Investors Bancorp, Inc.
Q4 2018 Earnings Call Transcript

Published: 31 Jan 2019

[Operator:]

Good morning, and welcome to the Investors Bancorp Fourth Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask question. [Operator Instructions] We'll begin this morning's call with the company's standard forward-looking statement disclosure. On this call, representatives of Investors Bancorp Inc may make some forward-looking statements with respect to its financial position, results of operations and business. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond Investors Bancorp's control, are difficult to predict and which can cause actual results to materially differ from those expressed or forecast in these forward-looking statements. In last night's press release, the company included its Safe Harbor disclosure and refers you to that statement. That document is incorporated into this presentation. For a more complete discussion of the certain risks and uncertainties affecting Investors Bancorp, please see the section entitled Risk Factors, Management Discussion and Analysis of Financial Conditions and Results of Operations set forth in Investors Bancorp's filings with the SEC. Please note, this event is being recorded. And now, I'd like to turn the call over to Kevin Cummings, Chairman and CEO of Investors Bancorp.

[Kevin Cummings:]

Thank you, and good morning, and welcome to the 2018 Fourth Quarter Investors Bancorp Earnings Call. The company last night reported in its earnings release quarterly net income of $33.3 million, or $0.12 per diluted share. And as previously announced last month, the 2018 fourth quarter results include a $32.8 million loss on the sale and restructuring of the debt securities available-for-sale and a $2.8 million in expenses related to the closure of four branches, three in New Jersey and one in New York. Adjusting for these items, core net income for the quarter was $61.1 million or $0.22 per diluted share compared to net income of $54.2 million or $0.19 per share for the three months ended September 30, 2018. And this compares to adjusted net income of $48.2 million or $0.17 per diluted share -- per share for the three months ended December 31 last year. The 2017 results reflect adjustments for the tax law change and severance and branch closure costs announced in 2017. Year-over-year, we saw a 27% increase in core net income and a 29% increase in EPS for the quarter ended December 31. For the year ended December 31, 2018, net income totaled $202.6 million, or $0.72 per diluted share. Core net income totaled $229.3 million after adjusting for the securities sales and the branch closures, and this totals $0.81 per share for 2018. These results represent a 28% increase in net income versus adjusted net income in 2017 and $0.62 per diluted share in 2017. So it's a good quarter and a good finish to 2018. During the quarter, we announced the termination of our informal agreement relating to the BSA compliance program and are pleased with our continued progress in this area. The investments in our people and technology and risk management over the last three years will provide a strong foundation as we continue to grow. During the quarter, we saw a strong loan growth of $652 million in total loans, which represents a 3.1% increase. For the year, total loans grew just over $1.5 billion, with close to 50% of this growth coming from our C&I portfolio, which grew from $1.6 billion to $2.4 billion during 2018. We will continue to diversify our balance sheet and leverage our excess capital through organic growth, buybacks and dividends. We announced a cash dividend of $0.11 per share to be paid next month, and we continued to repurchase our shares in the open market. During the quarter, we repurchased 5.9 million shares for $67.2 million for an average price of $11.39. This activity follows our third quarter repurchase of 6.9 million shares. Our return on tangible equity for the quarter was 8.34% as adjusted versus 6.28% in '17 and 7.29% for the quarter ended September 30. During the quarter, we experienced sound non interest expense control, as total non interest expenses, excluding the branch closure were $99.4 million versus $101.8 million for the quarter ended September 30 and $103.6 million for the quarter ended December 31 last year. We have a little bit of a difficult operating environment with respect to interest rates and the flat yield curve, but we continue to manage our growth prudently and will continue to make investments in both people and technology as we continue to grow and evolve into a full-service commercial bank. Our balance sheet is strong and our credit quality continues to perform well. At this point in the economic cycle, we believe we are well positioned for anything that might happen with respect to the potential slowdown in economic activity as we move through 2019 and into 2020. With respect to credit quality, we had net recoveries of $1.5 million for the quarter ended December 31 versus net charge-offs of $2 million in September and $3.6 million in the quarter ended last year. For the year, we incurred charge-offs of $7.2 million in 2018 and $13.7 million in '17. For the last five years, we have experienced net charge-offs of approximately $50 million. That averaged about $10 million per year. Overall our allowance for loan losses increased by $4.8 million to $235.8 million at year-end. This reflects the loan growth experienced in the fourth quarter. Our non accrual loans increased from $104 million to almost $125 million as we saw one multifamily relationship consisting of nine loans move into non accrual status. These loans total approximately $31.2 million and have an overall loan to value at year-end of approximately 75% on current appraisals received in September and October. We are closely monitoring these situations as the properties showed strong cash flows based on financials received from the borrower, and it appears that income is being diverted to other projects. We are in the process of putting our rent receiver in place and legal actions have commenced. We anticipate having that rent receiver in place by the end of the month -- end of February. In the CRE portfolio, $12.4 million is currently in non accrual status, with approximately $9.8 million of that group current on payment terms as of today. And in our business portfolio, there are $19.4 million in non accrual loans, of which $13.9 million is current on payment terms as of January 31. Overall, we think our credit quality remains strong, and we have made significant investments in the business lines and in our risk management groups to enhance our processes as we continue to grow. We believe these investments will allow us to continue to diversify our portfolio in a safe and sound manner. With respect to risk management, our Chief Risk Officer, Philippa Girling, has recently decided to leave the bank and will retire in March. Paul Kalamaras has moved into that position from the Chief Retail Officer position and brings over 30 years of banking and credit experience to the position. We thank Philippa for her efforts and wish her good health and good luck in her retirement. We are looking forward to improving and enhancing our processes in this risk management area to improve both the internal and external customer experience and become more efficient in this process. These past two years have seen an all-hands-on-deck approach to the issues we face with respect to ERM and BSA, but now we have the opportunity to get stronger and more efficient in these processes. On the deposit front, deposit grew $182 million for the quarter and $222 million for the year. With Paul Kalamaras moving over to risk management, Bill Brown was promoted to Executive Vice President and Chief Retail Officer to manage and lead our retail team. Bill, along with our Chief Marketing Officer, Dorian Hansen; and Mark Taylor, our Head of Digital Strategy are addressing the issues that we face in both the marketing and the technology front with respect to deposit-gathering activities. This is the single most important priority of this management team and the entire bank, and the same effort that went into solving our BSA and risk management issues over the past two years are being directed to expanded activities to enhance our products and improve the customer experience. We need our retail and business teams to focus on the customer – and not entirely – to focus on the customer and drive business into the bank. The competition in the northeast is fierce, and we need to manage our sales teams more effectively for better results. We have just recently hired a Senior Business Development Officer to head the team focused on driving business core deposits into the bank. This individual has a wealth of experience and will be in charge with expanding the team from its current team of 13 professionals to 40 over the course of 2018. In addition, we have hired a new Chief Information Officer to continue to improve our technology and digital platform to allow our teams to compete more effectively. We need to continue to change and get stronger to compete and win new business into the bank. Now, I'd like to turn the call over to Sean Burke, our CFO, who will give you some color and commentary on our net interest margin and operating results for the quarter.

[Sean Burke:]

Thank you, Kevin. I'll be brief. Net interest margin was 2.69% consistent with the prior quarter. Yield on interest-earning assets increased 10 basis points to 4.04%, while the cost of interest-bearing liabilities increased 13 basis points to 1.69%. Non-interest income excluding the impact of the securities loss, totaled $12.1 million, an increase of $1.8 million from the prior quarter. Non-interest expenses totaled $102.2 million, excluding branch closure costs. However, non-interest expenses were $99.4 million, down $2.4 million from the third quarter. The decrease was primarily driven by lower incentive compensation, employee benefits and FDIC expense, offset by a $1.3 million charitable contribution. Our effective tax rate was 22.1% for the quarter, which decreased compared to the prior quarter. We benefited from a $1 million tax credit resulting from the $1.3 million charitable contribution to the state of New Jersey's Neighborhood Revitalization Tax Credit Program. Our asset quality and capital ratios remained strong. At December 31, our nonperforming asset ratios stood at 55 basis points, a slight increase from 49 basis points in the third quarter. Finally, I'd like to share some high-level guidance for 2019. We are targeting loan and deposit growth in the 6% to 7% area; a net interest margin in the 2.60% area for full year 2019; non-interest income in the $45 million range; and expenses in the $420 million range, implying 3% to 4% expense growth from 2018. We expect our effective tax rate to be in the 27% area. Now I'd like to turn it back over to Kevin for concluding remarks.

[Kevin Cummings:]

All right. Thank you, Sean. The fourth quarter and 2018 were a very strong year and quarter for the company, and we are pleased, but not satisfied with our results. The 9 rate hikes since the fourth quarter of 2015 have significantly impacted our net interest margin. The recent Fed commentary has softened a bit and will benefit us if it decides to slow down the rate increases. We have pulled many levers to address the current environment and continue to grow and diversify our revenue streams by building our C&I teams in the middle market and managing the credit quality of the loan book. Our capital is strong, and we are well positioned to continue our growth. We are focused on improving our technology, products and processes to enhance our market penetration and drive deposits into the bank. Every meeting at the bank is focused on deposits. After four years from 2013 to 2017 of average annual deposit growth of $1.6 billion, the results in 2018 need to get better. The last six months, we saw a growth of $663 million, but we need to improve on these results in 2019. Our BSA issue is behind us. There are no excuses, and the focus is on improving the customer experience and driving results. It is not business as usual at the bank. It is business unusual, and there is a sense of urgency to change and to continue to improve. We had our recent state of the bank meeting in December, and there was great chemistry and good momentum in the room. The 2018 fourth quarter was our strongest quarter in the history with respect to net income and our second best quarter with respect to pre-tax earnings. We continue to be a force in the community through the activities and commitment of our employees. We are making a difference to improve the quality of life of our customers and the communities that we serve, but we're not satisfied with our stock price or the results and we need to continue to drive results for our shareholders. We appreciate the hard work and the dedication of our employees and look forward to a strong 2019. Now, I'd like to open the call for questions. Thanks.

[Operator:]

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Dave Rochester of Deutsche Bank. Please go ahead.

[Dave Rochester:]

Hey, good morning, guys.

[Kevin Cummings:]

Good morning.

[Sean Burke:]

Good morning, Dave.

[Dave Rochester:]

A quick one on the NIM. It looked like securities yields increased a bit more than expected. And you called out in the release some interest income from the paydown of trust-preferred securities. I was just wondering what that dollar amount was for the quarter.

[Sean Burke:]

For the quarter, it was $2.8 million, Dave. But I would note, that activity, while it's a bit lumpy, we do see that come in. And we have seen it come in, in other quarters, but it's hard to predict. And then just a step further, the securities portfolio restructuring that we performed, it was done in December. And so there's a little bit of pickup from the securities trade that we did there, but we're really going to see the full impact of that in Q1. And so not to say that they offset one another, but they do to a large degree.

[Dave Rochester:]

Yeah, yeah, yeah, exactly. I was just curious. I appreciate the NIM guide for the year. What are you guys thinking in terms of prepayment penalty income within that? And then what are your underlying rate assumptions for hikes and then just the shape of the curve?

[Sean Burke:]

The prepayment assumption is consistent with 2018. We're usually pretty conservative with respect to how we forecast that number because it does move, and it is pretty volatile. So it's no change from 2018 in terms of total prepayments. And can you repeat the second part of the question?

[Dave Rochester:]

Oh, yeah. Sure. Just in terms of just your rate hike assumptions and then the shape of the overall curve in terms of the 10-year, five-year?

[Sean Burke:]

Yeah. We are -- the guidance that was given was based off of recent curve and curve expectations, and the guidance is also building in anywhere from zero to two 2 interest rate hikes. So our budget called for two rate hikes, although today it's looking more like zero, but somewhere in that ballpark. And our guidance is going to be the same regardless if we get zero or two.

[Dave Rochester:]

You're not looking for much in the way of upside in terms of medium-term interest rates within that guide? You're projecting the current curve forward through 2019?

[Sean Burke:]

Yeah. We do benefit towards the end of 2019 or the second half of 2019. But we do have CDs and borrowings that will reprice, and that will continue regardless whether we get rate increases or not. And in the first part of the year, we're going to feel the impact of the last rate increase. So we are expecting some deterioration in margin in the first quarter, but then, it should be pretty stable for us throughout the year.

[Dave Rochester:]

Got it. Perfect.

[Domenick Cama:]

Dave, this is Domenick. If you look at the spread between two to 10, despite the activity over the last few days, it's still kind of bouncing around that 18 to 19 basis point range. I mean, it's better than 13 that we saw in December, but for the most part, it's about the same with where it's been.

[Dave Rochester:]

Yeah, sounds good. And just one quick one on capital, if I could, you had some nice buyback activity this quarter. How are you thinking about that going forward with your new loan growth guidance?

[Domenick Cama:]

We will continue to take advantage of the market, Dave. I mean, with the stock trading at 115% of book value, it still seems like a very good investment for us to continue to be active in the buyback market.

[Dave Rochester:]

All right. Great. Thanks guys.

[Operator:]

Our next question comes from Mark Fitzgibbon of Sandler O'Neill and Partners. Please go ahead.

[Mark Fitzgibbon:]

Hi, guys, good morning.

[Kevin Cummings:]

Hi, Mark.

[Sean Burke:]

Hi, Mark.

[Mark Fitzgibbon:]

I wondered, if you could share with us the size of your loan pipeline today and maybe what the blended yield on that looks like?

[Domenick Cama:]

The pipeline, Mark, is about $1.2 billion between CRE and C&I, and the weighted average yield on it is somewhere in the 4.50%-ish range.

[Mark Fitzgibbon:]

Okay. And then secondly, Sean, I missed -- I'm sorry, if I missed it, but could you give guidance on the effective tax rate for this year?

[Sean Burke:]

We did. We guided to 27%, the 27% area, Mark.

[Mark Fitzgibbon:]

27%, okay. And then on expenses, I would have thought perhaps with the lifting of the BSA/AML order, there might have been an opportunity to take some professional fees and such down. And so the expense growth might have been a little bit slower. Is that not the case?

[Domenick Cama:]

Mark, as far as the -- while we cleared the BSA issue, we think that we need to invest in technology. And we're using that 4% or so in growth in non-interest expenses to invest in our technology infrastructure.

[Mark Fitzgibbon:]

Okay. And then that New Jersey Neighborhood Revitalization Tax Credit Program, is that a tax credit investment? Or is that a charitable donation, where you got the benefit and it's kind of behind now?

[Sean Burke:]

A charitable contribution is that you receive a tax credit when you make the donation, so the tax credit is a $1 million tax credit.

[Mark Fitzgibbon:]

Okay. So there's nothing residual going forward on that?

[Sean Burke:]

No, no. That was a onetime stuff.

[Kevin Cummings:]

No. basically, Mark, it's like you're making a net $300,000 donation and get the benefit of $1.3 million.

[Mark Fitzgibbon:]

Got you. Thank you.

[Operator:]

Our next question comes from Matthew Keating of Barclays. Please go ahead.

[Matthew Keating:]

Great. Thank you. I'm just curious that the guidance calls for deposit growth in 2019 to broadly track loan growth. And so what are the real drivers? And I know you called out in the prepared remarks expectations for some hiring in sort of the business banking area, which will help drive deposit growth. But what else is there that's likely to drive deposits at a faster rate than what we saw in 2018? Thanks.

[Domenick Cama:]

Two aspects. One is the non-interest-bearing deposit line item is expected to grow by about 40% of the overall budget, and that we expect will come as a result of the hiring of the new relationship management team. And second is about 25% of the budgeted growth is expected to come from our online banking platform, which we have recently reinstituted across 48 states. And so non-interest-bearing, about 40%; and the online bank, about 25%.

[Matthew Keating:]

Great. Thank you. And then as it relates to the deployment of the bank's excess capital, and you talked about organic growth, buybacks and dividends. Notably absent was acquisitions, so maybe you could just comment on the bank's appetite for M&A. I guess, given the currency or the stock currency right now, is that something that's not in the cards? Thanks.

[Domenick Cama:]

Well, it certainly makes it difficult to try to do a transaction, Matt, if our currency is trading -- our stock is trading at about 115% of tangible book. So it's -- again, it's difficult to use it and we put that on a back burner at this point. I mean, while we'll always look at a potential transaction, we are most concerned with the level of dilution that may occur if we were entering some transaction. So right now, we see that buybacks are a pretty good deal for us.

[Matthew Keating:]

Understood. And then just my final question. Obviously, you used the word sense of urgency this year to improve performance. Just hopefully, you can kind of like apply that relative to The Wall Street Journal article that came out in November that the bank might be considering -- exploring a sale. And so maybe, I guess the question would really be, how much of a sense of urgency is the bank focused on delivering vis-à-vis looking at other strategic alternatives? Thanks.

[Domenick Cama:]

Well, first, I'll say that we're not going to comment specifically on the article that came out, I guess, back in November. But just in terms of the sense of urgency, Kevin made that comment. it really comes down to the fact that given the regulatory concerns and the building of the risk management infrastructure and the focus on BSA, management's attention was diverted towards ensuring that we can correct those issues to allow for us to continue to grow. And so, as Kevin said, most of those items are behind us. The regulatory issues are behind us and there's a real focus on driving noninterest-bearing deposits. The other aspect of this is, the fact that we've had 9 interest rate hikes over the last, say, 3 years, and that has put a sense of urgency on ensuring that we can continue to grow our non-interest-bearing deposits to help protect our margin in the different interest rate environments. So I guess, the sense of urgency comes from the fact that here in the northeast, a lot of banks starve by deposits, specifically non-interest-bearing deposits, and we want to make sure that we're working as hard as we can to continue to drive those into the company -- into the bank.

[Kevin Cummings:]

Yes, I think when you look at our -- I mentioned earlier, our growth in deposits prior to this year has averaged over $1.6 billion, and we need -- the competition was less intense. And we need to raise our game and improve the processes, our products and our technology and get off the excuse management wagon and produce results.

[Matthew Keating:]

Thank you.

[Operator:]

Our next question comes from Laurie Hunsicker of Compass Point. Please go ahead.

[Laurie Hunsicker:]

Hi good morning. Just wondering, if we could go back to loan growth. Your loan growth was so strong this quarter, and obviously, you've been adding some C&I folks. Was all of that organic?

[Sean Burke:]

Yes.

[Laurie Hunsicker:]

Okay. And so when we think about next year, the 10% run rate where we were for this quarter versus your 6% to 7% guide, can you help us think about why that slowdown?

[Domenick Cama:]

Well, fourth quarter is historically a strong quarter, not only here at Investors, but for most of the industry. I've seen that in a number of earnings releases over the last few days. And first quarter is generally a little lighter. So we think that having a 6.5% growth range for loans is a good place to be.

[Laurie Hunsicker:]

Okay. And then onto expenses, I just wanted to come back to that. So we really saw nice clarity. Obviously, if we take the 102, less the branch closures, you're down to 99.5; less the charitable contribution, you're down to 98. And then you've got, obviously, cost saves you're picking up from the branch closures puts you at a quarterly run rate of about, call it, 97, 97.5, something like that. But your guide of 420 is suggesting $105 million quarterly, so that's a big delta. Can you help us think about the differential there?

[Domenick Cama:]

Well, I think as Sean pointed out earlier, the fourth quarter expense was impacted by several items, actually several true-up items, if you will, and so we don't see that 97 as being the run rate for 2019. And in addition, what I think I said in response to someone else's question is that we see 2019 being a year in which we continue to invest in our technology infrastructure. So we built that into our run rate for 2019.

[Kevin Cummings:]

I'll just build off of that, Laurie, so just to go back to your comment around a sub-$100 million run rate per quarter. We're typically, it's a -- it's normal for us to see a 3% increase sort of across the board with respect to services, compensation and raises for staff. And so that's a natural spot. And so building off of that, to get you to that 420 that we're talking about. That is the investment Domenick is alluding to in terms of technology and really building out our digital capabilities and building our relationship banking teams to drive in deposits.

[Laurie Hunsicker:]

Okay, great. And then just last question. I just wondered -- I appreciate your sensitivity around dilution as you approach M&A. Can you talk a little bit about how you would consider an MOE, given that we obviously just saw a very favorable market reaction to the Chemical-TCF MOE, where your thoughts lie on that? Thank you.

[Domenick Cama:]

Yes. I mean, we think that was a good transaction. Obviously the market did. And certainly, anything -- we've always been steadfast in our comments about that, in that we would do whatever we think -- whatever is best for our shareholders. So whether it's an acquisition, whether it's an MOE, whether it's us acquiring someone, we always want to make sure that whatever we do, it's in the best interest to shareholders. So yes, I mean, we thought it was a good transaction.

[Laurie Hunsicker:]

Great, thank you.

[Operator:]

Our next question comes from Brody Preston of Piper Jaffray. Please go ahead.

[Brody Preston:]

Good morning everyone. How are you?

[Domenick Cama:]

Good morning.

[Kevin Cummings:]

Good morning.

[Brody Preston:]

I guess, I just wanted to focus back on deposits. The deposit growth quarter-over-quarter on period-end basis sort of lagged loan growth, but I guess, when I peel back the onion and I sort of compare the average balance sheet to the period-end or 3Q period-end balances, it looks like you guys did a pretty good job growing checking accounts, both interest-bearing and non-interest-bearing. And I wanted to get a sense for what drove that this quarter.

[Domenick Cama:]

Well it's the continued growth of our C&I business. The C&I business has the propensity to add more non-interest-bearing checking accounts to the bank. Some of our municipal deposits are -- grow in the area of checking account. But I would say primarily, it comes from our focus on trying to drive those types of accounts into the company, specifically as it relates -- as it comes from the C&I balances.

[Brody Preston:]

Okay. And I guess, moving forward, outside of focusing on new hires and building out that team, which will obviously drive increases in the checking accounts, is there anything different that you're doing to help yourselves sort of stand out from the crowd and drive incremental deposit growth in the checking accounts?

[Domenick Cama:]

Well, we are continuing to enhance our cash management products and our account analysis products. That's the area where we see that investment in technology is going to allow us to stand out from some of our competitors. Of course, there are all types of competitors that we are dealing with. We're dealing with the big multinational banks and the regional banks. The nationals have invested a lot of money in their cash management and account analysis products, and we are trying to catch up to them. So, I don't know specifically that there's anything that we can do, other than just continuing to provide good quality service and giving customers the technology that they want in this environment.

[Kevin Cummings:]

Yes, and I think it's really goes down to blocking and tackling, Brody. We've instituted a new sales force or what they call CRM system, and holding our retail leaders our branch managers, district managers and people more accountable. I use the term -- I mean, we're at a position now of micromanage. I hate to say it, but we have to manage it differently and hold people more accountable and get better results. So in a way, the tone is -- and in a positive way, is we're going to micromanage the process and drive better results into the organization and hold people more accountable.

[Brody Preston:]

Okay. I guess, so in that vein, have you sort of switched up the compensation -- incentive-based compensation to more heavily be weighted on deposit growth?

[Kevin Cummings:]

Yes, and that's been the tone here in every meeting. Sometimes, our loan officers are calling loan committee meetings, deposit meetings.

[Brody Preston:]

Right. And I guess, along those same lines, I understand you closed the four branches this quarter. Are there any plans to open new branches to help drive deposit growth or potentially close more in 2019?

[Domenick Cama:]

We're looking at potentially three more sites. We haven't officially -- we haven't signed any leases yet, but we're looking at newer markets in New York, where we're doing a significant amount of loan business, where we don't have any presence there. But it's still too early to tell.

[Brody Preston:]

Okay. Okay. And then I guess, I just wanted to touch back on loan growth outside of C&I. You did have some nice loan growth in the traditional multi-family bucket. I wanted to know what you guys saw there that helped propel that versus earlier in the year. Were there any purchases within that bucket? Or I guess, what drove that?

[Domenick Cama:]

That was organic business that's been in the pipeline. There's nothing unique about that business. And as I said, obviously multi-family takes up a bit -- a piece of the pipeline, and customers have a tendency to want to close those loans before year-end. So, nothing unique about that.

[Brody Preston:]

Okay. And I guess, what's the average yield on the new multi-family loans that are rolling on the books?

[Domenick Cama:]

Somewhere around a 4.40%-ish range. What we funded -- the funding loans that we funded, at least in the month of December, I know came in at around 4.59%, in that area, I think is what we funded for December.

[Brody Preston:]

All right. And the last one for me is with more of an emphasis on growing the checking balances and sort of the core deposits and hiring new people and incentivizing your lenders to that, could we see less of an emphasis on CDs moving forward potentially with those balances shrinking or potentially with you guys taking some specials or higher yielding CDs off the table?

[Domenick Cama:]

Yes, we hope so. We know that the market has stabilized somewhat. It's not as high or intense as it was in the second quarter of 2018. And we're hoping that the level of shifting from low-cost balances to CDs is going to slow.

[Brody Preston:]

All right. Great. Thank you very much, guys. I appreciate it.

[Domenick Cama:]

Thank you.

[Operator:]

This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

[Kevin Cummings:]

Okay. Thank you very much. We're pretty optimistic and feel pretty good about our operating results for 2018. It was a good quarter. We have strong momentum going into 2019. It's just a little cool and cold in New Jersey today, so I want to wish everyone a good Super Bowl, enjoy the game. And thank you today for participating on the call, and we look forward to catching up with you all soon. Thank you, and enjoy the weekend.

[Operator:]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.