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Eagle Bancorp, Inc. (NASDAQ:EGBN)

Q4 2013 Earnings Conference Call

January 23, 2014 10:00 AM ET

Executives

Jim Langmead - CFO

Ron Paul - Chairman and CEO

Analysts

Scott Valentin - FBR Capital Markets

Casey Orr - Sandler O'Neill

Catherine Mealor - KBW

Christopher Marinac - FIG Partners

Andy Stapp - Merion Capital Group

Operator

Good day, ladies and gentlemen, and welcome to the Eagle Bancorp Fourth Quarter 2013 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we’ll conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder this conference call is being recorded.

I would now like to introduce your host for today’s conference Jim Langmead, Chief Financial Officer of Eagle Bancorp. Please go ahead.

Jim Langmead

Good morning, everyone. Before we begin the presentation, I’d like to remind you that some of the comments made during this call may be considered forward-looking statements. Our Form 10-K for the 2012 fiscal year, our quarterly reports on Form 10-Q and current reports on Form 8-K identify certain factors that could cause the company’s actual results to differ materially from those projected in any forward-looking statements made this morning.

The company does not undertake to update any forward-looking statements, as a result of new information or future events or development. Our periodic reports are available from the company or online on the company's website or the SEC website.

I'd also like to remind you that while we think that our prospects for continued growth and performance are good, it is our policy not to establish with the markets, any earnings, margin or balance sheet guidance.

Now I'd like to introduce Ron Paul, the Chairman and Chief Executive Officer of Eagle Bancorp.

Ron Paul

Thank you. Good morning everyone. I'd like to welcome you to our earnings call to discuss the results of the fourth quarter and full year of 2013. Thank you for joining us in this call this morning. In addition to Jim Langmead, also on the call this morning is our Chief Credit Officer Jan Williams. Jim and Jan will both be available for questions later in the call.

I'm extremely pleased to once again announce a record level of quarterly net income at $12 million, which represented an 18% increase over the fourth quarter of 2012 and 2% growth over the third quarter of 2013. At $12 million in earnings, it was a 20th consecutive quarter for which we have reported record increasing earnings. It is also a very strong finish to an excellent year.

The net income for the 2013 full year of $47 million was a 33% increase over the annual earnings for 2012. Net income available to common shareholders was also up 18% over the fourth quarter of 2012, $11.9 million versus $10 million. Diluted earnings per share was $0.45 for the fourth quarter, a 15% increase over the fourth quarter of 2012 figure and $0.39 per share and a 1% per share better than the third quarter of 2013. Total revenue was $43 million in the fourth quarter 2013 5% over the same quarter of 2012 and was a $169.5 million for the full year of 2013, 14% higher than 2012.

We’re very pleased with the results for the quarter not just in terms of level of earnings, ROAA, ROAE, but because once again we’ve been able to produce these earnings through consistent performance in all of the key fundamental indicators. The net income for the fourth quarter was the result of an improved net interest margin, outstanding credit quality and growth in both loans and core deposits and disciplined expense control.

As previously discussed we consistently analyzed and managed each of these performance factors. We’re extremely proud that during 2013 our improved margin coupled with growth in the loan portfolio produced growth in net interest income which was more than offset the declining revenue from the sale of residential mortgages. Net income of $38.7 million for the fourth quarter increased 11% over the fourth quarter of 2012 and for the full year net interest income was up 14% over 2012 level.

I would like to touch briefly on each of the key indicators I mentioned earlier. The net interest margin was excellent for the fourth quarter at 4.4% which is 9 basis point improvement over the third quarter of 2013 and the fourth quarter of 2012. The margin is the result of proactive balance sheet management as well as our disciplined approach to both loan pricing and cost of funds. As you may recall we’ve built liquidity up at the end of 2012 in anticipation of the expiration of the FDIC’s TAG program and the uncertainty at that time over the federal government budget issues. Throughout 2013, we actively managed down that liquidity position and replaced the lower yielding liquidity with well priced C&I and commercial real estate loans.

As noted in yesterday’s press release, we achieved 18% growth in total portfolio loans for the year 2013. Over the year, the loan to deposit ratio which averaged 86% for the first quarter of 2013 was increased to 91% average for the fourth quarter, which contributed to the increased net interest margin in the quarter. While yields on new loans today are lower than they were a year ago and that will impact the margin, we continue to benefit from the floors on our existing portfolio, maintaining our pricing discipline on new loans and actively managing our cost of funds and the loan to deposit ratio.

The bank generated loan growth of $148 million or 5% during the fourth quarter. The year end balance of $2.9 billion was an increase of 18% over December 31, 2012. $148 million increase for the fourth quarter was the largest quarterly growth achieved during the year. We maintained our pricing methodology and discipline throughout 2013, and during the fourth quarter were able to originate quality loans which met our pricing standards.

The largest increases during the fourth quarter were in income producing CRE loans and in construction loans. We feel that the increase in long term interest rates during the year has somewhat alleviated the irrational loan pricing exhibited by some of our competitors early in the year. While we recognize that rates in general and competition continue to put pressure on loan pricing and the margin, we continue to see a healthy level of loan demand and have a significant pipeline.

Deposit growth of $241 million or 8% was also very strong during the fourth quarter. This contributed to the 11% growth for the entire year of 2013. We did have one large escrow type deposit that occurred in late December that was in the year-end totals, but had little impact on the quarterly average. The deposit was from a significant long-term customer which places major escrow accounts with us on a regular basis. This account is expected to have stable balances during 2014. Average deposit balances for the fourth quarter showed 3% growth over the third quarter of 2013 and 11% growth over the fourth quarter of 2012.

We continue to maintain a significant level of DDA deposits which were 28% average deposits for the fourth quarter. The deposit mix contributes to our favorable cost of funds and net interest margin. We have said many times at Eagle Bank we have focused more on growth in profits and EPS than just balance sheet growth. We are very proud to report net income which generated a return on average assets of 1.33% for the fourth quarter 2013 and is an average of about 1.25% for the fourth quarter of 2012.

The return on average equity for the fourth quarter was also strong at 14.07% up from 13.95% in the same quarter a year ago. At this level of profitability the growth in capital from retained earnings is outpacing the growth in assets which over the long run reduces potential pressure on our capital ratios. Those ratios are strong today. At December 31, 2013 total risk based capital was 13.02% up from 12.2% at the prior year end. Our tangible equity ratio was 8.86% at year end 2013, an increase from 8.5% at December 31, 2012. Assessing our capital needs is an ongoing exercise with goals of estimating future growth appropriately and consider shareholder value and EPS growth.

We believe that our current level of profitability will moderate the amount of additional capital needed over the long-term. As I mentioned earlier, we continue to see a healthy level of demand for both C&I loans and commercial real estate loans. The Washington regional economy is still one of the healthiest in the country. The market has absorbed the impact of reduced federal spending from sequestration and budget adjustments and offset those cuts through growth in the private sector. Federal government spending today represents about 30% of the local economy, down from 39% three years ago. Even with that, the region added over 24,000 new jobs in the last year.

We have not changed our [ALCo] [ph] philosophy and continued to maintain a neutral position in regard to interest rates sensitivity. Excluding loans held for sale, 57% of our portfolio is in variable or adjusted rate loans and are confident about our ability to retain an attractive margin should interest rates rise further. Including fixed rate loans 28% of the portfolio reprices or matures within 30 days and another 5% within the first year. In total 60% of the portfolio reprices or matures within three years and 83% within five years.

In the fourth quarter of 2013, the asset quality of the bank continued to improve over an already favorable position. At December 31, 2013 NPAs as a percentage of total assets decreased to 90 basis points as compared to 1.11% at September 30, 2013 and 1.06% on December 31, 2012. This level of NPAs is well below industry and peer bank levels and is the lowest we’ve recorded since pre-recession levels in 2008.

Net charge-offs for the fourth quarter were 18 basis points of average loans and were 23 basis points of average loans for the full year of 2013. These levels of charge-offs are also well below our performance over the last few years. This excellent credit quality combined with the growth in our loan portfolio resulted in allowance for loan losses of 1.39% at December 31, 2013. The level of provision expense was also favorably impacted by these factors.

The coverage ratio at the end of the fourth quarter was 166% and we believe we’re adequately reserved. Even though our credit quality is strong and the economy is improving we continue our diligent approach to monitoring the loan portfolio and taking aggressive action on individual credits as necessary.

Total revenue from non-interest income was challenging for both the fourth quarter and for the year of 2013 due to the decreased level of gains on the sale of mortgage loans. However, we continued to develop the other sources of fee income and excluding gains on sale of mortgage loans. Non-interest income was up 61% for the fourth quarter as compared to the fourth quarter of 2012 and for the year increased 56% over the 2012 full year results. The largest increase was from the gain on sale of SBA loans, where we also achieved significant increases in service charges and activity based fee income. Non-interest income as a percentage of total revenue was 14% for the year of 2013 due to the carryover of gain recognition from residential loans closed at the end of 2012.

For the year 2013, total gains from the sale of residential mortgage loans represented only 7% of total revenue. We continue to emphasize our efforts to increase all aspects of non-interest income fee. Disciplined management of non-interest expense was a key goal of the Bank during 2013. And I am pleased to report that the fourth quarter of 2013 expenses of $21.5 million were lower than third quarter of 2013 and only a 6% increase from the fourth quarter of 2012.

On an annual basis, expenses increased 11% from the full year of 2012 level, while total revenue was 14% higher. It is equally important to note that we have carefully managed our expense growth over the long term, reducing the growth rate from 24% in 2011 and 21% in 2012 to 11% in 2013. This expense management combined with our consistent revenue growth led to an improved efficiency ratio of 50.03 for the fourth quarter of 2013 as compared with 51.68 for the third quarter of 2013 and only slightly higher than 49.82 for the fourth quarter of 2012.

For the full year of 2013, the efficiency ratio was 49.9 as compared to 51.4 in 2012. We also look at non-interest expense as a percentage of average assets and that ratio was improved to 2.46% for the full year 2013 and 2.93% for the fourth quarter of 2013.

Personnel related items did lead to the favorable expense level for the fourth quarter of 2013. We continued our activities to right size the residential lending division as their volume decreased while at the same time using opportunistic approach to hiring additional commercial lending officers, particularly in the Northern Virginia market. We continue to feel that an efficiency ratio in the low 50s to high 40s is appropriate for EagleBank as we continue to invest in the correct infrastructure to support our business model to satisfy regulatory requirements and ensure the continued growth of the Bank.

Without making any specific forward-looking statements, I will say that I feel as positive about our prospects for 2014 as I have ever felt. We are extremely well positioned with the largest market share of any community bank in the Washington metropolitan area but still have less than 2% market share. Despite all the dysfunction on Capitol Hill, the Washington area is still one of the most dynamic regional economies in the country. Loan demand is still strong and we have a solid pipeline of loan transactions.

While this is a competitive environment, our currently favorable margin position gives us some flexibility to take market share while maintaining strong profitability. Also the Bank is well positioned in regard to our expenses. We completed the build out of our Northern Virginia branch network and have no new branches on the drawing board. We have already hired some excellent lenders and business development officers for the Northern Virginia market so we have the infrastructure already in place to generate additional new business in that robust market.

Throughout the organization from the Board of Directors to the branch platform, we sustain our focus on building new customer relationships and broadening current relationships. During 2013, we grew our net new relationships in excess of 6% and developed over 1,200 new core customer relationships. Each of these are customers we have moved to EagleBank, because of our recognized financial strength and quality of service. These customer relationships are the key to the success of EagleBank. The growth and development of these relationships is what has allowed us to become the leading community bank in the market. That concludes my formal remarks. We’ll be pleased to take any questions at this time.

Question-and-Answer Session

Operator

(Operator Instructions). Our first question comes from the line of Scott Valentin with FBR Capital Markets. Your line is open.

Scott Valentin - FBR Capital Markets

Good morning. Thanks for taking my question. Just with regard to loan yields, you guys had very strong loan growth. Just wondering loan yields I guess for the quarter were 5.4%, just wondering where they were versus third quarter. And then what you're seeing early in the first quarter. I think people are generally starting to think that loan yields are going to be stabilized despite the competition.

Ron Paul

Jim, why don't you take the first part of the question?

Jim Langmead

Scott, the fourth quarter yield you’ve mentioned of 5.40 for the portfolio compared to 5.48 for the third quarter, so it was 8 basis point contraction.

Ron Paul

As far as the pipeline is concerned, as I mentioned, we do see with the rise in interest rates, less irrational pricing from some of the competition. And obviously with 18% loan growth throughout the year, even with the competitive nature of rates, we’ve still had a very, very strong pipeline and believe that to be continuing.

Scott Valentin - FBR Capital Markets

Okay. And then just on the liability side, is there additional room to lower the cost of funds at all or is that kind of hit the bottom?

Jim Langmead

Well, I think Scott we have some opportunity. And as you can see, it’s been trending down the last several quarters, cost of interest bearing liabilities was 51 basis points in the fourth quarter from 53 in the third from 57 in the second. We still have some opportunity as we’re paying off broker deposits that mostly we had put on because of the concern over the TAG program at the end of 2012. Those broker deposits are running off and have average rates at or around one -- with much less expensive core deposits and so that will help to continue bring down the cost of money absent any impacts of rising rates that some say may occur later in the year. But overall, we think we’re in a good position with respect to the cost of money.

Scott Valentin - FBR Capital Markets

Okay. And then just one follow-up question. You’ve pointed out the trend in expense growth declined sharply in ’13. Should that continue, I mean I guess I’m asking about infrastructure versus growth, you guys feel comfortable with the current infrastructure and can you support growth or do feel you have to continue to reinvest at a pretty high level?

Ron Paul

That’s a great question. As I mentioned in previous calls, we spent a lot of money in 2011, 2012 on both GL operating system, total rehab in April of 2011. We built out a bunch of branches in 2011-‘12. So yes, answer to your question, with personnel that we brought on that has capacity, branches that have capacity infrastructure that has capacity, we feel real good about the level that we have right now of our non-interest expense.

Scott Valentin - FBR Capital Markets

Okay. Thanks very much.

Ron Paul

Thank you.

Operator

Our next question comes from the line of Casey Orr with Sandler O'Neill. Your line is open.

Casey Orr - Sandler O'Neill

Good morning. Thanks for taking my call.

Ron Paul

Hi Casey.

Casey Orr - Sandler O'Neill

Just starting with the loan growth you saw this quarter, can you give us some more color on which specific geographies you are seeing the most opportunities for growth? And then maybe on the other side, what areas you are maybe seeing things slow down a bit?

Ron Paul

It’s across the board, Casey. It’s really -- although we’ve certainly seen as a percentage of growth an increase in Northern Virginia, and certainly the seeds have been planted in Northern Virginia, it’s really been an across the broad growth both C&I and CRE. C&I has very strong 2013 fourth quarter that a great two thousand event -- great fourth quarter. So it’s really been across the board. It’s again, it’s just stealing market share from the big banks that have pretty much gotten their arms around where they want to be within this market, much larger size loans. So, we still can do a tremendous job on $2 million, $3 million loan or even the $20 million loan providing a customer service. So, it really is across the board, both C&I and real-estate even with the drop that we’ve had in the loans held for sale on the mortgage side.

Casey Orr - Sandler O'Neill

Okay, thanks. And then moving on to fee income, it looks like other fee income jumped up in the quarter about 500,000. Is there anything unusual going on there or something that you wouldn’t consider for the run rate?

Jim Langmead

Some of that Casey is due to additional BOLI investments, bank owned life insurance that we’ve made in the period. I can’t think of anything else that’s real unusual in the fourth quarter. We’ve got loan fees that come in from time-to-time when you have pay-offs of loans, prepayments and things like that where that’s not part of the yield, that’s part of fee income. That varies depending upon the level of prepayments that might have occurred. But I think the BOLI issue is one. We're also doing a good job with respect to electronic banking and their fees in that area, merchant credit cards, services, we're growing that area a little bit, ATM fees. We've got some good locations where we generate good fee income. So, it's a little bit of hodgepodge but it is a positive event.

Casey Orr - Sandler O'Neill

Okay, great and then just thinking about the SBA gains going forward, can you remind us how many people you have in that team, if you are still kind of building that out and what opportunities do you think there is for that as a source of income?

Ron Paul

We have five people in that department and we do believe that there is a tremendous opportunity out there. We’re right now, one of the leading SBA lenders and we think that we can continue to grow that department considerably.

Casey Orr - Sandler O'Neill

All right. Thanks for taking my questions. I'll let somebody else jump on.

Ron Paul

Thanks, Casey.

Operator

Our next question comes from the line of Catherine Mealor with KBW. Your line is open.

Catherine Mealor - KBW

Good morning everyone.

Ron Paul

Hi, Catherine.

Jim Langmead

Good morning, Catherine.

Catherine Mealor - KBW

Your loan to deposit ratio came up a little bit, I think to about 94%, what's your comfort level with this ratio? Do you think there is still room to move it up or do you feel this is a level that makes sense for you just given rate outlook?

Jim Langmead

I think, Catherine, we're comfortable with operating in the low to mid-90s, much higher than most banks but we've been there before. And I would say that level we had in the fourth quarter of the year is comfortable for us.

Ron Paul

Catherine, I think that the flavor as it relates to that is being able to manage both sides of the balance sheet to recognize that there are opportunities for us to be able to grow the liability side should we need it and feel strongly that we can grow that liability side at a very, very reasonable cost. So we're monitoring [those tickets] [ph] pretty carefully, but feel that as long as there is a capacity for us to be able to grow the funding side, we certainly will continue to grow the asset side.

Jim Langmead

Let me add to that, Catherine that even though that loan-to-deposit ratio is 94% for the fourth quarter, the average liquidity we had was just a little bit north of $200 million and it was down from the third quarter, which contributed to the margin expansion. But $200 million of average liquidity for a $3.7 billion bank I think is very substantial. And so, just adding some color to what Ron is saying, we're all the time looking at the liquidity and our ability to get at funds and the core deposit growth just as much as we are the loan-to-deposit ratio.

Catherine Mealor - KBW

Got it, makes a lots of sense. Maybe as a follow-up to the excess liquidity that certainly did drive most of the margin expansion this quarter and I mean you’ve got 440 margins; so it's phenomenal, so I don’t mean for this question to sound negative because it's not, but just directionally as we think about where the margin is going. Now that most excess liquidity has been deployed, would it be safe to say that the NIM should trend down modestly over the next year just as we see loan yields continuing to taper down maybe even just down 5 bps a quarter, you still may see 5 to 10 bps compression in the margin from here. Is that a safe assumption do you think or is there, are there more levers do you think that could actually bring the margin higher at this point?

Ron Paul

Obviously, without giving any forward-looking statements, I think that if you look at all the different levers as you point out that as Jim mentioned earlier, there might be an opportunity for us to [skinny] the cost of funds. We are seeing stabilization in the loan pricing side. So there are lots of levers that we could work off with regard to our NIM. Obviously, even with the efficiency ratio being as strong as it is right now, we have a stabilization of that non-interest expense. So we believe that there are opportunities to maintain that. So it really, if you look at the whole picture, we believe that the NIM is still going to be a strong NIM and our efficiency ratio continued to be again a strong efficiency.

Catherine Mealor - KBW

Great, thanks so much.

Operator

Our next question comes from the line of Christopher Marinac with FIG Partners. Your line is open.

Christopher Marinac - FIG Partners

Thanks, good morning. Ron and others, could you elaborate on sort of how much of business opportunity there is within your existing customer base versus the ongoing, obtaining new customers? Just whether you look at as products for household or just sort of how much you are doing with that business [versus] your top-tier customers are?

Ron Paul

If you call 425 employees, they will all tell you that our cross-sell ratio is probably at the top of the discussion. So it's really both. Obviously with 1,200 growth in new relationships we feel that that’s a phenomenal opportunity for us. Again, we all have to remember that even being the largest community bank that we're in; we still have less than 2% of the market share. So dealing with one part of your question, the opportunity for us to continue to steal market share is tremendous.

With regard to the cross-sell side, we're definitely seeing improvement in the cross-sell side and that’s not only, as an example, we have 247 customers right now that just have a loan, they don’t have any of the products. That has to be improved upon. So there is a bunch of a cross-sell side, a tremendous amount of merchant service work that could be done. We've never done a major emphasis on the refinance side with our existing customers.

So the opportunity for us to be able to do, and by the way, I will tell you that the cross-sell ratio is still a very impressive cross-sell ratio when compared to peers, but there is still opportunities for us to improve upon that in a very big way, our insurance division also an opportunity for us to grow. So, we have about 15 products that we look at on our cross-sell ratio and until all 15 are capitalized upon, there is still room for improvement.

Christopher Marinac - FIG Partners

Great, I guess my follow-up, Ron is, if you look at the sort of the staffing changes you had in terms of the net producers that have come to the team last year and the year before. How different should ‘14 be? Should we see a similar amount of hires or will you be less dependent on that?

Ron Paul

No, I believe that our -- if you exclude the residential real estate department, I would say that our -- that we do have a solid core group of lenders with capacity. So as I said in my statements, we’re going to be opportunistic in terms of when we hire and where we hire from, but we feel really good about a great team that we have that those have some of that capacity.

Christopher Marinac - FIG Partners

Okay, very well. Thanks very much.

Ron Paul

Thanks Chris.

Operator

(Operator Instructions). Our next question comes from line of Andy Stapp with Merion Capital Group. Your line is open.

Andy Stapp - Merion Capital Group

Hey, guys.

Ron Paul

Hey Andy.

Jim Langmead

Good morning, Andy.

Andy Stapp - Merion Capital Group

I just wonder what the mix between refi and purchase more users were during the quarter.

Ron Paul

Let me see, Andy. For the quarter; I would say that the refi number was about 35% to 40% and purchase money now call it 60%, 65%.

Andy Stapp - Merion Capital Group

Okay. And…

Ron Paul

That’s same for us.

Andy Stapp - Merion Capital Group

Okay.

Ron Paul

I was going to say that’s obviously good for us that the purchase money business is good in this area.

Andy Stapp - Merion Capital Group

Yeah.

Jim Langmead

And as a follow-up to that, Andy I think what’s important we go back to Chris’s question on the cross-sell side is that the home sales within the Washington area is still incredibly strong and where we certainly capitalized on the refi market in 2011, ‘12 and half of ‘13, we are seeing more and more energy being put by our lenders on working with our builders whether it’s condo converters or whether it’s single-family home builders to be able do and become more of their preferred lender. So, we do see that as a huge opportunity for us.

Andy Stapp - Merion Capital Group

Okay. That’s great news. And what were your gains on SBA loans during the quarter?

Ron Paul

For the quarter, I don’t have a full year number here. Let me see if I can get you the number for the quarter real quickly. There were only a little bit more than $200,000, Andy, but for the year they were $2.1 million. I think we’ve talked in various quarters about the fact we’ve got a lot of variability by quarter based on the size of the loans that we’re doing and the backlog at the SBA. But for the quarter, the gains were down compared to the third quarter, but for the year they were very strong compared to 2012. We had about $440,000 gains in ‘12, $2.1 million in ‘13.

Andy Stapp - Merion Capital Group

Okay, great. Thank you.

Ron Paul

Thanks Andy.

Operator

Our next question is a follow-up from the line of Scott Valentin with FBR Capital Markets. Your line is open.

Scott Valentin - FBR Capital Markets

Well, thank you. Thanks for taking my follow-up question. Ron, you mentioned capital you think I guess with ROA, ROE, ROA particularly exceeding the growth rate overall the balance sheet, you don’t see any -- I mean should we be able to self fund from a capital perspective. Just wondering you guys have a target range of capital levels? And then following that up, given that you’re generating excess capital can we see something on the return of capital front?

Jim Langmead

Well, I think we feel Scott that the capital levels we have are very are strong. I think the regulators would agree with that when you consider all the risk in the balance sheet. I think we have that our -- the rate at which we are crediting capital into equity is at least the strong as the balance sheet. So we haven’t seen a lot of leverage going on.

We did add some in the fourth quarter because of the strong amount of loan growth more than 5% loan growth and so the ratios came down a bit at the end of the year compared to September, but we are pretty comfortable. The event we got to be looking forward is the increase in the dividend rate on the SBLF preferred stock at the end of 2015. And I think we have said that before between now and the end of 2015 we have got a $56.6 million of preferred stock whose dividend rate jumps from 1% to 9%. We would need to consider capital between now and then, but the actual timing of that is indeterminable. We are assessing that on an ongoing basis looking at the market looking at the earnings and growth prospects. So it’s an ongoing exercise and something the board talks about each meeting. That’s the best I can go.

Ron Paul

With regard to the return on capital, as we have said repeatedly, with the growth that we have, the expectations we have, the opportunities that we have and then as Jim points out with the SBLF, some type of dividend is not a likely event.

Scott Valentin - FBR Capital Markets

Okay. Thanks for clarifying. Thank you.

Operator

And I am not showing any further questions at this time. I'd like to turn the call back over to management for closing remarks.

Ron Paul

Again I want to thank you all for being on the call. We're very proud and pleased with what we've been able to accomplish in 2013. As I mentioned in my call, very excited about the opportunities that we see in 2014, I’m looking forward to speaking with you after the first quarter. So, thank you all again for being on the call.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. And you may all disconnect. Everyone have a wonderful day.

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