M&T Bank Corporation
Q2 2013 Earnings Call Transcript

Published: 17 Jul 2013

[Operator:]

Good morning. My name is Jackie, and I will be your conference operator today. At this time, I would like to welcome everyone to the M&T Bank's Second Quarter 2013 Earnings Conference Call. [Operator Instructions] Thank you. I would now like to turn the call over to Don MacLeod, Director of Investor Relations. Please go ahead.

[Donald J. MacLeod:]

Thank you, Jackie, and good morning. This is Don MacLeod. I’d like to thank, everyone, for participating in M&T's Second Quarter 2013 Earnings Conference Call, both by telephone and through the webcast. If you have not read the earnings release we issued this morning, you may access it, along with the financial tables and schedules from our website, www.mtb.com and by clicking on the Investor Relations link. Also before we start, I'd like to mention that comments made during this call might contain forward-looking statements relating to the banking industry and to M&T Bank Corporation. M&T encourages participants to refer to our SEC filings, including those found on Forms 8-K, 10-K and 10-Q, for a complete discussion of forward-looking statements. Now I'd like to introduce our Chief Financial Officer, René Jones.

[René F. Jones:]

Thank you, Don, and good morning, everyone. Thank you for joining us on the call today. As I noted in the press release, our earnings quality remained strong in the recent quarter, including higher net interest income, comparatively strong mortgage banking revenues and above average credit quality. We took advantage of favorable market conditions by executing prudent balance sheet actions that enhanced our liquidity, capital and long-term return profile, while continuing to serve the needs of our communities in a relatively competitive landscape and an evolving regulatory environment. Let's review the detail of the quarter's results. After which, Don and I will be happy to take your questions. Turning to the specific numbers. Diluted GAAP earnings per share, common share were $2.55 in the second quarter of 2013, up 29% from $1.98 in this year's first quarter and up 49% from $1.71 in last year's second quarter. Net income for the recent quarter was $348 million, up from $274 million in the prior quarter. Net income was $233 million in the second quarter of 2012. During the quarter, we took advantage of some -- of the stronger risk appetite from investors in the current low interest rate environment by selling over $1 billion of private label mortgage-backed securities previously held in our available-for-sale investment portfolio. The after-tax loss on the sale amounted to $28 million or $0.22 per common share. This transaction resulted in higher liquidity and capital and removed a risk-sensitive asset, which had been generating substantially all of our other-than-temporary impairment charges, from our balance sheet, and assists us in preparation for entering the 2014 CCAR process. Also during the quarter, we sold our holdings of Visa and MasterCard common stock, which we had received through the restructuring of those companies back before the financial crisis. The after-tax gain amounted to $62 million or $0.48 per common share. Lastly, following the second anniversary of the Wilmington Trust merger, we reversed an accrual for a contingent compensation obligation assumed in that transaction. The result is a reduction of noninterest expense, having an after-tax impact of $15 million or $0.12 per common share. Taken together, these 3 items contributed $50 million to net income for the quarter or $0.38 per common share. Since 1998, M&T has consistently provided supplemental reporting of its results on a net operating or tangible basis, from which we exclude the after-tax effect of amortization of intangible assets, as well as expenses and gains associated with mergers and acquisitions. Included in GAAP earnings for the second quarter of 2013 were after-tax, merger-related expenses related to Hudson City that were incurred early in the quarter and which amounted to $5 million or $0.04 per common share. This compares with $3 million or $0.02 per share in the prior quarter. After-tax expenses from the amortization of intangible assets was $8 million or $0.06 per common share, unchanged from the prior quarter. Net operating income for the quarter, which excludes those merger-related expenses and intangible amortization, was $361 million compared with $285 million in the linked quarter. Diluted net operating earnings per common share were $2.65 for the recent quarter, up 29% from $2.06 in the linked quarter. Net operating income, expressed as an annualized rate of return on average tangible assets and average tangible common equity, was 1.81% and 22.72% for the recent quarter. The comparable returns were 1.48% and 18.71% in the first quarter of 2013. In accordance with SEC guidelines, this morning press release -- this morning's press release contains a tabular reconciliation of GAAP and non-GAAP results, including tangible assets and equity. Turning to the balance sheet and the income statement. Tax equivalent net interest income was $684 million for the second quarter of 2013, up from $663 million in the linked quarter. As required by GAAP, we regularly revisit the cash flow projections on which we base our valuations of acquired loans. In general, continued improvement in economic conditions, particularly in the former Wilmington Trust footprint, led to a reduction in estimated expected credit losses on acquired loans of $130 million. As a result, our estimates of cash flows to be generated by the acquired loans have increased by about 2%. Those increases resulted in about $6 million of additional interest income in the second quarter on our $4.9 billion portfolio of acquired loans as compared to the first quarter. Of course, as acquired loans repay, and that portfolio reduces in size in future periods, the dollar amount of interest income earned on acquired loans will also decline. Net interest margin was 3.71% during the second quarter, unchanged from the first quarter. A higher level of accretable yield from acquired loans added about 6 basis points to the margin compared to the first quarter. Prepayment penalties from commercial loans, combined with cash basis interest received on nonaccrual loans, added about 7 basis points to the margin as compared with the prior quarter, and higher level of excess funds held at the fed reduced the margin by about 9 basis points. This reflected a higher level of deposits by Wilmington Trust -- held by Wilmington Trust customers in connection with the pending -- in connection with pending capital markets transactions, as well as proceeds from the private-label MBS and the Visa and MasterCard stock that we sold. Lastly, in line with our prior outlook, there were some 4 basis points of what we'd consider core margin compression, which reflects the continuation of the trends that we, in the industry, have been seeing, higher-yielding loans maturing and being replaced at today's lower yields. As for the balance sheet, the average loans grew at an annualized 1% from the first quarter. Compared with 2013's first quarter, changes in average balance -- in average loans by category were as follows

[Operator:]

[Operator Instructions] Your first question comes from the line of Brian Klock with Keefe, Bruyette & Woods.

[Brian Klock:]

I just want to make sure I get all the moving pieces here. So within the release, you guys talked about a $13 million impact to net interest income, which sounded to me maybe related to the $130 million you re-classed from the non-accretable. So that to me, I think is -- how does that kind of reconcile with the $6 million you talked about here this morning?

[René F. Jones:]

Yes. You've got to think about -- we -- when we report, in our Q, the table on accretable yield, it's all of the yield on the acquired loans. So you have that number coming down from quarter-to-quarter, right? We added a new estimate of our cash flows that we're likely to receive. So really, when you look at the change from the quarter-to-quarter, that accretable yields from acquired loans, that actually increased by just $6 million, right, because the number is coming down over time.

[Brian Klock:]

Got you. So the $70.5 million you recorded in the first quarter, that number had gone down by $7 million, and now you added $6 million in. So...

[René F. Jones:]

Yes. So I think that number is about $6.5 million higher than the last quarter, $70.5 million to $77 million or so.

[Brian Klock:]

I got you. Okay. And then -- so I guess going forward then, that $6 million -- I mean, I guess, if I had a run rate, that I was kind of assuming you'd have a level yield in that acquired portfolio that the accretable yield would go down, I should be adding somewhere about that $13 million impact to my -- what I would have guessed would have been your normal accretable yield going forward? Is that fair to say?

[René F. Jones:]

Well, I think if you were to reset yourself, right, you can kind of look back at those tables we provided. You can see how much that is coming down. So for -- I won't give you the example, but you can kind of work your way through that. But the way I think about it, Brian, is we're left with about $4.9 million of acquired loans out of, say, 60 -- sorry, 6 -- $4.9 billion of acquired loans out of $60 billion. And if you look at the yield, the yield -- the difference between our yield on loans with versus without those acquired loans is about 15 basis points. And if you assume for a minute that the average life is 3 years, you're going to lose about 5 basis points of that every year, basis point or so a quarter. That's embedded in when Don and I talk about 3 basis points of compression. That's one of the things causing that compression. So your assumption of level yield is that's the way we look at it. That's the appropriate way to look at it, I think.

[Brian Klock:]

Okay. So x all of this, your guidance then of saying, "Look, you should be back to sort of the 3 to 4 basis points of core compression." That is assuming though that you take, what, about $2 billion or so -- $2.4 billion of interest-bearing deposits, that excess liquidity, which was the 9 basis point drag this quarter on the NIM. You are going to put that back to work, either you're going to buy some securities or actually put that in organic loan growth?

[René F. Jones:]

Yes. Well, I mean, how do I -- good question. So what I would say is you got it right. So we're -- our thought process is 3 basis points of compression a quarter. We're still sticking with that. One of the things that we do have is we do have the opportunity to reinvest that cash in sort of qualifying liquid securities, as you start thinking about the new ratios that are coming out. So that gives us some ability to offset. And I don't know how to exactly think about that because as you know, we often think about match funded. So as we put on Ginnie Maes and those types of things, economically, we think about the spread towards wholesale funding that we could go out and get. But you're right, one of the sources that could in the near term have the margin be more stable is reinvesting those -- that cash.

[Brian Klock:]

Okay. And then, I'm going to get in the queue. But just with that, you haven't reinvested that excess liquidity yet?

[René F. Jones:]

We've invested some. So if you look at the investment securities portfolio, you've got -- so we sold the $1.1 billion of the agencies. That probably had an average impact of somewhere between $600 million and $700 million on the balance sheet. But we also purchased a little over $800 million of Ginnies. And if you think about what we've been saying, our investment securities book has been shrinking, in part because, and this is my term, the rate seemed to be a little artificial. And so with a jump-up of 100 basis points, it was sort of a nice opportunity for us to say, "Okay. Well, let's start buying some, so that we can hold those qualifying securities as we go forward."

[Brian Klock:]

Okay. I guess, that agencies you bought, can you just give us that yield, and I'll -- then I'll get back in the queue.

[Donald J. MacLeod:]

The Ginnies we bought -- we committed to buy in 2Q, but they all settle in July. So they're not on the balance sheet at June 30.

[Operator:]

Your next question comes from the line of Todd Hagerman with Sterne Agee.

[Todd L. Hagerman:]

René, couple of questions just in terms of the BSA issue, as well as Hudson City. First off, can you give us a sense of like the time line for the planned submission to the fed?

[René F. Jones:]

Well, I mean, the only thing we really can give you is as you saw in the written agreement, there's a requirement, around 60 days, for us to come up with our credible plan that would need to be approved by the regulators. And then what's probably most important is from their reaction, we have to go execute that plan, right? So the way I think about it is we're really focused on submitting that plan, and then we'll have our head down for some time, trying to make sure that we have everything in place to execute it. So I think sort of speculating on any time line, at least right now, doesn't make much sense for us. We'll keep updating you as we move forward. But there's not really much to say beyond that at this point.

[Todd L. Hagerman:]

Okay. Is only just my assumption that you guys, obviously, had kind of started that work prior to formerly receiving the agreement based on what they had possibly communicated to you previously, as you guys disclosed that last quarter.

[René F. Jones:]

Yes. I mean, that's true. I mean, I'll say 2 things

[Todd L. Hagerman:]

Yes. No, understood. And then I don't know if you can answer this. But within the agreement, there's not necessarily any prohibition in terms of asset purchases and so on and so forth. But I think as you mentioned in your remarks, you want the plan and execution, so to speak, to be to the satisfaction of not only the fed, but the board as well. So help me kind of understand in terms of, again, kind of that process, if you will, from a formal standpoint and how it may affect or influence your ongoing kind of evaluation of the Hudson City transaction as I think about valuation in your ongoing review of that deal as time goes on.

[René F. Jones:]

Well, you got a couple of questions in there. I think -- I mean, I think one, I'm going to repeat myself. I think once we get through the work we have to do on BSA/AML, and when we get through to the satisfaction of everybody, then we'll consider what we do with things such as Hudson City, but really not before then. In terms of the economics, I mean, we have a good understanding of Hudson City's balance sheet. We think about, for example, what the moves in rates will do to them. We -- there's a lot of moving parts, but there's nothing that makes us uncomfortable about the economics of the transaction relative to where we were before. Obviously, all of that's got to be revisited when we sort of get back at it, right?

[Operator:]

Your next question comes from the line of Ken Usdin with Jefferies.

[Kenneth M. Usdin:]

Can you talk a little bit about the servicing acquisition that you guys are going to close, when is it going to close and how we think about the financial impact of it?

[René F. Jones:]

Well, again, I think the first thing is, is that we're not purchasing servicing, right? We -- what we've agreed to do, that's been out there in the [indiscernible] public for some time is to be a sub-servicer, right? And so just sort of operationally, I mean, if you think about expenses for a minute, you're likely to see expenses rise on a normal basis. I talked about that earlier on my earlier comments. But we've now hired about 500 people located here in Buffalo that used to work for a third party. And all of those 500 people are up and running as of July 1, right? So first thing you're going to see is that there'll be a little bit higher expenses as you get into the third quarter, and then that work will trickle in through the quarter, right? And so I don't think you really get a full running impact of any change in our servicing profitability in probably till the fourth quarter, right? But I would say, it's kind of relatively negligible if you think of the bottom line because of the fact that you've got to sort of start up -- negligible next quarter because you've got to put those upfront costs in place.

[Kenneth M. Usdin:]

I was getting more at what you think the incremental kicker is from a run rate perspective, not from a next quarter. But is this accretive to earnings? Is it -- I mean, the math would say it is. I'm just trying to give -- get a sense of if this -- is this a needle mover, is this just...

[René F. Jones:]

I mean, it's a great question, Ken. I guess, the way -- I didn't think about it till you just said that. But I don't really -- it's not that big, such that it's going -- I mean, going to offset the decline that we're going to see in residential mortgage gains, and we saw a 40-point decline on the residential side there. I wouldn't be surprised to see the same again next quarter. I don't -- I think that's probably the bigger theme, maybe mortgage banking revenue will be a little bit supported over the next few quarters by it, but you're still going to see an overall downward trend.

[Kenneth M. Usdin:]

Yes. And René, just the -- that reversal of the Wilmington gain, did -- could you just talk to us about the size of that and where that was geographically within the expense lines?

[René F. Jones:]

Well, it's in other expense. And this was when we closed the merger at the outset of the opening balance sheet, there was contingency outstanding, obviously, because if you can take yourself back to all that turmoil, we wanted to make sure that we were properly reserved given all of the contracts that were sort of out there. And I think what you see is this very nice sign that as -- over time, we've kind of gotten through the integration. It's now a little past the 2-year anniversary. A lot of people have remained with M&T and have decided to sort of remain as part of the group. So what you're kind of seeing is the finality of all that. And there was sort of that amount that was no longer considered a contingent liability as we got to this quarter. So I think I said the amount, did I not?

[Donald J. MacLeod:]

On a pretax basis, it was $26 million.

[Kenneth M. Usdin:]

$26 million. Okay. And then last quick thing is just can you give us the mortgage apps pipeline closings?

[René F. Jones:]

Oh, yes. So I'll give you a couple numbers. So this lock volume, I'll give you, the first quarter was $1.8 billion -- $1.9 billion. Second quarter was $1.8 billion. And then if I give you the pipeline, at the end of the first quarter, we have $1.6 billion. And the end of the second quarter, we have $1.6 billion. So what's happening is the volume is up, is remaining steady, maybe down 1 or 2 percentage points. But the only reason that's happening is because the gain on sale margins are dropping at a healthy pace. So I think that kind of tees you up. I wouldn't expect a big, big change in volume next quarter, but I would expect gain on sale margins to continue to decline.

[Operator:]

Your next question comes from the line of Bob Ramsey with FBR Capital Markets.

[Bob Ramsey:]

I was hoping you could talk a little bit about how the movement that we've seen in mortgage rates and interest rates generally impacts the Hudson City acquisition. And I think that those assets get mark to market at close. So with mortgage rates higher, how does that affect, I guess, the capital gain, as well as the income off of that business?

[René F. Jones:]

Okay. So I'm going to give you this very -- in a very general sense and from my understanding of, over the past year, the balance sheet, not necessarily from having any conversations with Hudson City. And I would guess, if I look at the profile of that balance sheet, the mortgages will extend some, net interest income will be higher. The issue you had is the steepening of the curve. So obviously, that's going to affect a little bit of the mark on any sort of fixed rate asset side, but you're going to have them out there for a longer period as well, right, so that's a little bit of an offset. And I wouldn't expect much in the way of any change in the mark on the liability side, right, because the short end didn't move. So you could get some -- if you're thinking of March, maybe there would be some negative impact as where we stand today. Really what matters most is what happens to the short end because that's where the big issue is on the wholesale borrowing. The second point I would make is that as we see things here, these are reflections of the economy improving. So you also should get some improvement on the credit profile. I mean, they're pristine. But having said that, everybody should get some benefit from the improvement in the economy. And the third thing is that the change in the Basel III rule is probably a positive effect from what we are all thinking on how mortgages are treated, both from the complexity of what we have to do to track it all and also from the favorable capital treatment from the rule now being finalized. So there's a lot of moving parts, right, but those are the items.

[Bob Ramsey:]

Okay, that's helpful. And then one other question, and I'll hop back out. The bump in CRE loan yields this quarter -- I know you mentioned prepayment penalty income. I'm just curious how much of that was the prepayment? How much was maybe the adjustment in assumptions on the Wilmington purchase loans? And I didn't catch the prepayment dollar amount if you gave it earlier.

[René F. Jones:]

Yes. I lumped it all together, and I think with the nonperformings, and we said that was 7 basis points, the 2 in total relative to the previous quarter. And I mean, without getting real -- I have it somewhere, probably half of that is probably prepayment. Give me a second. Yes, I don't have the 2 broken out, but let's say it's half of the 7 basis points, just as a general thought. I think the real issue, it's interesting, is that -- so when we sit around thinking about that we say, "Okay, well maybe that won't reoccur next quarter." So we tend to be relatively conservative. But having said that, it's very logical that we were seeing prepayment -- those prepayment penalties, because all throughout our balance sheet, we saw the impact of lower rates and people trying to refinance. We saw it in credit, in both deals, in our normal portfolio, where it actually was not a bad quarter in terms of loan volume in terms of origination. But we're seeing a lot of refinancings. We're seeing that in the nonperforming book. It's also part of what's behind the reversal on the Wilmington side of the -- into accretable yield, right? Because people are able to refinance things that are relatively healthy. So that said, it's hard to predict. It's somewhat lumpy in the margin, but it could continue, for while -- as people are trying to make sure they lock down their refinancings with the anticipation of rates being up.

[Bob Ramsey:]

Okay. And the Wilmington credit market investment, was that predominantly in the commercial real estate portfolio? Is that where virtually all that was?

[René F. Jones:]

It's across the board. There was a fair amount, a healthy amount in the real estate portfolio, yes.

[Operator:]

Your next question comes from the line of Erika Penala with Bank of America.

[Erika Penala:]

Just a follow-up question on the liquidity. What -- of the $2.4 billion in average balances, especially in light of the Basel III requirements on liquidity, what -- how much should we consider excess to -- for reinvestment?

[René F. Jones:]

So let me just -- I'll get to you -- I'll do it in 2 parts. So overall, our focus over the next couple of quarters is to sort of -- is to continue to improve our liquidity profile, and sort of the movement in rates makes that a little bit easier today. So as we get to the outset, would not be surprising to see all of that sort of reinvested in very, very liquid-type securities. But beyond that, we probably would continue to focus on that through additional -- we did $800 million of unsecured funding a quarter or 2 ago. We'll probably do more of that, right? So over time, we'll start to work on that liquidity profile as we get closer to the final rules. And then that will have to be also invested. So I'd kind of think of the first set as maybe all of the $2.4 billion, $2.5 billion will be invested. And then there'll be more, but it will -- those will be at sort of match-funded spreads, right?

[Erika Penala:]

And just a second question on the follow-up to your expense guidance. Should we think of the base upon which we're growing expenses for the second half of the year as $604 million?

[René F. Jones:]

I don't see anything wrong with doing that. I think yes, then you'll have to make adjustments for -- again, I mentioned the people we've hired and we continue to hire folks on the regulatory side. I think since last quarter, for example, we've hired 53 BSA/AML professionals, we've added to the team. And then you'll see professional services rising some as well, but starting at that $604 million is probably a good way to go about it.

[Operator:]

Your next question comes your next question comes from the line of Craig Siegenthaler with Crédit Suisse.

[Craig Siegenthaler:]

Just looking at overall loan growth here. I understand why you're reducing the consumer real estate portfolio at a pretty fast clip here. But I'm wondering, can you provide some commentary around your expectations for overall loan growth before the Hudson City deal closes, really given kind of modest negative loan growth in the first quarter and flattish loan growth during the second quarter.

[René F. Jones:]

What was the first part? Modest negative growth when?

[Craig Siegenthaler:]

I was just saying -- well, I mean, the question is what are your expeditions for overall loan growth given residential real estate is kind of running off and commercial is actually fairly strong.

[René F. Jones:]

Yes. So I don't know if you caught that, but we securitized some FHA loans. And so a little under $300 million of that just went right into our securities book. So in terms of earnings assets, there wasn't much of a change. There'll be a slight runoff in the resi portfolio, but we'll also do some -- retain a certain portion to sort of keep that runoff to be flat as we go forward. The C&I, I mean, it was a little higher than normal, and I would say 9% growth is pretty healthy. We haven't seen a change. When we look at our pipeline for both C&I and CRE, the quarter was pretty good. The amount of pressure on deals that we accepted was light. The margins were strong. The thing that we're seeing is that there's a fair amount of prepays, particularly on the fixed rate portfolios. And then finally, if you look at the consumer side on as that [ph] basis, and particularly if you look at home equity and indirect, for the first time, they actually had slight growth. So it sort of seems like those are leveling off, which is kind of why we held our -- held on to our 5% number overall. So we don't see much change. Some people are talking about slowdown. But everything we see is -- the slowdown is driven by paydowns, which is always good from a credit perspective, it's always good from the customer locking in lower rates and being healthier, right? So that's our logic behind sort of sticking with 5%, or mid-single digit, I think is what we -- or low mid-single-digit loan growth.

[Craig Siegenthaler:]

Got it. And René, you classified about $10.4 billion of consumer real estate loans in the June quarter. I understand why that was down, but do you expect that portfolio to decline at a pretty quick pace the next few quarters? Or you think that should kind of level off here?

[René F. Jones:]

It hasn't changed much. I mean, it's been down 1%, 2% every time we report. And on an asset basis, it was actually flat to up this quarter, right? So I kind of view it as slowing. I can't think of another reason why that would change.

[Craig Siegenthaler:]

And then, René, just a number question on the fee waiver. What was the impact of fee waivers in the second and first quarter in the trust income line? Was it material?

[René F. Jones:]

Fee waivers.

[Donald J. MacLeod:]

On the money funds, I think I'll have to get back to you on that, Craig. I don't have that in hand right now.

[René F. Jones:]

Well, finally to your last question, I think the other thing is, is that we may do more securitizations, right? So that will be just to re-class. But again, we want to make sure that the portions of our balance sheet that we have as customer loans, that we make sure that they have guarantees and a certain amount of liquidity as we kind of think about our liquidity coverage.

[Operator:]

And your final question comes from the line of Ken Zerbe with Morgan Stanley.

[Ken A. Zerbe:]

René, at the beginning of the call, you mentioned that you -- part of the reason why you sold the securities was to help your 2014 CCAR application. Is -- has anything changed in terms of the application process? Are you -- is there a certain reason for why you're doing it? Because obviously, you went through the process last year. I was just wondering what's different about next year's process.

[René F. Jones:]

That's a great question. It's a great, great question. Well, we went through the CapPR process, which is a process where we run our own models and we go through a review, and the Federal Reserve and other -- Federal Reserve actually goes through and reviews our governance and our process. But we've actually never been a CCAR bank, which requires an extra step, which is being part of the horizontal process, in which half is -- half of that process is what we did before, but the other half is that it now goes through the fed's own models, right, which was something that we're not familiar with. So we've really taken the position that as we kind of have learned about our portfolio, we thought -- we want to make sure that we're pretty well positioned to go through that test for the first time. And of course, that sort of is all benchmarked off of where you are at 9 30. So it's been a big focus of ours. Well that married up very nicely, with the private label mortgage-backed securities is that we run a model and we've modeled those for valuation purposes. And until recently, our model was saying that those securities were worth more than what the market prices were implying. But as we got into the early part of the quarter, that changed, and the valuations on the market were well above our model. And so we decided to pull the trigger. To give you some sense, had we pulled that trigger back in '09, the difference would have been roughly $240 million, right? So it's not a core security. It's also a risk-sensitive security. So if you have stress and housing prices were to drop, right, then not only are you not going to collect that $200 million extra, you're going to take a hit, right, in OTTI under extreme stress. So it's not a core asset. We decided to move it off, and then we take the $1 billion, and we also use it to improve our liquidity profile.

[Ken A. Zerbe:]

All right. That helps. And then just really quickly, or last thing is on the CRE payouts you mentioned, there was a couple of big ones in the quarter that drove the prepays. Was that -- how large were they? I'm just trying to get a sense of if it was meaningful for the growth in CRE this quarter.

[René F. Jones:]

Yes. It would have changed the percentage growth. I definitely think so. I don't know how to -- I mean, first of all, there were several. Several loans, anywhere from $5 million to $30 million, $35 million would not be abnormal. And not only that, in our nonaccrual book, you had several loans that paid off as well, right, so both there and the nonaccrual balances. So how do I say it? I think -- I kind of think of it as more of a trend. I don't know how long the trend will last. But I don't know if that helps. There was not one really large transaction that paid down [ph].

[Operator:]

And that was our final question. I'd now like to turn the floor back over to management for any closing remarks.

[Donald J. MacLeod:]

Again, thank you, all, for participating today. And as always, if clarification of any of the items on the call or news release is necessary, please contact our Investor Relations Department at area code [phone].

[Operator:]

Thank you. This concludes today's conference call. You may now disconnect.