Hanmi Financial Corporation
Q4 2018 Earnings Call Transcript

Published: 16 Jan 2019

[Operator:]

Ladies and gentlemen, welcome to the Hanmi Financial Corporation's Fourth Quarter and Full Year 2018 Conference Call. As a reminder, today's call is being recorded for replay purposes. At this time, all participants are in a listen-only mode. Following the presentation, the conference will be opened for questions. I would now like to turn our conference over to Mr. Richard Pimentel, Senior Vice President and Corporate Finance Officer. Please go ahead.

[Richard Pimentel:]

Thank you, Matt, and thank you all for joining us today. With me to discuss Hanmi Financial's fourth quarter and full year 2018 earnings are

[Chong Guk Kum:]

Thank you, Richard. Good afternoon, everyone. Thank you for joining us today to discuss Hanmi's 2018 fourth quarter and full year results. Despite the inclusion of some noise from extraordinary items, our underlying performance in the fourth quarter was strong and provides evidence that our strategic shift to moderate loan growth to protect our net interest margin is indeed working. Here are some highlights for the quarter and full year. While net interest income before loan loss provision increased slightly quarter over quarter, one-time tax adjustments and a higher loan loss provision impacted fourth quarter net income. As announced in the fourth quarter, as part of our ongoing efforts to further enhance profitability going forward, during the quarter we began efforts to rationalize our branch network, which included the closure of two branches and opening of one new one, with four additional branch closures scheduled for the first quarter of 2019. Although growth in our loan and lease portfolio was modest, new origination activity reflected loan pricing discipline and our shifting emphasis towards higher-yielding categories. As a result, net interest margin stabilized in the quarter, in spite of higher deposit costs and after excluding the effects of the FHLB special dividend and slightly higher prepayment fees in the quarter. Importantly, we continued to maintain our normal conservative underwriting standards and our overall asset quality remains excellent. Deposits were up 2.9% quarter over quarter and 9.2% year over year, primarily driven by growth in time deposits and savings accounts. With solid growth in deposits coupled with our strategy to selectively grow loans and leases, our loan-to-deposit ratio at yearend was 97% compared with 99% a year ago. And finally, during the quarter, we completed our stock repurchase authorization of 1.6 million Hanmi shares or 5% of our shares outstanding. Looking in more detail at our fourth quarter results, we reported net income of $11.4 million or $0.37 per diluted share. This included a one-time income tax adjustment totaling $2.7 million and a $3 million loan loss provision, which together reduced fourth quarter net income by $0.16 per share. Excluding these items, net income per share increased by approximately 6% or $0.03 per share compared to the prior quarter. Overall, our asset quality metrics have remained excellent. During the quarter, criticized loans declined 17.6% from $71.3 million to $58.7 million. Nonperforming loans were $15.5 million, or 34 basis points of loans at quarter end, representing sequential improvement of 15.3% from third quarter nonperforming loans of $18.3 million or 40 basis points of loans. We recorded a $3 million loan loss provision in the quarter and our allowance for loan losses held steady at 70 basis points of loans and leases at yearend. The fourth quarter also included a $2.1 million charge-off of a problem loan identified and reserved for in prior years. As such, net charge-offs were $2.7 million for the quarter and ended the year at 7 basis points. Notwithstanding the fourth quarter uptick in charge-offs, the overall asset quality of our portfolio is quite strong and we anticipate minimal charge-off activity in the first quarter of 2019. Importantly, even in today's highly competitive market for loans and leases, we continue to maintain our commitment to conservative, disciplined credit underwriting. For the fourth quarter of 2018, consistent with asset quality data from prior quarters, the weighted average loan-to-value and debt coverage ratio on new commercial real estate loan originations were 50.8% and 1.4 times, respectively. The slight decline in the weighted average debt coverage ratio for the newly booked CRE loans for the quarter is due to one large hospitality loan booked during the quarter, backed by a Korean conglomerate, which has a loan-to-value of 55% and a debt coverage ratio of 1.25 times. This credit is going through a property improvement plan, or PIP, required by a major national chain. The stabilized DCR projected for this property is 1.8 times. Weighted average loan-to-value and debt coverage ratio for the entire commercial real estate portfolio at Hanmi Bank are 50% and 2.1 times respectively. During the fourth quarter, we completed the stock repurchase program that was authorized by the Hanmi Board of Directors during the third quarter of 2018. In total, we repurchased 1.6 million shares of Hanmi common stock or 5% of shares outstanding at an average price of $22.57. This included fourth quarter share repurchases of 1.2 million shares at an average price of $21.34. Even after completing the share repurchase, Hanmi's tangible common equity ratio remained strong at 9.84%, as do all of our regulatory capital ratios. I believe the share repurchase highlights our confidence in the Hanmi franchise and we see buying shares at this level as a timely and appropriate use of our capital resources. I now like to provide an update on the strategic roadmap for the bank as we look ahead to 2019. As we articulated on our last earnings call, given the current interest rate environment that has resulted in fierce competition for gathering deposits and originating well-priced loans, which meet our underwriting requirements, we made the decision to protect net interest margin by slowing net loan growth for the second half of 2018. We are also moderating our loan growth expectation for the full year in 2019 to a range of 5% to 7%. This includes efforts to grow areas of the Bank that generate lower cost deposits and/or higher spreads. C&I loans, including the bank's Specialty Lending Division that focuses on mainstream businesses, along with the Commercial Equipment Leasing Division are key areas targeted for additional growth along with greater pricing discipline. Our fourth quarter results are early indications that these efforts are working. A significant encouraging sign is the average loan and lease yield for the fourth quarter, after adjusting for the prepayment penalty, being up 12 basis points to 5.03%. Additionally, weighted average interest rate for the newly originated loans in the fourth quarter increased 32 basis points, and importantly weighted average interest rate for the newly generated Commercial Real Estate loans jumped 37 basis points during the quarter. As a result, after several quarters of declining net interest margin, the fourth quarter net interest margin of 3.51%, even after adjusting for the FHLB special dividend and slightly elevated prepayment penalty, appears to represent a sign of stabilizing Net Interest Margin. As it relates to SBA loans, Bonnie and Ron will follow with more information on our fourth quarter activities. With respect to the guaranteed portion of the SBA 7(a) loans originated in 2019, once the government shutdown is over, we will evaluate retention versus sale of the guaranteed portion on a loan by loan basis. A decision to retain versus sell the guaranteed portion will be based on our profitability analysis, the rate environment, and the type and duration of a loan. In conjunction with moderating growth in a safe and prudent manner, during the quarter we executed initiatives designed to reduce costs and to improve operational efficiencies. In total, these actions are expected to reduce non-interest expenses by at least $5 million, or approximately $0.12 per share, by the end of 2019. At the foundation of our cost reduction initiative is the rationalization of our branch network. This process contemplates elements such as branch profitability, dependence on time deposits and strategic importance to the franchise. During the quarter, we closed two branches and opened one new branch all of which were in Texas. We currently have scheduled four additional branch closures in the first quarter of 2019, including two branches in Illinois, one additional branch in Texas and one branch in Southern California. At the conclusion of this rationalization process, we will have consolidated approximately 10% of the Hanmi branch network. Additional key areas of focus to improve our cost structure includes

[Bonita Lee:]

Thank you, C. G. I will discuss loan and lease production and deposit gathering activities and then turn it over to Ron Santarosa for additional details on our fourth quarter financial results. During the quarter, organic loan and lease production totaled $246.2 million, which increased 3% over the prior quarter. However, due to elevated levels of payoffs as well as the higher amortization during the quarter, our portfolio of loans and leases expanded by just 1.6% on an annualized basis and the portfolio grew 6.9% for the full year. Consistent with our strategy, fourth quarter production activity reflected our shifting emphasis towards higher-yielding categories with the strong asset quality such as C&I loans, as well as equipment leases, while we reduced our exposure to lower yielding asset classes such as the single family residential loans. In line with our longer term objective to diversify our loan and lease portfolio, CRE loans comprised 70.8% of our portfolio at the end of the 2018 compared with over 76.5% two years ago. Fourth quarter production consisted primarily of $87.5 million of commercial real estate loans, $30.8 million of SBA loans and $68.1 million of C&I loans. We also originated $59 million of commercial equipment leases. Of note, C&I loan originations in the fourth quarter were more than two times higher than the previous quarter, while equipment lease production remained consistently strong throughout the year. Newly generated loans and leases for the quarter had a weighted average yield of 5.89%, an improvement from the previous quarter's weighted average yield on new production of 5.57%. As a result, average loan and lease yields for the portfolio improved to above 5%, even after adjusting for prepayment fees in the fourth quarter. Looking ahead in the first quarter of 2019, our pipeline remains healthy and supports the annual growth objective range of 5 to 7% that C. G. noted in his remarks. Moving on to deposits, we continue to operate in a highly competitive Asian American banking landscape for deposit gathering activities. Total deposits of $4.75 billion increased 2.9% during the fourth quarter on a linked quarter basis and 9.2% from a year ago. Most of the growth in the quarter came from the interest bearing deposits, with the money market and savings increasing 6.4% and time deposits increasing 4%. As a result of the fourth quarter loan production and deposit gathering activities, our loan-to-deposit ratio for the fourth quarter was 97%, down from 99% in the fourth quarter last year. I'd now like to turn the call over to Ron Santarosa, our Chief Financial Officer. Ron?

[Romolo Santarosa:]

Thank you, Bonnie, and good afternoon all. First, I'd like to dive a bit deeper into our effective tax rate for the fourth quarter. As reported, our provision for income taxes included a charge of $2.7 million. That charge included $2.1 million increase to the valuation allowance for the State of Illinois net operating loss carryforwards, a $1.4 million adjustment to temporary differences from the change in the Federal income tax rate and a $772,000 benefit from the lapse of the statute of limitations on certain unrecognized tax benefits. These adjustments increased the effective tax rate to 41.9% for the quarter and to 31.1% for the year. Absent these adjustments, the effective tax rate would have been 28.1% for the fourth quarter and 27.9% for the year. Our net interest income was $45.6 million for the fourth quarter, up slightly from $45.3 million for the third quarter. Even though the fourth quarter included $266,000 from the special FHLB dividend and $352,000 in prepayment fees, we saw loan and lease income increase $1.2 million as yields improved. In addition, as deposits replaced borrowings, borrowing expense fell $844,000 as deposits expense increased $2.4 million. Again, loans-to-deposits ended the year at 96.9%. Net interest margin for the fourth quarter was 3.51%, up three basis points from 3.48% for the third quarter. Again, while the special dividend and prepayment activity contributed five basis points to the fourth quarter margin, we saw loan and lease yields increase 12 basis points sequentially. Combined with the shift from borrowings to deposits, net interest margin, adjusted for the special dividend and prepayment activity, declined two basis points sequentially. Turning to noninterest income for the fourth quarter, we saw a 1.4% improvement from the third quarter to $6.3 million. This increase reflects higher levels of deposit service charges and other operating income, offset by lower gains on SBA loans. SBA gains were just under $1.0 million for the fourth quarter on a lower volume at $17.9 million and lower trade premiums at 6.5%. For noninterest expenses, we had a 1.0% increase from the prior quarter to $29.3 million. As noted, we lowered incentive compensation, closed two branch offices and reduced staff late in the fourth quarter incurring about $400,000 in severance, retention and other costs. Later in this 2019 first quarter, we will close four additional branch offices that come with additional costs. In addition to these cost saving actions, we will continue to invest in our business. In the fourth quarter, we continued with our seasonal advertising efforts and investment in technology. Last, because the increase in noninterest expenses outpaced the increase in revenues, our efficiency ratio for the fourth quarter increased to 56.40% from 56.28%. Return on average assets for the fourth quarter was 0.83% and 1.08% for the year, while the return on average equity was 7.92% for the fourth quarter and 10.07% for the year. Our tangible book value at the end of the year increased to $17.47 per share and our tangible common equity ratio was strong at 9.84%. With that, I'll turn it back to C. G.

[Chong Guk Kum:]

Thank you, Ron. Hanmi results in the fourth quarter reflect our decision to grow in a safe and prudent manner, protect net interest margin and to improve our cost structure. Given the competitive environment coupled with further headwinds from a flat yield curve, we are convinced that this approach is most judicious at this point in the credit cycle. Our strategic growth targets, coupled with our cost reduction and operational efficiency initiatives, will put Hanmi in a very good position to drive profitable growth as we look ahead to 2019, and beyond. I look forward to sharing our continued progress with you when we report our first quarter 2019 results in April. Thank you.

[Richard Pimentel:]

Matt, that concludes our prepared remarks. We would now like to open up the call for questions.

[Operator:]

Great. Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question is from Chris McGratty from KBW. Please go ahead.

[Christopher McGratty:]

Ron, maybe a question for you; you guys are very, very aggressive with the buyback in the quarter given the volatility in the market. So you're done with the buyback. I guess, my question is with the stock a couple of bucks below your average cost and growth slowing a bit, like can you talk through the potential for another buyback or maybe remind us the capital target that you're managing to? Thanks.

[Chong Guk Kum:]

Okay, Chris, Ron is looking at me. So, yes, we will be going to the Board with a proposal to have another buyback plan. And the - our target, capital target, tangible common equity capital target is between 9% to 9.5%.

[Christopher McGratty:]

Okay. And then, I assume the Board meets in the next couple weeks. Is that fair to assume that the authorization might come at that point?

[Chong Guk Kum:]

Possible, yes.

[Christopher McGratty:]

Okay. If I could switch to expenses, it seems like some of the benefits of the strategy are making their way into numbers, which is a good sign. Can you help us with the kind of the trajectory? I think you talked about saving the $5 million and $0.12 by the end of 2019. I guess, how much is in the numbers already and maybe just help us with the kind of the glide towards full realization in terms of the dollar expenses on a quarterly basis.

[Romolo Santarosa:]

So about half of that $5 million idea is through branch consolidation, and the remainder of the branches will be consolidated as we complete the 2019 first quarter. A little bit more takes us up to about two-thirds of the total, say just related to staff reductions. The staff reductions will be on the same path as the branch consolidations. The remaining third of the save comes from ferreting out areas in the organization where we can save costs or renegotiate contracts, things of that like. That will take a little bit longer. I would expect that last third to come in by the time we finish out the third quarter of next year. So I would anticipate that that the full save is manifested as we get to the second half of the year and more so as we get to the fourth quarter.

[Chong Guk Kum:]

Yeah, third quarter of this year, not next year.

[Romolo Santarosa:]

I'm sorry. Sorry, my years are mixed up. But you're right.

[Chong Guk Kum:]

We're already in 2019, Ron.

[Romolo Santarosa:]

Correct. Thank you.

[Christopher McGratty:]

Okay. And just to make sure I'm clear, Ron, the quarterly trajectory should kind of make it down to that 29-ish range by the end of the year, is that the run rate?

[Romolo Santarosa:]

I would be hopeful that we hit more like 28 by the time we get to the fourth quarter. So, first quarter will be a little bit elevated if you will because of payroll taxes and the rest. Second quarter, you will start to see a bit more because of the branch consolidation, staff reductions would have taken into effect. And then, the timing of the last third, that's the one that's a little bit more difficult to predict. So I'm very confident that in the second half of 2019, as C. G. corrected me, we will start to see it and definitely by the fourth quarter.

[Christopher McGratty:]

Okay. That's helpful. Thanks a lot.

[Operator:]

Our next question is from Gary Tenner from D.A. Davidson. Please go ahead.

[Gary Tenner:]

Guys, good afternoon.

[Chong Guk Kum:]

Good afternoon.

[Gary Tenner:]

I just have a couple of questions. I guess, first, I just want to ask about the provision with the $2.1 million charge-off representing most of the charge-offs for the quarter, and as specific reserve being carried against that. I'm curious as to the decision to increase the provision and build that reserve back given strong credit metrics in general. Can you talk about the thought process on where we are in credit and your decision to build that reserve back up?

[Chong Guk Kum:]

Well, that one credit is an impaired credit that we started to deal with several years ago. So from a quantitative standpoint, as the asset quality metrics have indicated, the - they're really, I mean, we're about as strong as you can get. But in the environment that we're in, with some economic uncertainties, and then frankly, with the CEO’s pending departure, it made sense for us to start dealing with some issues relative with what we call the qualitative side. And so, the bulk of the provision is geared more towards the qualitative rather than the quantitative. Does that make sense?

[Gary Tenner:]

Okay. So you're not necessarily seeing anything in the environment or in your internal credit scoring today, but just my understanding, kind of where we are maybe in the expansion and any uncertainty?

[Chong Guk Kum:]

Correct. And as I mentioned, I mean, we've actually looked down to - tried to look down the road. And after discussions with my credit people, they're not seeing any type of meaningful charge-off activity in the first quarter, and their crystal ball only goes out that far. So that was very, I would say positive, I would say positioning from the credit people for my benefit.

[Gary Tenner:]

Okay. Thanks for that C. G. And then just regarding SBA, given the government shutdown, is it just safe to say as long as that goes on, there would be no gain on sale activity or there would be - will there be SBA production, but maybe they would - their loans weren't qualified as SBA loans until after government shutdown is over, how does that work mechanically?

[Chong Guk Kum:]

Well, yeah, we can't sell - we can't conclude these SBA programs or loans with the government closed, but the activities are still ongoing, and so once the government shutdown is over, then we can immediately ramp up the closing in the sales activities. And so, the marketing efforts have been ongoing and they seem to be holding up fairly well notwithstanding the government shutdown as we speak.

[Gary Tenner:]

Great. Thank you.

[Operator:]

Our next question is from Matt Clark from Piper Jaffray. Please go ahead.

[Matthew Clark:]

Hi, good afternoon.

[Chong Guk Kum:]

Good afternoon.

[Matthew Clark:]

Just first one for me on deposit pricing and with the fed that could be on hold for a little while, can you just give us a sense for where your CDs are? What rate they're renewing into and your general competitive pressures that exist today, again with the fed that might be on hold for a bit.

[Bonita Lee:]

So I'll cover that. During the fourth quarter, we had CD maturing at average cost at the 1.4%, we retained them at 1.76%. But in terms of new money that's coming in, as soon as like the competitors or some of the rates are offering as high as 2.7%. We are averaging about 2% for 12 months money for now.

[Matthew Clark:]

Okay, great. And then - go ahead.

[Chong Guk Kum:]

Also from the [financial] [ph] standpoint, it seems that the competition has eased somewhat and if the fed could sit on the sidelines for a while longer and let the market just kind of stabilize as far as these deposit products are concerned, I think that bodes well for not only us but the entire industry. So there seem to be some early indications that the CD pricing environment seems to be stabilizing.

[Matthew Clark:]

Okay. Then just switching gears to the loan side of things. Can you give us the weighted average rate on new equipment leases in the quarter?

[Bonita Lee:]

Sure. The equipment leases came in at 5.82% for the quarter.

[Matthew Clark:]

Okay. And Ron or C. G. can you speak to that portfolio as that continues to increase on a relative basis, can you give us a sense for and what do you think the normalized loss rates are on that portfolio?

[Chong Guk Kum:]

I think I said this in one of our prior calls, when we acquired this portfolio from that bank in Southern California; we had modeled in a loss rate of 150 basis points. In reality the loss rate has been substantiated less than 150, in fact, well below 100 basis points. Our model has been to trade-off yield for credit quality and so even though our weighted average on these leases is somewhere close to [go 6%] [ph]. The loss rate of the portfolio is very, very modest. And so, if we stayed of course on this particular program, I see us maintaining a loss rate of 100 basis points or less and so we'll see how this type of product performs in a slower economy, but so far it has exceeded our expectations in terms of asset quality.

[Matthew Clark:]

Okay. And then just last one for me on the tax rate Ron, is 28 the right number going forward or?

[Romolo Santarosa:]

Yeah.

[Matthew Clark:]

Okay, great. Thank you.

[Operator:]

Next question is from Tim Coffey from FIG Partners. Please go ahead.

[Timothy Coffey:]

Good. Thanks. Good afternoon everybody. The SBA premium, I think Ron mentioned, it was in the end of his comments was 6.5%, that kind of suggest that there has been kind of a steep drop-off in premiums at the back half of '18. Is there a point where it makes more economic sense to hold the SBA production rather than selling it, assuming of course, the government reopen?

[Chong Guk Kum:]

Yeah, I mean, there is. We've just intuitively, if we can get a premium in excess of seven that makes sense, but we're in the process of basically putting together a program, relative to profitability analysis that will enable us to determine when we - well, one of the elements associated with the decision to sell or to retain, but the other things have to do with as I mentioned earlier, the rate environment because it changes. And the duration and the type of - the type of SBA loans that's originated, so depending on a loan, we'll make those decisions on a case by case basis, but probably somewhere in the range of about seven maybe above it, if we get a premium we'll probably sell.

[Timothy Coffey:]

Okay. And then with the re-hike in December, should we expect to see a similar level of prepayments like we saw this past quarter or could it increase?

[Chong Guk Kum:]

The time to predict prepayment is, just, it does not work for us. It's just been all over the board. Many of the prepayments that have taken place is just basically because of the sale activity associated with the commercial real estate held by our customers rather than refinance. And so it's just very hard to predict where that's going to go. But as I tried to allude to in my presentation, what I'm really feeling good about is the way our - our loan products have gotten traction in terms of the upward pricing of these loans, because of - or what I should say under Bonnie's leadership, we've been very focused on making sure that we get paid for the risks that we undertake when we make these loans. And so the fourth quarter activity in terms of ramp-up from third to fourth quarter, in terms of increases in the interest rates, across all of our product lines, it just - it gives me hope that we are at or near the bottom. And maybe if we got lucky with the fed, maybe we will even see an uptick. But I feel good about our net interest margin trajectory.

[Timothy Coffey:]

Okay, great. Thank you. All my other questions have been answered.

[Chong Guk Kum:]

Okay.

[Operator:]

Our next question is from Gary Tenner from D.A. Davidson. Please go ahead.

[Gary Tenner:]

Hey, guys. I just had a follow-up question, just as it relates to CECL, obviously now it's 2019. Can you update where you are? Are you already now running through current kind of systems to where you starting - continue to gather data? Any sort of initial thoughts to glean from anything you've seen so far?

[Chong Guk Kum:]

Yeah, now, we're well under way in terms of getting our CECL program up and running. We've been running some, I'd say, what-if scenarios, modeling if you will. And preliminarily, I don't think there is going to be any kind of a meaningful impact to our capital. But it's way too soon in the game. But we're well underway in terms of conforming and meeting the expectations of the regulators and our shareholders as far as if and when CECL is implemented that we'll be ready.

[Gary Tenner:]

Okay. Thank you for that. And I think this question may have been asked and answered to some degree. But if there are no rate hikes over the course of 2019, just given your kind of discipline on pricing and where you see deposits, where do you think that sets your margin sort of directionally for 2019 from the fourth quarter level, if there is no further hikes?

[Chong Guk Kum:]

I'll - because as I said, I - the one of the things that we have done a good job of is to - and maybe we did it little bit earlier than on competition is to really focus and put a discipline in place as far as getting paid higher rates if you will on these loans. And so, as I look at the data, every quarter - Bonnie has been very good about making sure that we get everything we can on each and every one of the loans. The trajectory is positive. And so, if we can get a little bit of help on the liability side, i.e., deposit pricing, I believe that the market is finally willing to pay a little bit higher rate in the environment that we're in. And I think ultimately, under your scenario, I'm fairly confident that not only us, but I think the entire industry - industry's net interest margin will have an upward movement.

[Gary Tenner:]

And based on your commentary on what you're seeing competitively in the market on deposits, you're not fearful of just ongoing upward creep or lag on the deposit side?

[Chong Guk Kum:]

Well, that could happen. I mean, in particular, in our, I would say competitive arena, when a bank is having liquidity issues, they'll do something that is, I would say difficult to ignore. And then so, absent a bank having some liquidity issues that caused them to put some really ridiculous rate out there. I think even in the Korean-American banking community, we're already seeing some signs of stability as far as deposit pricing is concerned.

[Gary Tenner:]

Great. Thanks for the color.

[Chong Guk Kum:]

You bet.

[Operator:]

Our next question is from Don Worthington from Raymond James. Please go ahead.

[Don Worthington:]

Thank you, just a couple of small questions. In terms of expenses during the quarter, how much would you consider to be kind of nonrecurring? Is it kind of that $400,000 number related to the branch closures?

[Romolo Santarosa:]

Yeah.

[Don Worthington:]

Okay, okay. And then looks like you had about roughly $400,000 of OREO income in the last two quarters. Do you expect that to continue or kind of diminish?

[Romolo Santarosa:]

A very volatile number, Don, it's hard to predict when we get a benefit or when we have a charge.

[Don Worthington:]

Okay. And, I guess, lastly, Ron, you mentioned this but I missed it. What was the amount of that special dividend you got from the FHLB?

[Romolo Santarosa:]

$266,000.

[Don Worthington:]

Okay. All right, great. Thank you.

[Operator:]

Thank you. This concludes the question-and-answer session. I'd like to turn the floor back to management for any closing comments.

[Richard Pimentel:]

Thank you for listening to Hanmi Financial's fourth quarter and full year 2018 results conference call. We look forward to speaking to you next quarter.

[Operator:]

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.