Simmons First National Corporation Q3 2008 Earnings Call Transcript

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Simmons First National Corporation (NASDAQ:SFNC) Q3 2008 Earnings Call October 16, 2008 4:00 PM ET


David W. Garner – Senior Vice President & Investor Relations Officer

J. Thomas May – Chairman of the Board & Chief Executive Officer

David L. Bartlett – President & Chief Operating Officer

Robert A. Fehlman – Chief Financial Officer & Executive Vice President


Matt Olney – Stephens, Inc.


Welcome everyone to the Simmons First National third quarter earnings call. (Operator Instructions) Mr. Garner you may begin your call.

David W. Garner

I am David Garner, Investor Relations Officer of Simmons First National Corporation. We want to welcome you to our third quarter earnings teleconference and webcast. Joining me today are Tommy May, Chief Executive Officer, David Bartlett, Chief Operating Officer and Bob Fehlman, Chief Financial Officer.

The purpose of this call is to discuss the information and data provided by the company in our quarterly earnings release issued this morning. We will begin our discussion with prepared comments and then we will entertain questions. We have invited the analyst from the investment firms that provide research on our company to participate in the question and answer session. All other quests on this conference call are in a listen only mode.

I would remind you of the special cautionary notice regarding forward looking statements and that certain matters discussed in this presentation may constitute forward-looking statements and may involve certain known and unknown risk, uncertainties and other factors which may cause actual results to be materially different from our current expectations, performance or achievements.

Additional information concerning these factors can be found in the closing paragraph of our press release and in our Form 10K. With that said, I will turn the call over to Tommy May.

J. Thomas May

Welcome everyone to our third quarter conference call. In our press release issued earlier today, Simmons First reported third quarter 2008 earnings of $6.5 million or $0.46 diluted earnings per share compared to $0.53 diluted earnings per share in Q3 ’07. As anticipated, the decrease was primarily attributable to an increase to the provision of loan losses and a decrease in the premiums from the sale of [stale] loans. We will discuss both of these items in more detail in a moment.

For the nine month period ended September 30, 2008 net income was $21.3 million or $1.51 diluted earnings per share compared to $21.2 million or $1.48 per share for the same period in 2007, an increase of $0.03 or 2%. As we discussed in the previous conference calls, during Q1 ’08 we recorded earnings of $0.18 per share for non-recurring items related to the Visa, Inc. IPO. Excluding these non-recurring items, core earnings for the first nine months of 2008 were $1.33 per share.

On September 30, 2008 total assets were $2.9 billion and stockholders’ equity was $281 million. Our equity to asset ratio was 9.8% and our tangible equity ratio was 7.8%. All of our regulatory capital ratios remain significantly above the well capitalized levels. Needless to say, our company remains well positioned with strong capital. Net interest income for Q3 ’08 increased $777,000 or 3.3% compared to Q3 ’07.

Net interest margin for Q3 ’08 declined 17 basis points to 3.84% when compared to the same period last year. The decrease in margin was primarily the result of a significant repricing of earning assets due to declining interest rates during the first half of the year and our concentrated effort to grow core deposits. When compared to the previous quarter, net interest margin increased 17 basis points due primarily to the seasonality of our loan portfolio.

Based on the recent rate reductions, we now anticipate some margin compression through the first part of 2009. As previously mentioned, one of the early objectives this year was to enhance the liquidity in each of our eight banks. Retrospectively we have been very successful in this effort. On a quarter-over-quarter basis, our non-timed core deposits have grown $293 million or 28% and our timed deposits decreased by $172 million.

First, in February we introduced a high yield investment account which year-to-date has generated approximately $130 million in new money. In addition, by design we have moved some of the more volatile expensive CD dollars in to this account. The second strategic move towards building liquidity was to secure about $55 million in long term funding from the Federal Home Loan Bank borrowings.

Through this process while we slightly negatively impacted margin we have been able to reduce our dependency on most costly timed deposits, increase our liquidity and develop new customer relationships. Non-interest income for Q3 ’08 was $11.3 million relatively flat compared to the same period last year. Let me take a minute to discuss some items that impacted our non-interest income.

First, service charges on deposit accounts increased $250,000 or 6.7% in Q3 ’08 compared to Q3 ’07 due to an improvement in our fee structure and core deposit growth. Secondly, credit card fees increased by $376,000 or 12.1% primarily due to higher volume of credit and debit card transactions. The higher credit card transactions volume is a direct results of the initiatives we have discussed in previous conference calls.

These increases in non-interest income were somewhat offset by the following. During the third quarter we recorded an other than temporary impairment charge of $75,000 related to Fannie Mae common stock. The company had accumulated this stock over several years in the form of stock dividends from Fannie Mae. The remaining book value of this investment is negligible at less than $6,000.

The second item, during the quarter we recorded net losses on the sale of other real estate of $37,000 compared to net gains of $80,000 in Q3 ’07. This resulted in a quarter-over-quarter net reduction of $117,000. The third item, as might be expected due to current economic conditions, income on the sale of mortgage loans decreased by $120,000. Finally, premiums on the sale of student loans decreased by $416,000.

As you are probably aware, the current liquidity of the student loans secondary market has effectively disappeared. At this time we are unable to sell student loans at a premium. However, we have committed to continue to serve the students of Arkansas by continuing to fund new loans with the expectation of holding them until Q3 ’09. At that time we expect to sell loans originated and fully funded during the ’08-’09 school year under the previously announced Federal Student Loan Program at par plus reimbursement of the 1% lender fee and a premium of $75 per loan.

As a matter of information, while we will be increasing our student loan portfolio by an estimated $50 million during the carrying period, we have the option of creating liquidity by selling participation loans to the Federal Student Loan Program. The estimated net pre-tax impact on earnings from student loans for Q4 ’08 is a reduction of $180,000 compared to the same period in ’07.

Specifically, we estimate a reduction of $300,000 in premium income partially offset by $120,000 increased in net interest income due to the increase in the student loan outstanding balances. Now, looking forward to next year, we anticipate the entire premium on the sale of student loans currently estimated at $1.6 million to be recorded in Q3 ’09. We will continue to evaluate the profitability and the viability of this strategic business unit going forward.

Currently there are way too many uncertainties concerning the roles of government in the secondary market and private sector to make any long term decisions. Moving on to the expense category, non-interest expense for Q3 ’08 was $24.4 million, an increase of $1.2 million or 5.2% from the same period in 2007. Included in Q3 ’08 are the expenses associated with the company’s five new financial centers that were opened after the second quarter of 2007.

Excluding the impact of these new branches, non-interest expense increased by only 2.8%. Although we continue to be pleased with our modest increase and normalized non-interest expense there are a few non-controllable expense items I would like to discuss. First is the deposit insurance expense which increased by $182,000 some 214% in Q3 ’08 compared to Q3 ’07.

As you may recall during 2007, the FDIC issued credits based on historical deposit levels to be used in offsetting deposit insurance assessments and Simmons First received $1.8 million of these credits. During Q3 ’08 the majority of these credits were exhausted so looking forward to Q4 we estimate the increase to be approximately $350,000 over Q4 ’07. Based on recently FDIC insurance assessment projections, we estimate a $1.8 million negative impact in 2009 versus 2008.

The second item would be student loan origination fee expenses which increased by $178,000 due to an increase of the lender fee from .5% to 1% and an increase in the volumes of student loans. The third item would be credit card expenses which increased by $125,000 for the quarter primarily due to increase card usage, interchange fees and other related expenses resulting from the initiatives that the company has taken to grow the credit card portfolio.

The fourth and final item would be a new accounting pronouncement EITF6-4, it required a change in the method of accounting for post retirement benefits related to bank owned life insurance effective January 1, 2008. In Q3 ’08 we recorded a $74,000 expense due to the accounting change compared to no expense in Q3 ’07. As of September 30, 2008 we reported total loans of $1.9 billion, an increase of $61 million or 3.3% compared to the same period a year ago.

The growth was primarily attributable to a 9.4% increase in the consumer loan portfolio and a 2.5% increase in the real estate portfolio. The growth in consumer loans was primarily in the area of student loans and credit card portfolio while the growth in the real estate portfolio was entirely in single family residential and commercial real estate loans. Overall loan growth was somewhat mitigated by 12.6% reduction in real estate construction and development loans due to permanent financing of completed projects.

Like the rest of the industry our loan pipeline remains relatively soft. Considering the challenges in the economy is important to note that we have no significant concentrations in our portfolio mix. Our construction and development loans only represent 11.7% of the consolidated portfolio and we have no subprime assets in either the loan or investment portfolios.

Now, let me give a brief update on credit cards. The portfolio’s outstanding balance increased in Q3 08 by $13.7 million or 9.2% compared to the third quarter last year. This continues the trend set in 2007 as we have now seen quarter-over-quarter growth in credit card balances for eight consecutive quarters. The increased balances can be mostly attributable to the increase in new accounts.

As we have discussed in detail in previous conference calls, after several years of net new account losses, we introduced a number of new initiatives that reversed the trend. Although the account growth is slowing in 2008, the positive trend has continued with the addition of nearly 4,000 net new accounts in the first nine months of this year.

Although the general state of the national economy remains volatile and despite the challenges in Northwest Arkansas region, we continue to have relatively good asset quality. In fact, we continue to enjoy good asset quality in all the other regions of Arkansas. At September 30, 2008 the allowance for loan losses equaled 1.32% of total loans and 182% of non-performing loans. Non-performing assets as a percent of total assets were 63 basis points, up only 2 basis points from the previous quarter.

Non-performing loans as a percent of total loans were 72 basis points, a decrease of 4 basis points from the previous quarter. The annualized net charge off ratio for Q3 ’08 was 61 basis points compared to 40 basis points for the second quarter. Excluding credit cards the annualized net charge off ratio was 39 basis points compared to 27 basis points for the second quarter. The preponderance of this increase is associated with the challenges in Northwest Arkansas which will be discussed later in this presentation.

Annualize net credit card charge offs were 1.8%, a decrease of 3 basis points from the previous quarter and still more than 400 basis points below the most recently publicized credit card charge off industry average. We continue to expect that credit card charge off will gradually return to more historic levels in excess of 2%. During Q3 ’08 the provision for loan losses was $2.2 million, an increase of $1.4 million from the same quarter in 2007 which was near a historical low mark for Simmons First.

The increase includes a $550,000 special provision for the Northwest Arkansas region. The remaining $1.65 million provision represents a return to a more normalized level based on recent asset quality trends. The provision equates to a 35 basis point annual rate of which 20 basis points are allocated to the general portfolio and 15 basis points to the credit card portfolio. Because of the uncertainty in the overall economy we will continue to be aggressive relative to the adequacy of our loan loss reserves specifically in the Northwest Arkansas region.

It is probably that the provision for loan losses will continue at more historic levels in Q4 ’08 and throughout 2009 for the company. Obviously, this depends on credit card charge offs, loan growth and overall asset quality trends. Let me take a minute to reiterate what we have previously said and what we continue to see in Northwest Arkansas region.

While bankruptcy and foreclosure filings associated with the residential real estate market in the region continue to be a problem and while we believe there are likely more to follow, at the current time there is a general belief that there may be some return toward normalcy by the later part of 2009 or early 2010. Obviously, that can change.

On a positive note, Washington and Denton Counties continue to have population growth, thus absorption rates are likely to improve since new developments and construction have slowed significantly. Concerning our company, as stated previously we have one of our most seasoned management teams in this market. We have been proactive in the identification and resolution of problem assets and we have significantly increased the loan loss reserve based on the challenges of the region.

Accordingly, we have made another previously mentioned special provision. We fully recognize that challenges remain in this economy and there is likely to be further deterioration in this region before a return to normalcy. To put things in perspective, the total loans originated in Northwest Region only represent 10.5% of our consolidated portfolio. One final thought, we do believe that the northwest Arkansas economy will work through the challenges related to an overbuilt real estate market and will once again be one of Arkansas most attractive markets.

Remember, the influence of Wal-Mart, Tyson, JB Hunt and the University of Arkansas remains a powerful attraction for new job growth. The company’s current stock repurchase program authorizes the repurchase of up to 700,000 shares of Class A common stock or approximately 5% of the outstanding common stock with $646,000 shares remaining available. During 2008 we have only repurchased 45,000 shares with a weighted average repurchase price of $28.38 per share or $1.3 million.

Effective July 1, we made the strategic decision to temporary suspend stock repurchases. This decision was made to preserve capital and cash at the parent company which is part of our strategy of managing our company during this turbulent economy. I would like to give you a final update on our de novo branch expansion plan which began in 2005.

In Q1 ’08 we opened the last two financial centers completing the original plan. At this point we have no plans for additional de novo financial centers. During Q3 ’08 we closed one in-store branch. We continue to evaluate all of our financial centers relative to their efficiency, profitability and growth potential.

Bottom line, quarter-over-quarter we experienced moderate loan growth of 3.3%, margin compression of 17 basis points, increased provision expense but good asset quality compared to the industry, a continuation of relatively low credit card charge offs at 1.8% an overall positive trend in the credit card portfolio with 9% growth, excellent growth in core deposits at 28% and most importantly strong capital at 9.8% equity to asset ratio.

Like the rest of the industry we expect the balance of 2008 to be a challenge relative to meeting our normal growth expectations. However, Simmons First is well positioned based on the strength of our capital asset quality and liquidity to deal with the challenges and opportunities that we face through 2009. Our conservative culture has enabled us to engage in banking for 105 years.

To reiterate, Simmons First does not have any subprime loans in our loan portfolio, nor do we have any subprime assets in our securities portfolio with mortgage backed securities making up less than one half of 1% of our total securities portfolio. We rank in the upper [inaudible] of our national peer group relative to capital, asset quality and liquidity. There has never been a greater time to have these strengths.

We continue to believe that the Arkansas economy will better sustain the economic challenges because as primarily a rural state we have not and likely will not experience the same highs and lows that will challenge much of our nation. We remind our listeners that Simmons First experiences seasonality in our quarterly earnings due to our agricultural lending and credit card portfolio and quarterly estimates should always reflect this seasonality.

If you will, let me close with a few personal remarks about the economy, our industry and company. While everyone on this conference call is totally aware of the challenges facing our economy, and while the turmoil continues to shape the financial markets, I think it is important to be reminded that the majority of the community banks in our country remain well capitalized with good asset quality and liquidity.

While the challenges with the economy are great, don’t forget that we have persevered through major economic challenges in the past and we will again. While the magnitude of the challenges may be greater and the solutions different, history shows that our economy will persevere and our industry will be stronger from the lessons learned. As such, we know our commitment must be to keep our eyes on the home front. We simply want to maintain control of our own destiny which is what we do best.

Question-and-Answer Session


(Operator Instructions) Our first question comes from the line of Matt Olney – Stephens, Inc.

Matt Olney – Stephens, Inc.

I wanted to ask about the margin. I was expecting some margin benefit but I was surprised at the level of margin expansion that we saw in the quarter. Could you give us some more details on that margin expansion during 3Q over 2Q?

J. Thomas May

Well, the increase over 2Q was 17 basis points on the linked quarter basis as you know. On a quarter-over-quarter basis it was down some 17 basis points. But, the real pick up on a linked quarter basis is primarily seasonality driven both the agra and the student loan portion of our portfolios so on a linked quarter basis that that would be the primary driver.

Robert A. Fehlman

Part of that also Matt you’ll see in our seasonality on the agra loans were up quite a bit on a quarter-over-quarter basis. Some of that is driven by the amount of rain that’s been in Arkansas over the last couple of months from the hurricanes and it’s delayed the farmer and being able to harvest those crops. So, the seasonality was a little bit stretched out this year. We expect some of those to start paying off in the early part of the fourth quarter here.

J. Thomas May

Both input costs caused the portfolio to go up higher than expected, and at the same time just what Bob said on the rain and the [inaudible] that went harvesting.

Matt Olney – Stephens, Inc.

As far as the near term margin outlook for some compression, how much of that outlook is based off the recent 50 basis point cut and fed funds? And how much of that were you already assuming, even prior to that announcement?

J. Thomas May

All of that was based on the announcement, all of the compression projected forward. On the 50 basis point cut, it certainly will affect us, to what extent, we are not exactly sure yet. What we do know is that when you look at our overall loan portfolio and the fact that we have $672 million in variable rate loans that are going to reprice with about 15% of that being credit card loans that were repriced, that is obviously going to have a pretty negative impact to us.

We don’t have the floors in place on most of the commercial loans. They are not at the level yet where they hit the floors. Certainly that will help us going forward below the 4.5%. I think the other big part of that, outside the large amount of variable rate loans that we have is going to be that we have about $300 million of CDs that are repricing at about the 3.25 range. Right now, just looking at the competition for the CD dollars, if we go ahead and match to keep those CD dollars, it will be about a wash. There certainly will not be any basis points pickup for us.

In other words, to keep the same dollars we are going to have to pay about the same thing we have. Then on the interest-bearing transactions, we have interest-bearing transactions in the savings accounts we have about a billion dollars, and it will be awfully hard to get too many basis points pickup there. So we are going to be a net loser on the margin side with this 50 basis points cut and we certainly expect that to be a challenge through the Q4 and certainly into Q1.

Robert A. Fehlman

Part of our margin this quarter, Matt, was also kind of recovering from the first quarter changes, where significant Fed changes in the first quarter and our company tends to, in a stable rate environment, is when we do best in our margin and when it decreases, the first 90 days out is when we tend to have a drop in our margin. Then we begin to recover after that period.

J. Thomas May

And like you say, we’re are still adjusting to several of these decreases. You had one Jan 22nd, Jan 30th, Feb 18th, April 30th and October 8th. So the impact on that is still compression through Q4 and probably into Q1.

Matt Olney – Stephens, Inc.

So as far as the CD repricing that you mentioned it doesn’t sound like you are very optimistic for those rates to move lower given the recent cut.

J. Thomas May

Well I think that is right. I think there could be – it would be a wash to maybe a few basis points pickup. We have a lot of liquidity in the company, back in November of last year we introduced a high yield investment account with the purpose of trying to build liquidity in the company, it’s just simply a part of our strategy of managing the company through these turbulent waters.

The other part of that was to try to move some of the dollars from the more expensive CDs into the money market investment accounts, and we were effective in doing this. So we have got the liquidity. We might get a few more basis points pickup on the CD side if we are not wanting to pay up to what the competitor rates are. Like I said, we have the liquidity to be able to do that but there won’t be much pickup there.

Matt Olney – Stephens, Inc.

I want to switch gears over to the student loan side. You guys went into tremendous detail on the last call kind of based off your expectations for the next several quarters, with the government opening up a small window to purchase some of these student loans in 2009. From a big picture perspective has anything changed since we last talked on the last conference call, or are your expectations still pretty similar to where they were three months ago.

J. Thomas May

Matt I think they are very similar. I will tell you there are two things that I maybe I can expand on a little bit. First and foremost in the student loan portfolio we have firmed up that the government will allow us to sell into this program all loans that are originated in the ’08-’09 school year. Number two is I can reaffirm that those will be sold at a 1% - they will pay back the 1% fee, and they will purchase the loans at par, and then we will be paid $75 per loan.

As we reported in our message that we just presented, we think that that we will accumulate within our portfolio anywhere from $40 million to $50 million more than normal and that we will sell that $40 million to $50 million, and through that pricing I gave you, we should generate $1.6 million and that should come in Q3.

I have already in the text I think I mentioned what we would be given up in Q4 by virtue of holding it. I’ll just reiterate that, we would normally have gotten about $300,000 on the sale that we will not get, and then we will get about $120,000 in interest income by carrying it in the portfolio, so the net impact is about $180,000 down.

Matt Olney – Stephens, Inc.

For Q4?

Robert A. Fehlman

I’d to make two points also. One, if you just for your model next year, if you look at 2008 you’ll see year-to-date we have a $1.35 million in premium on student loans and as Mr. May said on the script, we will have zero on the fourth quarter. We expect that whole $1.6 million to be recorded in the third quarter of next year, so first second and fourth would not have any or negligible amounts in those quarters. The other point is, I believe we also have from the government that they are going to have a second year of this program so the 2009-2010 school year would also be covered under this program for a sale to the government in July 2010.

J. Thomas May

Which makes us feel good about our decision to have stayed in the program. I think one other thing Matt, that we need to mention is that we have learned since our last meeting is that we would have the opportunity to sell a participation in this portfolio to the government if we wanted to during January and February, maybe just during the first quarter of 2009.

Now that would not affect the overall yield very much, it would somewhat so it is a liquidity bump that we get that we have learned about. Right now we don’t think we would have that need but it is good to know it is there.

Matt Olney – Stephens, Inc.

I can see how most banks would need that liquidity but it seems like you guys have the capacity to hold it so you guys have the option it sounds like.

Robert A. Fehlman

And as you notice we ended the quarter at about $100 million in student loans, and we generally range from $70 million to $90 million. We expect that number to probably go up to about may the $130 million range at the peak before we end up selling it.

Matt Olney – Stephens, Inc.

$130 million probably in 2Q ’09?

Robert A. Fehlman

Yes, probably. It would grow up to that $130.

Matt Olney – Stephens, Inc.

On the deposit side, we have heard some other banks talk about getting increase in deposits from some depositors that are worried about their bank that it is not a healthy bank, and in some of the more established banks like Simmons is seen the benefit at that. Is that something you are starting to see right now?

David L. Bartlett

I do think we have, we are seeing some benefit. Yes, sir. Like I said I think there is probably, we’ve also received some benefit from other flight to quality issues coming out of the equity market or coming from other places also.

Matt Olney – Stephens, Inc.

Is that something that you are marketing aggressively?

David L. Bartlett

No sir, we are not. Now when you say marketing aggressively, let me see what you mean by that?

Matt Olney – Stephens, Inc.

I just mean remind customers that Simmons has been around for 100 years, and that your capital ratios are strong.

David L. Bartlett

Yes, I apologize. Yes, certainly we are very proud of the fact that our capital asset quality and liquidity is strong, and we have been around 105 years. We certainly let people know that that is a major plus for our organization but we are not running a lot of ads in that respect. That is just a decision that we made here at the organization. Again, I think the proof of the pudding in that is our performance. I think we do have a reputation of being a conservative culture. And I think we probably do not have to promote that, and we have gotten the benefit of that.

Matt Olney – Stephens, Inc.

I also wanted to ask about, if you talked to some of your agri borrowers, I think the recent months have been extremely volatile with commodity prices, the weather. What are they feeling right now, and how are you feeling about the credit quality of some of the agri borrowers.

J. Thomas May

I feel very good. I just believe the agri industry has been impacted by the weather, it has been impacted by input costs. But generally speaking, I think I can summarize it by saying this, everybody northeast, southeast and the deep southeast delta part of Arkansas has had obviously the increase in the input cost. I think the weather has most impacted southeast Arkansas through the two hurricanes.

What I have heard is those that have cotton are most challenged. I guess the positive from our standpoint is that there is less cotton acreage in Arkansas this year than probably any year in the last 20 years, and that continues to go down. There will be some farmers that will have challenges but my belief is that most of our portfolio will be okay. There will be some carryover but not to the extent that one might have thought.

Matt Olney – Stephens, Inc.

It doesn’t sound like any of the provision in 3Q is specifically for those agri borrowers any more than the usual amount.

David L. Bartlett

That is exactly right. We obviously have some catfish in our portfolio in southeast Arkansas and there are some challenges in the catfish industry as there seems to be every two or three years and that is probably still to unfold. But we do not have any major issues there, at this time, at least that we know.

Matt Olney – Stephens, Inc.

My last question guys, delinquency trends on credit cards, I don’t you mentioned that in your prepared remarks, but you may have. Do you have any thoughts there?

David L. Bartlett

Well, yes. Our past due ratio is down, it is 1.8% down from 1.84% the last time we visited. I think what we have said, and I think that the most recent information that we have gotten on national is 4.5% or 5.5% somewhere south of 5% I believe. We’re some 400 basis points at 1.8% better than the national average. But the question is the trend. Well, certainly the trend has been moving up as we had projected it would, but quite honestly it has not moved up to the level we thought it had.

We had projected it would go over 2% which would be coming back to normal levels and those normal levels would be pre October 2005 when you had the new bankruptcy laws. It has just been slow to move in that area which is certainly a positive. Now obviously the issue bigger than that is well is it going to go beyond 2% looking at what is happening in the economy? That is an issue that we certainly try not to bury our heads in the sand.

We also watch and continue to monitor that process. I will tell you this, we have shocked it to the 2001 and 1991 recessions. By shocking it I’m talking about it in terms of going back to those two periods, looking at the trends that took place in those timeframes over a two to three year period and then carrying that forward to next year. Surprisingly there is just not a big change.

I am not saying there won’t be I am just saying that is the process we have went to. Remember though, that we are 39% funded, based on our commitments so lots of diversification, we have less than an average of $2,000 per account. Significantly less than what the industry average was and probably most important is the fact we don’t just score, credit score, we credit score and underwrite and we’ve done that since the ‘60s.

I believe that if there is a chance one, to have a credit card this size and work its way through these kind of economic challenges without being significantly impacted I think our portfolios is where it will happen with. Time will tell.


We have no further questions in queue.

J. Thomas May

Thank you very much. Have a great day.

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