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S & T Bancorp Inc (NASDAQ:STBA)

Q2 2013 Earnings Conference Call

July 23, 2013 1:00 pm ET

Executives

Mark Kochvar – Senior Executive Vice President and Chief Financial Officer

Todd D. Brice – President and Chief Executive Officer

David G. Antolik – Senior Executive Vice President and Chief Lending Officer

Analysts

Collyn B. Gilbert – Keefe, Bruyette & Woods, Inc.

Matthew Breese – Sterne, Agee & Leach, Inc.

Jake Civiello – RBC Capital Markets LLC

David W. Darst – Guggenheim Securities LLC

Operator

Greetings, and welcome to the S&T Bancorp Second Quarter 2013 Earnings Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mark Kochvar, Chief Financial Officer for S&T Bancorp. Thank you, sir. You may now begin.

Mark Kochvar

Thank you. Good afternoon, and thank you for participating in today’s conference call. Before beginning the presentation, I want to take time to refer you to our statement about forward-looking statements and risk factors, which is on the screen in front of you. This statement provides the cautionary language required by the Securities and Exchange Commission for forward-looking statements that may be included in this presentation.

A copy of the second quarter earnings release can be obtained by clicking on the press release link on your screen or by visiting our Investor Relations website at www.stbancorp.com.

I would now like to introduce Todd Brice, S&T’s President and CEO, who will provide an overview of S&T’s results.

Todd D. Brice

Well, thank you, Mark, and good afternoon, everyone. I’m pleased to report net income for the second quarter of $14.1 million, or $0.47 per share versus $12.3 million or $0.41 per share in the first quarter this year and $8.6 million or $0.30 per share in the second quarter of 2012.

Let’s say all in all, we’re very pleased with our results this quarter as we continue to experience positive trends in loan growth, asset quality, net interest margin, fee revenues, expense controls, and also, we’re seeing some benefits from the synergies afforded to us by our two mergers last year. I think all of these areas have been a major focus for us over the past year, it is really nice to see our efforts impacting our business in a favorable manner.

For the quarter, the loan portfolio increased $61.3 million over the prior quarter, which contributed to part of our $900,000 increase in net interest income. Our Chief Lending Officer, David Antolik is going to elaborate a bit more on loan growth in his comments. But it was really fairly evenly distributed between our CRE, C&I and mortgage lines of business. Also building our sales teams has been a focus over the past year and some of the folks that we brought on board are beginning to see their production ramp up and hit the balance sheet.

And I’m also pleased to report that we recruited five new members to our commercial lending team since the last call, and we expect to see their production ramp up towards the end of this quarter once they get settled into their new roles.

Asset quality metrics continue to show nice improvement as our provision expense for the quarter was $1 million versus $2.3 million in Q1. And if we add another good story in net charge-offs for the quarter, which totaled $900,000, nonperforming loans now stand at $37.9 million, which is an 18% or $8.4 million decrease from the end of Q1, when they were $46.3 million, and NPL total loan ratio is now 1.1%, so nice trends on those metrics. And finally, the substandard and special mention loans decreased by $20.6 million or 7% to $259 million at the end of the quarter. These results are really a direct reflection on the hard work that the credit and lending teams are undertaking really just to improve the risk metrics of our profile – portfolio.

Another area we’re seeing, where we do expect to see some softening as there are mortgage banking division, which is beginning to see the effects of increasing interest rate environment. For the year, originations were up approximately 14% over last year, but at the end of Q2 we did begin to see our pipeline slip a little bit. One bright spot is the volume of purchase money mortgages, which continue to increase as some sales in the Western Pennsyl marketplace continue to be very strong.

While we don’t expect the fully makeup from the reduction and the financial request through purchase money activity, we do expect to see a slowdown in payoffs in our home equity portfolios, which should help with offsetting some of the decline in new origination volumes. To further offset the slowdown in the mortgage business, we are focusing our attention on consumer lending areas, and this year we will increase originations by 22% through the first six months of 2013 as compared to last year. And a lot of this activity is coming in our home equity products, also small business production through our branch network is gaining traction as we continue to focus on our efforts in this segment of market through that deliver channel.

And on the retail side, we’re also seeing some nice growth in the number of DDA accounts which are up about 6% year-to-date on a per household basis and we’re aggressively focusing our attention on cross-selling efforts to maximize penetration in these households. We’ve also modified several of our fee schedules in our deposit products, which should begin to hit the income statement in Q3 and Q4.

And then wealth management, again, another bright spot as fees have increased about 8% compared to last year. We really had some nice traction on the Stewart Capital Mid Cap Fund, which has grown by about 40% year-to-date and today assets under management are well positioned now to about $1.7 billion. And then just finally, I just want to mention that many of the expense initiatives that we’ve implemented through the first couple of quarters are beginning to gain traction.

Noninterest expense for the quarter was $28.4 million and that compares favorably to $31.6 million in Q1. We also anticipate closing two more branches this quarter, which again should have minimal impact on our customer base, but we’ll help with the expense control going forward. I know Mark is going to provide some more color on our expected run rate and the margin in his comments in a few moments.

So at this point, I just like to turn the call over to our Chief Lending Officer, David Antolik

David G. Antolik

Thanks, Todd, and good afternoon, everyone. As Todd highlighted the bank experienced solid loan growth in the second quarter as evidenced by a net increase of $61.3 million or 1.8% in total portfolio allowance. This growth was the direct result of our strategies to improve our sales efforts and to add highly qualified professionals for our sales team.

For the quarter, commercial loans grew by $44.5 million or 1.8%, with an increase of $24 million in CRE and construction loans, and an increase of about $20.5 million in C&I loans. Additionally, residential mortgages continued their strong growth with balances increasing by $20.7 million or 4.7% for the quarter.

I now like to provide an update to some of the strategic initiatives that I outlined during last quarter’s earnings call. First, we hired five commercial lenders since the last call. These folks are all seasoned banking professionals, three of these new hires are additions to our lending teams in our core markets of Western Pennsylvania, and few are additions to our Northeast Ohio staff.

Now second, our business banking team, those lenders who handle aggregate commercial lending relationships under $1 million added strongest production quarter since its inception of nearly $20 million. Supporting this growth is a fully developed and implemented underwriting platform. This growth is a product of being fully staffed with business bankers who work closely with their partners on the retail side of the bank to identify new lending opportunities.

Third, our Northeast Ohio region continues to grow. That team now has six members and commercial loan outstandings of approximately $50 million. Next, we continue to see growth in our dealer core plan business across all of our markets with increases and commitments of 5.6% from $123 million to $130 million, an increase in outstandings of 6.5% from $76 million to $81 million for the quarter.

Additionally, the quarter saw growth in our commercial construction portfolio and that growth continues to help provide stability to our commercial real estate balances. Our total commercial construction commitments at June 30, were $320 million, which includes $167 million outstanding versus $297 million in total commitments and $165 million outstandings at March 31. We also saw our C&I revolving line of credit utilization rates increased from 42% to 45% quarter-over-quarter, that increased utilization helped to drive much of our C&I growth.

Our commercial pipeline continues to be solid as a result of our additions to the commercial lending staff and particularly strong with regard to our small business lending area. We did have several large commercial loan payoffs that were anticipated for the second quarter that were delayed. We anticipate that these payoffs will occur in the third and fourth quarters, and we’ll provide an additional challenge to our loan growth pools.

Mark will now provide you with some additional details on our financial results.

Mark Kochvar

Thanks, David. The improvement we experienced in core performance for the second quarter 2013 came from every significant line item; higher net interest income, higher recurring fees, lower expenses, and lower provision. The $900,000 increase in net interest income was held by a net $400,000 of unusual items.

A large interest income recovery from a previously charge-off loan, which was partially offset by accelerated expenses related to the early redemption of $45 million of subordinated debt. The remaining increase in net interest income is due to loan growth, disciplined deposit pricing, and the redemption of the sub debt. The net of the unusual item equates to 4 basis points in the net interest margin rate. For the 2 basis point increase we saw this quarter otherwise would have been a decrease of 2 basis points.

We anticipate that our net interest margin rates will decline further, but at a very slow pace. We also expect that despite challenges with the margin rate, net interest income will expand through loan growth and a better asset mix.

Adjusting for the $3.1 million gain on the sale of our merchant card servicing business last quarter, fees are up almost $1.2 million this quarter. Of the nearly $700,000 improvement in debit and credit card fees, almost $500,000 is related to merchant fees. The timing of recognizing these fees during the year is different under the arrangement with our new partner. So we set full-year fees to be in line with last year at approximately $1.7 million.

The improvement in mortgage banking is due to a $425,000 increase from the recapture of mortgage servicing rights and the change in the value of mortgage commitments. the fees we earned from actually selling mortgages in the second quarter were little changed from the first quarter. As Todd mentioned, we anticipate some softness in this area due to fewer refis. our income from sales into the past few quarters has been about $550,000 split between held for sale fees and the value of the new mortgage servicing rights.

Noninterest expense decreased by $3.2 million and $28.4 million, this quarter is a little below our expected quarterly run rate of $29 million to $29.5 million. The first quarter included merger-related and branch closure costs of $1.1 million and the variance in the provision for unfunded commitments was $1.2 million favorable, and expense in the first quarter of 750,000 compared to a contra expense this quarter of $450,000.

The impact of some of our expense initiatives can be seen in salaries and benefits, which is down $1.3 million this quarter. Over half of this decrease is in actual salaries. So far this year, we have completed the conversion to Gateway Bank, closed two branches, implemented branch capture, which helped proved expense and sold our merchant business, all of which are having a favorable impact.

The remainder of the salary variance is due to the timing of payroll tax expense and somewhat lower commission and incentive expense. Our capital ratios were impacted this quarter by the redemption of the subordinated debt and a decrease in the value of our bond portfolio. we redeemed $45 million of Tier 2 sub debt in mid-June.

The weighted average rate on these borrowings was LIBOR plus 2.94% or approximately 3.20% all in. We expect to save in excess of $1 million annually in interest expense. the capital impact of sub debt is limited to our total risk-based capital ratio, which decreased by approximately 138 basis points due to this redemption.

We believe that given the new capital rule, which plays less emphasis on Tier 2 that we have sufficient total capital. The increase in interest rates this quarter had a negative impact on the market value of our bond portfolio decreasing the unrealized gain from $12.8 million at the end of the first quarter to 631,000 at the end of the second quarter.

This $12.2 million decrease translates to $7.9 million equity impact through AOCI or approximately 17 basis points on our TCE ratio. It’s also impacted our book value by about $0.27 per share. Our bond portfolio is relatively modest at $471 million or only 10.4% of total assets.

The duration of the bond portfolio at the end of the second quarter was 3.8 years essentially unchanged from the end of the first quarter. Our exposure to mortgage-backed securities is only $132 million, 28% of the bonds and less than 3% of total assets.

And finally, our tax rate for the quarter was 21.9% and it’s 18.9% year-to-date. With the improvement in our pre-tax income, we do expect to see a somewhat higher effective tax rate for the year probably in low 20s.

Thank you very much. At this time I’d like to turn it over back to the operator to provide instructions for asking questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Our first question comes from the line of Collyn Gilbert with KBW. Please proceed with your question.

Collyn B. Gilbert – Keefe, Bruyette & Woods, Inc.

Thanks, good afternoon, guys.

Todd D. Brice

Hi, Collyn.

Mark Kochvar

Hi.

Collyn B. Gilbert – Keefe, Bruyette & Woods, Inc.

So that would be – you gave a lot of great details, just wanted to talk a little bit about kind of the loan growth and your outlook. Obviously, you are seeing some improvement and good momentum from some of the teams you’ve hired. Can you just sort of quantify where you think you can go with your loan portfolios, and what your plans are in terms of hiring of additional teams from here?

Todd D. Brice

Sure. So I’ll take this first stab and then Dave, you can fill in too. But we’re happy with the growth that we’ve had for the first two quarters. Now, that the pipelines are still very strong and both on, the commercial side and really we are starting to see some traction we mentioned the b-to-b area, which is a small business. But that loan, that pipeline is really starting to see some nice lift in the activity over there.

So we would expect to continue to build those out. As Dave mentioned in his comments on, there are some headwinds with some payoffs that we’re tracking. But the nice thing with that construction and bucket building up, that funds the tune of about $10 million plus a month, so that will help to offset some of the big, the construction pipe that we may feel over the next couple of quarters. But as far as growth at the end of the year, I would expect us to continue to be up maybe, I think this was a pretty successful quarter as far as hiring folks. Dave, go ahead.

David G. Antolik

Yeah, in terms of the payoffs, just to add a little color, some things that we were expecting to happen, payoffs that we are anticipating in the second quarter as we said were delayed. And these payoffs are really the result of some customers selling assets. In one case it’s a portfolio of properties that our customer is selling. So the good news is we are able to retain those relationships, we lose balances, but we’ll have other opportunities. The challenge for us is going to be to continue to grow our pipeline and create earning assets and those activities have been strong.

As Todd mentioned, the pipeline continues to be solid. We are able to track talents, in order to grow assets, so asset-generating activities continue to be strong.

Collyn B. Gilbert – Keefe, Bruyette & Woods, Inc.

Okay. Okay, that’s helpful. What about pricing? How are you guys seeing pricing? And loan yield is still coming on at lower rates than what’s rolling off, and have you been able to pass through any of the rate increase into some of your loan pricing buckets?

David G. Antolik

Yeah, we are seeing some increase in the five and 10-year bucket as our cost of funds increase, they are reflected in the pricing of the new loans coming on. The competition continues to be aggressive with regard to pricing. So we have seen some folks delay or hold on to rates that may have been committed to within the past month or two, but for the most part, our competition has adjusted the pricing like we have.

Collyn B. Gilbert – Keefe, Bruyette & Woods, Inc.

Okay. And then just on the expense front, I know you guys ran through some of the initiatives that had caused expenses to fall into where they are today. But as you maybe continue to add lenders, or your asset generation starts to increase, do you think you can still hold that expense line steady or should we start to see that start to migrate higher?

Mark Kochvar

I think over a longer period, certainly that will get higher, but as we think in the relatively shorter-term over the next several quarters, the initiatives that we have done over the last couple of quarters should offset any increases we are seeing on the production side.

Collyn B. Gilbert – Keefe, Bruyette & Woods, Inc.

Okay. And…

Todd D. Brice

Just in that regard is, a lot of the kind of what we call the investments that we’ve made over the last couple of years and I’ll call some of those the fixed costs, more of the back-room functions, those have been made. So, we anticipate being able to grow the balance sheet with minimal impact on some of the support areas

Collyn B. Gilbert – Keefe, Bruyette & Woods, Inc.

Okay. Okay, that’s good. And then just one final question on the deposit side, your loan growth seems to be sort of outstripping deposit growth a little bit here. How are you thinking about excuse me your deposit strategy going forward? Is it intentionally – are you intentionally trying to put on CDs or just maybe if you could talk a little bit about that.

Mark Kochvar

On the CD side, the growth in there is really participations that we’ve done in the CEDAR program with the one-way buys. So we’ve actually had a decline in customer CDs. We’ve not been aggressive on the pricing side as of yet. We think we still have some room on the increment due to funding from a wholesale side, which we think at this point is still incrementally cheaper with the level of loan growth that we’ve had so far. But that’s something we are constantly taking a look at.

Collyn B. Gilbert – Keefe, Bruyette & Woods, Inc.

Okay. Okay, that’s helpful. I’ll hop off. Thanks.

Todd D. Brice

Thanks, Collyn.

Mark Kochvar

Thanks, Collyn.

Operator

Thank you. Our next question comes from the line of Matthew Breese with Sterne, Agee. Please proceed with your question.

Matthew Breese – Sterne, Agee & Leach, Inc.

Good afternoon, guys.

Todd D. Brice

Hi, Matt.

Mark Kochvar

Hello.

Matthew Breese – Sterne, Agee & Leach, Inc.

Just to be clear on the new loan yields, so the 5-year treasury is up, anywhere from 55 to 65 basis points from year end. New loan yields based off of, either the FHLB advances or the 5-year treasury. How much of that increase has been passed on to new loans?

Mark Kochvar

Well, as in terms of the customer facing, it has all been passed on. So our spreads are – we maintain our spreads, but that cost hasn’t had through the customer.

Matthew Breese – Sterne, Agee & Leach, Inc.

You guys are seeing in new loans the full 65 basis points?

Mark Kochvar

Right

David G. Antolik

Yeah.

Mark Kochvar

Yes.

Matthew Breese – Sterne, Agee & Leach, Inc.

Okay.

Mark Kochvar

And as loans reprice, that’s reflected in the repricing as well.

Matthew Breese – Sterne, Agee & Leach, Inc.

And how much of your commercial loan portfolio is priced off of either the 5-year treasury or FHLD advances?

Mark Kochvar

It’s probably about a quarter. As we can have close to – a very large percentage, maybe about a $1.1 billion to $1.2 billion of the commercial book is of prime or LIBOR to the majority of that book close.

Matthew Breese – Sterne, Agee & Leach, Inc.

How big were percentages LIBOR upfront, I’m sorry?

Mark Kochvar

About $1.2 billion of the total loan portfolio.

Matthew Breese – Sterne, Agee & Leach, Inc.

Okay. And then going back to the deposit cost strategy, you guys had mentioned – it sounded like you were going to ratchet down some of the costs there?

Mark Kochvar

We continue to look and we did make some adjustments to savings rate this quarter. It is getting as we said it every item, it’s getting more and more difficult to continue to do that. We are – we do have some higher priced CDs from about three year ago that are coming off in the third quarter that will help the funding and then we’ll get the full benefit of the subordinated debt redemption going forward in the third and fourth quarter. Right now you wouldn’t say, since most pricing for our bank deposit has been on the short end of the curve and we really haven’t seen a lot of rate movement inside of two and three years, and competitively nobody has really made any substantial move. So we’re biting our time for now and seeing how pricing develop.

Matthew Breese – Sterne, Agee & Leach, Inc.

Okay. And with all that being said, better spreads and lower funding costs and you guys say that line that you expect to see some margin compression in the quarter, it sounds like we have to be pretty close to the inflection point. Where do you foresee the bottom and how soon are we getting there?

Mark Kochvar

Are you talking about the bottom of the margin rate?

Matthew Breese – Sterne, Agee & Leach, Inc.

Yeah.

Mark Kochvar

I’m hoping we are getting toward the bottom. But again, we are, in terms of pricing, we are probably a little more sensitive to the very, very front end of the curve. So as long as the Fed stays camped where they are, we’re still going to feel that pressure. So I mean, I don’t know how many exactly how many basis points we have, it is a function of how long we stay at this level. But we are still seeing loans coming off at higher rates than what the new rate is going back on. So we are still seeing the asset yield pressure.

Matthew Breese – Sterne, Agee & Leach, Inc.

Got it. Okay, thank you, guys.

Operator

Thank you. Our next question comes from the line of Jake Civiello with RBC Capital Markets. Please proceed with your question.

Jake Civiello – RBC Capital Markets LLC

Hey guys, good afternoon.

Todd D. Brice

Hi, Jake.

Mark Kochvar

Hi.

Jake Civiello – RBC Capital Markets LLC

Are there any one-time expenses coming in the third quarter associated with the planned branch closings?

Mark Kochvar

Yeah, I think that will be minimal if they are Jake. So I mean, there the one branch is really small branch that we own it and the carrying costs are pretty low on that. So I don’t think they would have any significant impact on that – material impact to the numbers.

Jake Civiello – RBC Capital Markets LLC

Okay. Is there anything else unusual that we could see coming in the second half of the year?

Mark Kochvar

Nothing we are aware of.

Jake Civiello – RBC Capital Markets LLC

Okay. All right, thanks. That’s really all I had.

Mark Kochvar

Okay.

Operator

Thank you. Our next question comes from the line of David Darst with Guggenheim Securities. Please proceed with your question.

David W. Darst – Guggenheim Securities LLC

Hey, good afternoon.

Todd D. Brice

Hey, Dave.

Mark Kochvar

Hi, David.

David W. Darst – Guggenheim Securities LLC

On the credit costs and your level of NPLs, and the improvement in the substandard and watchlists, are you at a point where – I guess you are just going to go through a longer trough, or your credit costs maybe go back to some historically low levels or is there still visibility where you know, you’ve had some lumpiness that needs to be cleaned up and charged off?

Todd D. Brice

I mean you always are at risk if something big pops in there to some lumpiness David. But I think if you look at the trends, if you look at the – it starts with delinquency and we are at 1.4% from a delinquency ratio. And then if you look at your criticized and classified loans, so those are down another $20 million to $260 million. Then you take a look at your MDA ratio levels, and those are down at $38 million.

So, I think if you look at the last couple of quarters, the March that we’ve had on the loans have been pretty conservative. So we’ve been able to reduce nonperformance without taking corresponding charges. In fact, this quarter we had about $2 million in recoveries from three or four larger ones that impacted charge-off number. So I’m not going to say that we are going to have $2 million of recoveries every quarter, but I still think there is room to move down some of those levels and do it without incurring a lot of charges over and above what we’ve already recognized on those accounts.

David W. Darst – Guggenheim Securities LLC

Is something – I’m sorrry…

Todd D. Brice

Go ahead.

David W. Darst – Guggenheim Securities LLC

I would say, it’s something around $2 million to $2.5 million a good run rate for a couple of quarters on provisioning and charge-offs?

Mark Kochvar

It’s probably, I mean if you just do the math, if we took a $1.1 million this quarter or so and if you add the $2 million back, that gets you in that $2.5 million to $3 million range, probably somewhere in there.

David W. Darst – Guggenheim Securities LLC

Okay. And then would you be willing to further build the securities portfolio from this level?

Mark Kochvar

We still have a fairly high level of interest-bearing balances at the Fed. So over time, we anticipate shifting that from cash into securities.

David W. Darst – Guggenheim Securities LLC

Okay. And, Mark, I know in your filings you have the ALCO model for a parallel shift. Do you think you are inherently better positioned for the steeper curve, or do you think the parallel shift is the best environment for you, with the short rates coming up?

Mark Kochvar

On the parallel it’s a bit better. But we do have, we do see some benefit when we run simulations for a steepener because of the better pricing for those three and five years, as well as the three and five-year reset, that could depend somewhat on how that impacts the funding size to the extent, it gets competitive longer out and people begin to shift out of core into CDs that could dampen that somewhat. but we still see a favorable benefit in net interest income and margin from a steepener.

David W. Darst – Guggenheim Securities LLC

But not as much as you do when you run your model for a parallel shift?

Mark Kochvar

That’s correct.

David W. Darst – Guggenheim Securities LLC

Okay, got it. Okay, thank you.

Operator

Thank you. (Operator Instructions) Gentlemen, it appears there are no further questions at this time. do you have any closing comments?

Todd D. Brice

I’d just like to make one other point of clarification regarding Jake’s question on some of the one-time charges. I think maybe, what he was trying to get at. If you looked at it in the first quarter, we had some one-time charges associated with some branch closures, and the real estate that we had the branches on was newer.

So the carrying charge was a little bit higher and accordingly and we got it sold rather quickly. So thought it was prudent to maybe to just take a little bit less of a price just to move it, so we didn’t have to carry it. And but like I said, with – these other branches are, we had on for many, many years and the carrying values are fairly low. So we shouldn’t expect to see any major impact from some of the one-time charges like we did in the first quarter or so.

Mark Kochvar

Okay, operator, we also have a – we have a couple of questions that came in through e-mail. The first of those is why hasn’t S&T increased the dividend since earnings have increased significantly and the bank has greatly improved asset quality?

The dividend is something that the Board of Directors take a look at. Every quarter, there is a lot of factors that go into that, including our earnings and our outlook for earnings, the capital requirements of the regulatory agencies, the payout ratios, the dividend yield, a lot of different factors. This past quarter, we did do some capital changes with the payout of the subordinated debt, and we got our payout ratio, given the first couple of earnings quarters this year with improved earnings in a range that we’re a little bit more comfortable within the 30% or 40%.

So while it’s something that we do look at every quarter, it’s not something that the Board felt was appropriate at this time, but they will continue to look at it on an ongoing basis every quarter as we move forward.

And the second question that we got and I’ll paraphrase a little bit had to do with how we can or how someone can try to predict what the quarterly loan loss provision for S&T is.

That’s something that presents a challenge for us as well. We have historically had some volatility in our charge-offs and therefore also our provision levels. There is a lot of factors behind that, including the some of the size of some of our credits tend to be larger and we also are fairly aggressive when there is a problem to take charges that we feel are appropriate, which tend to be larger when we do take them. We try to take them all at once, so that leads to some additional volatility in the credit. So I mean, it’s a challenge for us to predict what credit losses are going to be over the next several quarters, so it’s hard for me to provide any further insight into that.

Okay, thanks operator.

Todd D. Brice

I think with that we’ll adjourn for the day and we appreciate the opportunity to address some of your concerns, and we’ll look forward to talking to you the next quarters call.

Operator

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

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