core deposit growth was 5.1% at the end of December and we had on a linked quarter basis an 11.1% increase. Tommy will add a little to this but he will mention the success we continue to have in our shared CD and money market account program. Unique. No other company has the capability we have with that particular product.
Moving to the subject of capital, I believe we have a continued source of strength here as I am confident you all know we did receive our capital purchase program investment from the U.S. Treasury on December 19. It was $968 million. I believe that this program will continue to do its part to generate confidence in our banking system. Certainly in our company it drives our capital ratios which were already good and strong up to higher levels. We believe it will make possible for us good gains in liquidity and deposit gathering going forward which in turn will stimulate our ability to satisfy customer needs and demands for credit.
I do want to mention our capital ratios. First, our tier-1 ratio is at 11.2% at the end of the year. The total risk based capital ratio is 14.5% and the tangible common equity to asset ratio is 7.9% and Tommy will add a little bit to what I have said there about those ratios.
Moving to the fifth topic I wanted to cover here at the outset, our asset disposition strategy. We continue to get even better organized around this approach. We have centralized the team and accountability to manage the disposition of problem assets in the company. We have created additional infrastructure. The leadership group is identified. They are working with our individual banks as we make decisions that will take into consideration the assets that are better able to be converted into cash than others so that we have a priority system and are able to rank our assets in terms of disposition priority.
We have created just in recent weeks a new subsidiary within Synovus to house some of the non-performing assets. We have named the entity Broadway Asset Management. We have essentially sold or transferred $500 million in non-performing assets from seven banks which will relieve some of the pressure on our banks with the highest levels of NPA’s. This will create a better, more productive focus for our bankers in those banks even though they will continue to contribute to problem resolution. Still, within the charters themselves in those instances creates a better set of credit metrics and will better allow our bankers to be bankers.
Finally, I want to mention Project Optimus. We have continued to share with the public the progress that is underway as we implement the ideas, the 700 ideas that were converted into good ideas under Project Optimus. We are on schedule, on track to meet the expectations that we set for run rates at the end of the fourth quarter. We are moving now into 2009. The executive team, we call it our steering committee, meets every month to go over in detail progress under Project Optimus. Project Optimus has brought into our company a more disciplined way of life as we make decisions, as we evolve as a company, as we work toward continued improvement. We clearly have centralized some of the areas that we would have found difficult to convert in the past.
Our company and the leadership realized that as a $35 billion organization we need to operate in a more sensible and basically efficient manner. So I continue to be very pleased with the shifts that are taking place in our company as a result of these good ideas that came from Project Optimus.
So that gets us started. I hope that helps you some at a high level understand where we are in our progress in Synovus.
We will now shift to Tommy who will give some insight on the balance sheet and he will hand off the program to Fred after that.
Thank you Richard. Just a little more color on the balance sheet and margin and maybe a capital comment also. In this environment loan growth is slow as you would expect. In the environment the positive story is very good. During the quarter we continued the momentum we saw through the third quarter and we increased our core deposits during the fourth quarter compared to third quarter $605 million or 11.1% linked quarter growth rate. Some of the drivers there were government deposits and we also had good experience with our shared products.
For the year, of course, core deposits up 5.1% or $1.1 billion. On the shared product side, we ended the year and the quarter at $1.74 billion in shared products. That represented an $850 million growth in the fourth quarter. The majority of that was actually earlier in the quarter probably at the height of the customer concerns that were in the marketplace about the banking industry in general and we were bringing in a lot of the deposits from the outside in particular at that time.
The deposit momentum has actually carried into the early part of 2009. We have seen a good January so far with some good growth in total core deposits. That great deposit growth and the great government preferred stock investment that closed on December 19 and was funded on December 19 together have created a tremendous amount of liquidity in our company. I know you have seen that on the balance sheet. Some of that will be there on a short-term basis as we bring down the brokered CD’s over the next 45 days or so to absorb this new liquidity.
I’ll make a couple of comments on the margin. The margin for the quarter was 3.20%. It was 3.42% one quarter ago so we are down 22 basis points. You have to remember that prime rates started this quarter at 5% and ended at 3.25% so that 175 basis points is a pretty big amount to swallow.
The earning asset yield during the quarter was down 37 basis points while the cost of funds was down 15 basis points. The actual negative carry on non-performing assets went up about 3 basis points during that period. Those are the drivers that brought the margin down to a lower level during the quarter.
Just kind of looking out a little bit on the margin, we would expect to see some additional pressure in the early part of the first quarter as we absorb the rate cuts that were made, particularly the ones late or through the middle part of December with the 75 basis point cut that occurred there. We’ll have to absorb that on the asset pricing side but things that will help the margin going forward are the great job that our folks are doing with loan pricing.
The message is crisp and clear on the front line that in this rate environment and in this credit environment loan price has to be one of great discipline and the loans that we on-boarded or renewed in December were at a little over 5% with variable rate loans at least half of them had floors. So our front line guys are doing a good job at pricing loans.
Additionally we will have an opportunity to re-price deposits going forward. Some of the CD’s that were rolled off during the year were priced are coming up on anniversaries of some really high pricing during 2008 and I think we will have some opportunity there to improve the cost of funding some. Then we will be bringing the brokerage CD’s down somewhere in the neighborhood with excess liquidity and on any given day it varies but let’s call it a little over $1 billion possibly up to $1.5 billion.
That funding and that balance sheet being a little bit swollen up because of the recent receipt of the U.S. Treasury investment and that excess liquidity being there at year-end actually took our tangible capital ratio which is very good at 7.91% reported level but when you take into the de-leveraging we will do with the reduction of brokerage CD’s that helped bring that ratio up to north of 8% as we ease into the first quarter.
So that is just a couple of high level comments I wanted to make. I want to turn it over to Fred now for the credit side.
Thank you Tommy. Richard mentioned a couple or a number of our credit metrics and I just want to share a little more detail on several of them. Our credit issues for the most part continue to be contained by product type and that is residential construction and development category and pretty much by geography as well. Primarily Atlanta as referenced in the release and as Richard commented on.
What I want to do is spend a little bit of time talking about other components of our portfolio that are holding up real well and share that with you. Let me begin with our retail or our consumer loans. As I think everyone knows we have strategically not built an indirect auto book so any deterioration nationally within those type portfolios we will not see as a result of really not having any.
The primary retail loans we have, though, are HELOC and credit cards so I will touch on those just a second. Our HELOC portfolio is $1.7 billion. It is very healthy and continues to perform well. The non-performing loans in that portfolio ended the year at 0.47%. 30 days and greater past due at 1.04% and had been tracking at close to that level throughout the year.
Charge offs for the quarter were at 1.09% and 0.68% for the year. Again, that portfolio is holding up very well. Credit cards, again another category that has shown deterioration throughout our industry is holding up well here at Synovus. First off, our balance is relatively small at $295 million but the credit metrics are important. Some we are proud of. Our 30 day past dues in that category or portfolio is 3.21%. Our charge offs for the quarter were at 4.4% and again on an annual basis at 3.95%.
I think both of these particular retail or consumer portfolios are doing as well as they are compared to maybe the industry averages and it is really a result of our origination. These products are sold as companion products to existing relationships. They are customers that we know and have banked for awhile. None are sold out of market or through non-relationship sources like brokers. So again these are our customers that we have had for awhile and they continue to perform very well.
Let me move up to the commercial real estate category. I want to start with a comment we made last quarter about our variable rate demand notes. Those that were listening in will recall that we talked about the variable rate demand notes. They are basically the term facilities that we underwrite and back with our letter of credits.
They are sold or have been sold primarily to the money market mutual funds group and with the liquidity issues that came into play in the industry in the early third quarter a number of those purchasers chose not to continue to purchase and we were seeing some of those variable rate demand notes put back to us since we issued the letter of credit.
The reason I mention that is they are existing credit exposure. They are customers that are our best customers. They are underwritten in conventional rates. We have had some pretty aggressive stress testing there. As of this quarter end we had about $400 million in net funding as a result of these variable rate demand notes and they distort some of the growth rates that are in the tables.
That is why I really wanted to bring that out. I’m really just going to comment on two and I would be happy to field questions on any of the others and maybe more detail on these. The first one I will comment on is hotels. In the table the annualized growth rate was 73.4%. Within that category there were $79.2 million in bond puts and there was also some coding reclassification in that category of $29 million. That leaves true growth in that area of $49.8 million or 23.9%. Almost all of that, in fact all of it, is related to construction draws on projects that are underway.
Again, that product type is holding up very well. The non-performing loan ratio at year end was 0.97%. The 30 day and over past dues were zero. The quarter net charge offs were zero and on a year-to-date basis we have a 0.1% recovery.
The next item I wanted to talk about was shopping centers. We recognize that shopping centers are looked at and we certainly look at them as a possible next wave of deterioration. Again, the growth rate that was expressed in the tables was impacted by the puts, again the credits we have issued letters of credits on.
Of the growth in that category, $38.9 million were related to the bond puts and that also had some coding reclassifications of $23 million so in essence there was no net growth in that one area. By the way the coding reclassification came from the commercial development and other investment property categories that either show run off or single digit growth rates as a result.
Some credit metrics on shopping centers, our non-performing loan ratio at quarter end was 0.36%. Our 30 day and over past due is 0.76%. Our quarter to date charge off ratio is 0.16% and year-to-date 0.10.
Again, I point those out to explain some of the growth but also how well they are holding up. Let me move now to the traditional CNI category. The commercial strategy that we have talked about for the last couple of years is alive and well and we are proud of the progress we are making there. The portfolio is holding up well there.
The non-performing ratio in this category is 1.58%. 30 day and over past due is 0.73% and quarter to date charge offs at 1.68%. I point out that charge off rate is not a systemic issue. We had I guess about $10 million associated with the charge off on an earlier mentioned non-performing loan to a customer in the automobile business and about another $10 million is associated with three leases, one in the trucking business and the other two were related to private airplanes.
So again, no systemic issues there.
I will just move on to the area we are having the greatest stress in and that is our residential portfolio. I will add a little bit to it and then see what questions we might have. Of our total $5.1 billion in that portfolio, our Atlanta market has $1.2 billion of that amount. Of the $1.2 billion in Atlanta we still have approximately $1 billion in performing loans and the balance in non-performing.
Richard mentioned a number of very aggressive steps we took in the fourth quarter. Specifically building reserves in Atlanta. We have had aggressive write downs there in the fourth quarter. We have taken our impairment marks. We are planning for even greater liquidation results in the early part of 2009 and as a result have taken liquidation charges to accommodate those plans and what we would anticipate yielding during those type sales.
So I will just end it with that and again we will be happy to ask Mark Holladay or Kevin Howard and others to join me if there are any specific questions you might have.
Richard, I will turn it back to you.
Thank you Fred and Tommy. I’d like to open the floor now up for questions from the audience.
(Operator Instructions) The first question comes from the line of Nancy Bush.
If I missed it I am sorry but did you address the Island at all and the size of the exposure, etc.? It has been in much of the news lately I think down in Atlanta.
What we will say about Sea Island is they are our largest customer. I won’t get into the net amount of our loan there but what I will say is that the loan is a performing loan. We have very, very frequent interaction with the company and the principles because of the size of the loan and that being our largest customer. As I said it is a performing loan.
Has that loan been re-structured? Is that part of this remaining performing? My understanding is that Sea Island development is in not great shape.
The are in, as you know, the resort business which is suffering throughout the country. That loan has not been restructured. We are talking to them about opportunities to do that but at this point it has not been restructured and is current as well.
The reference Fred is making would have to do with a longer term and the company is performing within the maturities that have been established and with all the covenants and payment requirements but if possible we would like to work out a longer term maturity and those conversations are going on. There are other bank partners with us and the activity levels have been pretty good down there. I was down there last weekend and was impressed with what I saw.
I asked Kelly King today on the BB&T call about doing auctions in Atlanta and I know that had been your plan before. If I recall it was about $125 million a quarter. If you can just update us on that. Kelly said the conditions for auctions there were pretty tough and they had done some small things there and the discounts were just prohibitive. If you could just speak to that.
In the third quarter we had mentioned to you that we took a charge down to do an auction in the fourth quarter. We did carry out that auction. It did come in where we anticipated it to come. We got some really good partners that we do business with. The end users that we are seeing are actually end users buying these properties. The mortgage rates are dropping. The availability of financing and affordability is going up. Right now we are not seeing that. We had a successful fourth quarter auction so we still feel pretty comfortable with where we are.
Just to restate our approach on this asset disposition strategy, unless something changes we will continue to have fairly frequent auctions. I believe the next is scheduled for late February. We will have one that follows it. We have had four so far. Primarily houses. Most in Atlanta. We have gotten, and this is based upon the original loan amount, we have gotten proceeds basically in the 63-70% of original loan amount on those auctions. But our feeling is that with houses we just can’t justify not pushing them out as quickly as possible. Anybody would know that you have maintenance, taxes and vandalism risks and so we just feel that we have to keep moving those and so far the auctions have been the best vehicle, not the only vehicle, but one of the best certainly for bulk sales.
Is the $125 million per quarter still an operative number?
Yes. I’m looking at Mark and Kevin and the plan is still for that.
Yes that would be correct.
The next question comes from Tony Davis.
I guess you did sell $500 million to Broadway in the quarter. Fred, I wonder what the mark on that was and if you could maybe just give us the percentage of the cumulative mark from original book on the $920 million in NPL’s you have got now. This is sort of another way of asking what Richard just said.
The sale or transfer to Broadway was obviously an internal transfer and I’ll ask Mark again to share the cumulative mark question.
In our non-performing loan category there is about $700 plus million in our total non-performing assets. That number is a little higher but our cumulative mark on that is right at 25%. In the structure we did, as Richard mentioned, took an additional mark from ORE and non-performing loans of about $50 million during the quarter through P&L and provision to position us in the first quarter to move those assets that we were previously talking about.
We have a few houses that went into the BAM subsidiary but a lot of the assets in there are lots and some land. What that means is that some of these assets are going to be held a little longer than some of those we feel must be moved out quickly. As you can imagine it is a real difficult time to be selling developed lots. So we would be holding there in a position to perhaps look two or maybe even three years down the road. Not for all of these assets but for some at the bottom end of the scale.
Of that $500 how many would be lots do you think?
It is a high percentage.
It is going to be probably in the 60-65% of those assets are residential.
I wonder if you could talk about the recent shelf filing and your thinking about the tangible common equity levels that might prompt you to look at activating that.
The shelf filing really surrounded the U.S. government preferred investment and just getting that out there. Actually as previously stated tangible common equity ratio is very sound and probably among one of the best in the business right now and it gives us a lot of avenues and opportunities down the road as things evolve and you one day get away from this U.S. government investment. But right now it doesn’t mean any more than just that.
The most recent trends down there in deposit pricing it has been pretty hot and furious I guess?
We are hoping for relief from that one day and really have still seen some very, obviously pricing is down relative to all the indices there. Still there is some un[inaudible] pricing out there in the marketplace. Local market CD’s still tend to be over brokered CD’s so we are just having to fight it out as best as we can on the deposit side and think that is a very big wild card in 2009 as to how that piece of the margin flows with regard to competitive pricing.
The next question comes from Adam Barkstrom.
I was just curious, want to shift gears a little bit and talk about the TARP funding. Give us a sense of how you are thinking about this. We saw SunTrust and BB&T’s results today and we saw some fairly noticeable levering up on the investment security side whereas you have kind of kept it somewhat flat. I’m curious as to what your thoughts are on that side of the balance sheet especially given that your commentary on letting some of the brokered CD’s wind down. What are we thinking on levering up with the TARP funds?
The guys you just mentioned have had a little bit longer to work with the U.S. government capital. We actually had within the reporting period we are talking about we had it for seven days. So we really hadn’t had time to fully, but we have put some additional capital in the banks and expect that to strengthen the banks and allow them to over time leverage it. We are using some excess liquidity short-term to bleed off some of the brokered CDs and we will look for opportunities to deploy the capital in a profitable way very, very soon. But these guys have been at it for a little bit longer than we have in terms of possession of the dollars.
I was asking what your tendency might be going out 2 to 1 or 3 to 1. Do you have any thought along those lines?
First of all, using this to offset…actually getting rid of the brokered CD’s is more profitable than the investments you’d make right now. So that is the short-term strategy. We will be looking longer term as things unfold.
Could you help us out with the one piece of sort of the run rate for the preferred cost? The dividend piece is pretty easy but the warrant dilution, any way you could help us out with sort of what the run rate is for the cost? How you guys are looking at that on a quarterly basis?
I can give you a pretty good estimate of it after the discount has been applied against the preferred stock for warrants and it has to be amortized. I would estimate that cost to be I guess the easiest way to do it is to describe it as it pushes the yield on that. While the cash cost is about 5% the yield in the dividend is about 7% with that amortization of the discount.
Can you give us some thoughts on what your thoughts are looking into 2009 on the tax rate?
It will be a little more normal in 2009. Obviously it got out of whack with the goodwill write off but mid 30’s right now is a good number.
The next question comes from Kevin Fitzsimmons.
I just wanted to clarify a couple of things. First on the margin I just wanted to make sure I heard you right that you are going to see additional pressure in the first quarter and then hopefully kind of stable to improving after that because of the price of CD’s. I just want to make sure I heard that right. Secondly, on credit costs obviously this was a quarter whereas you said Richard you took some very conservative steps and aggressive steps so when we look at the run rate going forward I know it is tough to talk about credit in terms of a run rate but should we be looking at the first quarter not using this quarter and maybe looking at something between this quarter and the third quarter as something more realistic given the aggressive steps you took this quarter?
On that last point we would say yes, we would not encourage anybody to extend the run rate you saw in the fourth quarter out into the first quarter of 2009. That would not be what we expect.
On the margin question you really got it right. We would expect additional pressure on the top line on net interest income with our variable rate loans absorbing the additional hits that will occur from the 75 basis point decline that happened mid-month in December. Those will have to play themselves out. The offsets will be the brokered CD’s coming off, the great job our folks are doing on truck line loan pricing and also the opportunities we will have fairly early and throughout the quarter on the CD re-pricing.
So based on what you are seeing now kind of…we have only got days of January but based on what you are seeing would you expect the magnitude of compression to be less in the first quarter versus fourth?
We are not really prepared to take it quite that far.
The next question comes from Christopher Marinac.
I wanted to ask about seller financing to the extent you are using that to move problem assets from the books and is it something you would prefer to do or not do in the coming year?
We’ll get you an answer. It is kind of frequently and we think it ought to be a tool and we have used it some. I don’t have the particulars but in recent conversations I continue to bring it up because I think we need to give our bankers all the tools that they think are necessary so Kevin do you want to comment further on that?
We have just started picking up the pace there in Atlanta and south Florida particularly along the coast. When necessary we have done some of it on houses where we are making sure that the customer is a qualifying customer. We don’t have any big program out there but we have done some of that in those particular areas.
I wanted to follow-up about outside of Atlanta perhaps in the Carolinas. Have you seen an deterioration whether it is on construction or in the CRE front, whether it be your bank in Columbia or other markets and North and South Carolina you operate in?
Our bank in the Carolinas is one bank charter headquartered in South Carolina but it is throughout the state. The softness we have seen inside Carolina has been on the coast almost exclusively in the Myrtle Beach area and it is in some of the multi-family there. Again just to share some high level information with you the non-performing asset ratio in South Carolina ended the year at 1.68% which was really our lowest by state and the net charge off ratio in South Carolina for the quarter was 0.96% again performing nicely. The issues there, as I said, are pretty much centered on the coast and really in the Myrtle Beach area.
The next question comes from Jennifer Demba.
A question on the Atlanta residential construction development portfolio. Fred thanks for all the detail on that. You said about 16% is on non-performing status. Can you give us the net charge off level in the fourth quarter for that as well as the 30 day past due?
We can. Is your question specific to Atlanta? Hold on just one moment.
I think your question wanted to address maybe the Atlanta portfolio, the past due and non-performing and the charge offs. As Fred already mentioned we have $240 million of non-performing loans in the 1-4 family properties. We had about $64 million in the residential part of our past dues in that 1-4 family in Atlanta. Our total past dues as you know were down for the quarter. Atlanta represented also a slight decrease quarter-to-quarter. Their total past due is about $117 million in total past due in the Atlanta area banks.
And the net charge offs for the quarter?
The net charge offs in the Atlanta area in the 1-4 residential development was around $62 million.
When you have been selling lots what kind of prices have you been getting as a percentage of loan value?
We haven’t sold a lot of our lots. We are holding our lots. Of course our strategy has been to move the houses first. We have sold some of those probably 40-50% range on some of the lots we have sold. We put a few lots in one of the auctions we held, I think the one in October. It may have been about $1 million in lots just kind of sampling the market and I think we came out off the top of my head in the 40% range off of our book in that portfolio.
There are no further questions in the queue. Do you have any closing comments you would like to finish with?
Thank you for joining us on this call. I would like to leave you with this thought. Think of our company’s approach as being conservative, proactive and aggressive. We are, in my opinion, doing the right things particularly as it relates to credit and managing our way through this part of the cycle. I feel like as painful as it has been, 2008 was a year of change and progress. We are building a foundation for the future of this company that will serve us well. We are not out of the cycle so 2009 will be tough but I am optimistic that we have gotten even better organized around this approach and I leave you with the capital thought.
This tangible capital to asset ratio continues to stand out. It will serve us well and we will be playing offense before too long. Not quite yet but stay tuned we will be.
Thanks a lot. We will be in touch.
That does conclude today’s conference call. You may now disconnect.
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