Prosperity Bancshares, Inc.
Q1 2013 Earnings Call Transcript

Published: 24 Apr 2013

[Operator:]

Good day, everyone, and welcome to the Prosperity Bank First Quarter Earnings Call. [Operator Instructions] Please note this call may be recorded, and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Charlotte Rasche. Please go ahead.

[Charlotte M. Rasche:]

Thank you, Zach. Good morning, ladies and gentlemen, and welcome to Prosperity Bancshares' First Quarter 2013 Earnings Conference Call. This call is being broadcast live over the Internet at www.prosperitybankusa.com and will be available for replay at the same location for the next few weeks. I'm Charlotte Rasche, Executive Vice President and General Counsel of Prosperity Bancshares. And here with me with me today is

[David Zalman:]

Thank you, Charlotte. I would like to welcome and thank everyone for listening to our first quarter 2013 conference call. Some of our successes this quarter include our quarterly earnings increased to $49,305,000 in the first quarter compared to $36,487,000 for the same period in the prior year, an increase of $12.8 million or 35.1%. Our diluted earnings per share were $0.86 for the first quarter of 2013 compared to $0.77 for the same period in the prior year, an 11.7% increase. Our loans increased in the first quarter of 2013 by $83,084,000, which represents a 1.6% increase or 6.4% on an annualized basis compared to loans at December 31, 2012. When comparing this quarter to the same quarter of 2012 and excluding loans acquired in our recent acquisitions and the new production at those banking centers since the acquisition date, we showed an organic growth rate of 5.5%. And again, excluding loans acquired in our recent acquisitions on a linked-quarter basis, we had an annualized growth rate of 6%. Our nonperforming assets at March 31, 2013, were 14 basis points of quarterly average earning assets, one of the lowest in the industry and a sign of strong asset quality. We continue to see strong loan demand, although we are also experiencing a high amount of loan payoffs. Overall, we believe our customers are experiencing increasing business trends as the population and job growth in Texas and Oklahoma is outperforming most other areas of the country. However, we also believe that many of our customers are unwilling to take risks as there are a number of unknowns with respect to tax rates, government regulation, health care and the general economy. We saw deposits increase to $11,713,000,000 at March 31, 2013, an increase of $3,169,000,000 or 37%, compared to the $8,544,000,000 at March 31, 2012. Our linked-quarter deposits increased $71,623,000, 0.6% or 2.5% on an annualized basis. As you may recall, in the fourth quarter of 2012, we saw an unusually large increase in deposits, specifically, a 26% annualized increase when comparing deposits at December 31, 2012, to those at September 30, 2012. At that time, we expected and commented that some portion of those deposits would flow into other investments. We generally see stronger deposit growth during the last half of the year and believe that much of the deposit increase at year-end 2012 was related to tax planning strategies. Despite a declining net interest margin, we have been able to increase earnings primarily because of a bigger balance sheet. We hope to offset this declining net interest margin by continuing to increase loans, keep expenses low and identify, complete and integrate accretive acquisitions. As you know, we have been very busy with acquisitions. We closed Community National Bank, Bellaire in October of 2012 and completed the operational integration during December 2012. On January 1, 2013, we completed the previously announced acquisition of East Texas Financial Services, Inc. and its wholly-owned subsidiary, First Federal Bank Texas in Tyler, Texas, and completed the operational integration of that bank during the first quarter of this year. On April 1, 2013, this month, Prosperity completed its announced merger with Coppermark Bancshares, Inc. and its subsidiary, Coppermark Bank, a $1.3 billion bank headquartered in Oklahoma City. We are currently working on the operational integration and expect that it would be completed this month, actually next week, I believe. We continue to hear from bankers about the added regulatory requirements that are impacting their profitability, as well as the capital and debit card fees and stress testing applicable to larger banks. We continue to see a declining net interest margin for most banks. And we believe that these factors, combined with management and board fatigue, will continue to create opportunities for those that have the ability and the will to deal with these headwinds. I'd like to say -- I would like to welcome all the new associates and customers that have joined us over the last year. We will continue to work hard for your support. Besides a number of other honors we have received over the years, we were recently recognized by SNL, a prestigious provider of bank information, that we ranked as the second-best regional bank in the nation based on their research. Honors like these could not be achieved without everyone working toward the same goal. We are fortunate to be located in a part of the country that has a growing population and job growth increasing at rates faster than many other areas. The unemployment rate in March for Texas was 6.4%. And in the Permian Basin area in West Texas, it was below 4%. I think Houston was around 6%. This is compared to the national jobless rate of 7.6%. The Oklahoma area is also doing very well with low unemployment rates, growing population and an overall positive business climate. Our goal is to continue to take care of our customers with new and innovative products at fair prices that benefit our customers and help make their life easier. Again, I would like to thank our whole team once again for a job well done. Thanks again for your support of our company. Let me turn over our discussion to David Hollaway, our Chief Financial Officer, to discuss some of the specific financial results we achieved.

[David Hollaway:]

Thank you, David. Net interest income for the 3 months ended March 31, 2013, was $108.1 million compared with $81.8 million for the 3 months ended March 31, 2012, an increase of $26.3 million or 32.1%. This increase was primarily due to a 42.9% increase in average interest-earning assets. The net interest margin on a tax equivalent basis was 3.42% for the 3 months ended March 31, 2013, compared to 3.64% for the same period in 2012 and 3.53% for the 3 months ended December 31, 2012. Noninterest income increased $9.5 million or 68.1% to $23.4 million for the 3 months ended March 31, 2013, compared to $13.9 million for the same period last year. The increase was primarily due to the American State Bank transaction. Noninterest expense for the 3 months ended March 31, 2013, was $55.8 million compared to $40.5 million for the same period last year, an increase of $15.3 million or 37.8%. Again, the numbers were impacted by the American State Bank transaction. The efficiency ratio was 42.4% for the 3 months ended March 31, 2013, compared to 42.2% for the same period last year and 42.9% for the 3 months ended December 31, 2012. The bond portfolio metrics at 3/31 showed a weighted average life of 3.5 years -- effective duration of 3.5 years and projected annual cash flows of approximately $1.8 billion. And with that, let me turn over the presentation to Tim Timanus for some detail on loans and asset quality. Tim?

[H. E. Timanus:]

Thank you, Dave. Our nonperforming assets at the end of the first quarter of 2013 totaled $18,133,000, which represents 34 basis points of loans and other real estate. This is compared to $13,015,000 or 25 basis points at the end of the fourth quarter 2012. The increase in NPAs for this quarter represents 39% from the total at the end of December 2012. The March 31, 2013, nonperforming asset total is made up of $8,171,000 in loans, $49,000 in repossessed assets and $9,913,000 in other real estate. As of today, $4,508,000 of the March 31, 2013, nonperforming asset total are under contract for sale. But there can be no assurance that any of these contracts will close. These contracts represent 25% of the NPAs at March 31, 2013, that are under contract for sale. Net charge-offs for the 3 months ended March 31, 2013, were $315,000, compared to net charge-offs of $1,913,000 for the last quarter of 2012. $2,800,000 was added to the allowance for credit losses during the first quarter of 2013, compared to $3,550,000 for the fourth quarter of 2012. The average monthly new loan production for the first quarter of 2013 was $141 million, compared to $187 million for the quarter ended December 31, 2012. The average monthly new loan production for the entire year ended December 31, 2012, was $138 million. Loans outstanding at the end of the first quarter of 2013 were $5,263,000,000, compared to $5,180,000,000 at December 31, 2012. The March 31, 2013, loan total is made up of 47% fixed rate loans, 32% floating rate and 21% variable rate. I'll now turn it over to Charlotte Rasche, who will coordinate your questions.

[Charlotte M. Rasche:]

Thank you, Tim. At this time, we are prepared to answer your questions. Zach, can you assist us with questions?

[Operator:]

[Operator Instructions] And we'll take our first question from John Pancari with Evercore Partners.

[Rahul Patil:]

This is Rahul Patil on behalf of John. Quick question on the loan growth and the demand that you're seeing right now. If I exclude the loans coming in from the East Texas deal that closed in Q1, it looks like the period-end loan balance has actually declined 1%. Can you discuss your loan growth expectations going forward, and then maybe quantify the paydown activity that you saw in Q1 versus last quarter?

[David Zalman:]

Yes, I'll take that. This is David Zalman. And that's a good question. I think if everybody didn't really understand the question is when you take out the East Texas loan, what did it really look like. Well, actually, we're actually doing better with the acquisitions than we've done on other acquisitions. I think if you total all those up, you see about 13.5% decline on all of the banks that are mentioned there. Some of them have been there for 5 or 6 months, some have been there for 15 months. But in previous transactions, we sometimes have gone as high as a 20%, 21% reduction in loans. So at the 13.5%, we'd like to have 100%. That's still doing pretty good for us. And again, you have -- when banks merge with you, you identify -- some credits are identified at the due diligence time that we intentionally manage our way out of those. Sometimes the terms and conditions are different than what the customers have been used to. Again, there's new processes the lenders have to learn and there's a required learning curve in there. So all these play into the reduction in loans that you get through a merger like that. But usually between year 1 and 2, things start gelling and you return to a growth mode. I hope I answered your question. Tim, do you have something?

[H. E. Timanus:]

I'll add just a little bit more. You asked about, in essence, the payoffs during the quarter. While I don't have a hard number for you on that, they were significant and they took away quite a bit from the new loans that were generated and produced in terms of what stayed on the books. Whether that stays the case, obviously we don't know. Rates had been low for quite some time now and a lot of the payoffs over the last year or so have been related to low interest rates and people refinancing at rates that we were not comfortable with exposing our shareholders to. So some of that undoubtedly will continue. Competition is aggressive. It's becoming maybe a little more aggressive than it has been. That's an issue. But the other side of the coin is, as we said in David Zalman's remarks, the economy is good basically where we are and there is economic activity that's reasonable. And we anticipate that, that's going to continue forward. A lot of it is based on the energy industry, but there's no reason to think right now that there are ill headwinds in that regard. So we're reasonably optimistic that we're going to be able to continue to grow loans at some kind of a reasonable pace.

[Rahul Patil:]

Okay, that's helpful. And a question on NIM. It looks like the accretion was down modestly linked-quarter. It looks like the drag was around -- on NIM was around 2 bps in Q1. How should we look at accretion going forward, especially given that the Coppermark deal closed early in the quarter? And then maybe discuss -- I mean, maybe you could discuss your NIM expectations for the year.

[David Hollaway:]

I'll take that one first. This is Dave Hollaway. A couple of things, and I assume when you say accretion, you're looking at the fair value accretion on the loan.

[Rahul Patil:]

Right.

[David Hollaway:]

Yes. It changed a little bit. But we would love to have that crystal ball, where you could -- it would be smooth quarter-after-quarter. But in reality, that's just a bumpy number. But what you do expect is over time for that book of business, that accretion should start trending down a little bit. Now how it acts quarter-to-quarter, I don't know I can tell you that. The second part of it is you're absolutely right, Coppermark is now part of the team effective April 1. There will be a fair value mark associated with that. What that number is today, we can't tell you, the analysis is still ongoing. But it shouldn't be materially different than from the other transactions we've done. And so that's going to have a positive impact on the NIM going forward. But if you step back and kind of look at the big picture of what's the expectation of NIM, again in this low-rate environment, there's obviously pressure on the margins from different avenues. But it is a good point to look at Coppermark and what they bring to the table. That part of the balance sheet will actually be a positive to the NIM. So I guess, a long-winded answer to your question. But the way I would conclude it is we might see some pressure on the margin. But I don't know with Coppermark being put into the numbers as we go forward over at least the next couple of quarters, maybe down a little bit, maybe up a little bit, maybe steady. That's probably the best that we can give you.

[Operator:]

And we'll take our next question from Jefferson Harralson with KBW.

[Jefferson Harralson:]

I was going to follow up on the accretable yield question. You told us that there was $14 million of loan accretion. Was there a similar to past quarters of security yield offset to figure out the total versus the accounting impact on the spread income this quarter?

[David Hollaway:]

Absolutely. In fact, I think there's a table in there, but that's absolutely right. If you go back and kind of dig through the numbers, it's exactly right. The amortization related to that book of business is about the same that you'd seen in prior quarters in that there wasn't a lot of material change. I'd also make an observation, if I could step back and just look at the bigger picture. Specific to net amortization on that bond portfolio, you can see ASB, for a second, that part of the book of business, look at big picture total. And you can see in the press release, you'll notice that the overall amortization dipped a little this quarter because we saw basically in March a slowdown, I guess, in the prepayments, which then helped us from an amortization perspective. And I think if you're looking at the quarterly numbers, you see it decreased roughly $1 million and a big chunk of that we saw in March. Now the question becomes does that continue? Do we continue to see the slowdown in payments, which then translates into less amortization going forward? And again, I'm talking the big picture here at this point.

[Jefferson Harralson:]

All right. And then to follow up with that, how much did East Texas add to the accretable yield that's going to roll through over time? And what's that balance at the end of the quarter of the accretable yield that's going to roll through over time?

[David Hollaway:]

That's a good question. I don't have the number, but it's going to be a relatively smaller amount. And again, I don't have the exact number. But I could probably get you close, if you would think about it this way. The current numbers that we published, these discounts that you see on these portfolios are 5%, 6%, 7%, something in that range. That's probably not a bad percentage if you're just doing back of the envelope on that book of business.

[H. E. Timanus:]

I think the total discount relative to that bank is about 10% or less than the total discount.

[Operator:]

And we'll take our next question from Jon Arfstrom with RBC Capital Markets.

[Jon G. Arfstrom:]

Just couple of follow-ups, maybe a question for Tim or Dave Zalman. Where do you expect the American State loan balances to bottom? It seems like maybe you're a little more optimistic on that.

[David Zalman:]

Tim may want to jump in. Again, you'd almost need a crystal ball for something like that. But I feel like they are starting to stabilize now. And again, we did the operational integration on that probably in June of last year. So we're coming up almost to a year now pretty quick. So hopefully, we'll start seeing that change, and down the road, even grow that portfolio. But right now, it needs to have a little bit more declining balance. Tim, do you have a...

[H. E. Timanus:]

I think that's essentially correct. There are, I guess, 2 dynamics at work there. One is the portfolio that we put on our books. There are loans in that portfolio that are performing loans, they're not credit issues. But some of them are structured in such a way that it's not normally what we would do on our side. And as those loans mature with remaining unamortized balances, we're letting some of those loans move out of the bank. So there will be a little bit of a continuation of that. It's not extremely material, but I think you should recognize that there will be some more of that. And I think more importantly than that, and this is typical of all acquisitions really, it takes the loan staff a while to -- I guess, the best way to say it is get used to the way that we do things. And they had a lot on their plate initially, just understanding how we operate, the way we would normally do something. There are a lot of operational issues that they have to deal with. So their eye has probably not been on the production ball the way that it will eventually end up. And we see that starting to turn right now. But it's probably still a few months out before those loan officers can get in full production swings. But that's normal, we see that with all acquisitions. So hopefully, that gives you a little more color.

[David Zalman:]

I would just add to that. I mean, I don't think it's unusual at all whenever a bank merges with us, especially with the size of American State Bank. The first thing, all your competitors are out there trying to call on your customers, and you're really playing really a lot of defense more than you are offense, and so -- but again, these guys are really good. The tide should turn in the near future. And so I think they're all going to jump onboard, the majority of all the staff in there that would then join us in the lending areas. So we're excited about it. I think it will be good going forward. It just takes some time, and that's just natural.

[Jon G. Arfstrom:]

Okay, that helps. And then maybe, Tim, just one follow-up on pace of loan growth. I appreciate the average monthly production numbers. But any change in the pace of activity? Most of the other banks were reporting that it was soft in January and it started to pick up throughout the quarter. Curious if you saw the same thing.

[H. E. Timanus:]

We did. Obviously, the first quarter of this year was not anywhere near as dynamic as our last quarter of 2012. But our production for that last quarter of '12 was basically off the charts compared to what was normal. As I indicated, we did an average of $141 million this quarter and average for all of last year was $138 million. And if you look at where we've been over the years, just going back to '09, for example, our average was $75 million. That calendar year, it went to $80 million in 2010. It went to $104 million in 2011. And as I said, it was $138 million in 2012. So over the last 4 or 5 years, we've reflected steady growth in that regard. The nemesis has been the paydowns over the last couple of years and we talked about that a little while ago. But yes, we did see a little bit of a slowdown at the beginning of this quarter. Once again, the overall economy of where we operate is good. So we have every reason to believe that we should be able to sustain and even pick up some loan growth volume.

[Operator:]

And we'll take our next question from Brett Rabatin with Sterne Agee.

[Brett D. Rabatin:]

Wanted to get a little more color, if I could, on the securities portfolio and just kind of talk about how much you guys have in maturities in the next couple of quarters. And David, what you're doing in the bond portfolio, kind of given where rates are today, what's your thinking about the yields going forward?

[David Zalman:]

I'll start off. This is David Zalman, Brett. Basically, our model hasn't changed at all. If you looked at our numbers, you saw that we had about $400 million, $500 million position, borrowing position. And really that evolved for 2 reasons. One, if you remember, I don't know which month it was in this first quarter, but the 10-year treasury started bumping around a 2% yield. And at that time, we really jumped in the market. And we thought that those were -- we started getting better yields, so we bought $500 million or $600 million at that time. Since then, we haven't bought any. David Hollaway can probably give you what our paydowns are here in a minute. I don't think that, that's changed. Usually, that's running little over $2 billion a year.

[David Hollaway:]

About $1.8 billion projected now.

[David Zalman:]

About $1.8 billion projected. So we're seeing paydowns kind of like where they were. Going forward, we really have hopes. But we really have hopes that interest rates would go up. That's a two-edged sword. One, we have a pretty big gain in our overall portfolio of $160 million, $170 million, something like that, so you lose the gain on rates. While on the other hand, hopefully, it would improve our net interest margin and our earnings would go up. So we were hoping about -- we were looking forward to that. Things in March really came back the other way. It kind of got some cold water poured on it when we saw the treasury, the 10-year treasury dumped to about -- gosh, it even dropped below $170 million, it's probably a little bit above that right now. But I think most people still believe and you're starting to see more of the Fed governors discuss the idea that probably at least by the end of this year, that we probably -- they are going to have to pull out of the market of buying $80 billion a year -- on $80 billion a month in mortgage-backed securities. And if that happens, I think that you could see as much as 1% increase in interest rates, maybe not this year but maybe next year. And I think that would be good for everybody.

[Brett D. Rabatin:]

Okay. So the duration of the portfolio is still probably around 3?

[David Zalman:]

I think it's a little over 3, a little 3...

[David Hollaway:]

3.5.

[David Zalman:]

3.5 years. And what's so important and I think that people, you guys like you realize it, but right now, with our net interest margin at around, what is it, Dave, 3.40% or something like that, compared to where we usually run at 4% to 4.25%. If the net interest margin we could ever get that going back the other way and this is probably what everybody says, it impacts us about $70 million a year after tax. So it's a big number if we can ever get the net interest margins back up.

[Operator:]

And we'll take our next question from Brad Milsaps with Sandler O'Neill.

[Brad J. Milsaps:]

Just a question on Coppermark. David, I know you mentioned that you're completing the integration next week. But I think you guys initially disclosed maybe 25% cost saves. Do you still feel comfortable with that? The reason I asked is looking at the call report, it looks like maybe their expenses were almost 2x what they typically were sort of on a run-rate basis in their first quarter. And it looks like maybe they paid off a few things, the interest expense is a lot higher as well. I was just kind of curious to hear your comment on did they hit the ground running at a faster rate than maybe initially thought because of some of those...

[David Zalman:]

I was going to answer that. But David Hollaway looks like he's shaking his head so much, I'm going to throw that to him.

[David Hollaway:]

I'll jump in first. This is Dave Hollaway. I mean, absolutely right. I mean, if you recall on previous conference calls, we talked about how the American State Bank folks jumped ahead of us. And we're doing a lot of these things before we got there. The Coppermark folks kind of in the same boat. They really asked, come to us and said, "What can we do to help move this along?" So that's exactly what you're seeing in the first quarter. They've done some things that we probably would have done after April 1 when we signed. But they did some of those recognition of expenses then and some other things that they've done. So yes, the answer, the direct answer is yes, they've moved a little quicker than we might have moved. But that's a good thing. And so as you look forward, those cost saves, maybe they'd already be there as we start moving forward. But I would caution you, they're still at a higher run rate because they were running 2 sets of books here, which will change by the end of April. And then there's just a few more things that we'll probably have to touch and help them with as we move forward. But absolutely, they've been working with us.

[David Zalman:]

Yes. And I would just add that, the person on our team that's really helped Coppermark is a guy named Mike Epps, who's actually is the President of American State Bank when we merged with them and is now their Chairman over there. And he's really helped them in going -- and done a lot of the same things that he did over at American State Bank. So he's been extremely helpful. And that's the performance, why you're seeing that kind of performance.

[Brad J. Milsaps:]

And in terms of the total cost saves, do you still feel comfortable with 25%? Or do you think, as you kind of gotten your arms around a little more, you can do better than that?

[David Zalman:]

Well, I would say, we always tell you guys 25%, but we always strive for more than that. So we leave the 25% out there, but we always -- in the general part, we try to do much better than that, or not much but better.

[Operator:]

And we'll take our next question from Jennifer Demba with SunTrust Robinson.

[Jennifer H. Demba:]

David, I'm curious about your acquisition pipeline and how Dan's departure has impacted your ability to work on that pipeline on a weekly and monthly basis.

[David Zalman:]

Well, Jennifer, I would say that our pipeline is very busy. I think that with Dan leaving, he definitely added a lot to the company as far as especially dealing with a lot of the analysts and the investment community. So that obviously takes time. But a lot of his duties were split to probably the 5 people in this room sitting next to me

[Jennifer H. Demba:]

And are you seeing a relatively larger number of bigger bank opportunities than smaller ones right now? And has Oklahoma really opened up for you after the Coppermark transaction?

[David Zalman:]

First of all, the first part of your question, yes, we are looking at bigger deals right now. There's a few bigger deals out there that we are looking at and talking about. I would say that we're still primarily focused for Texas acquisitions. We know that's our first and primary deal. On the other hand, if something in Oklahoma did come up, we would certainly look at that at the same time. And again, we hope to grow the Oklahoma franchise. But there are some bigger deals out there right now that we are considering and looking at. It doesn't mean at all that we'll ever get them, and you never know you talk a lot, so you never know.

[Jennifer H. Demba:]

Do you feel comfortable -- you said you'll do the operational conversion for Coppermark in the next couple of weeks. Do you feel comfortable starting on another one right now if that opportunity were to present itself?

[David Zalman:]

Well, generally, I promised all of our people that we wouldn't do anything for 6 months. But they laughed when I told them that to begin with. And probably, the ideal for us would be growing from $9 billion last year to, with Coppermark today, over, what is that, $16 billion or so. That's a huge jump. And for the most part, you would think -- or your ideal situation is probably we need to back up and just look at this for 6 months or so. At the same time, you really don't want to pass up -- for us to jump into a deal right now, it has to really look very attractive to us. It has to make a whole lot of sense. And so if we see a deal like that, we just don't want to miss it. So sometimes you can't always have it like you want it. The main thing that we have to know and that we have to reassure the regulators and to the investment community, people like you, that if we do, do another deal that we really have our backrooms, our operations together and that we can handle it. And at this time, where preferably you wouldn't want to do that and you'd like to let things rest for maybe 6 months, I think we have an extraordinarily good team. Everybody knows what they're doing, and it probably would push some of the departments a little bit better. I do think we can handle it.

[Operator:]

And we'll take our next question from Chris Marinac with FIG Partners.

[Christopher W. Marinac:]

David or Tim, I was wondering if you could remind us on the average loan sizes and if there has those have been changing over the last couple of quarters or if they're roughly the same in the past.

[H. E. Timanus:]

It's ticked up, I guess, a little bit. Our average loan size is about $140,000. And that's been pretty close to what it's been for a year or 2 now. I guess, if you go back, I can't remember, 5 or 6 years ago, maybe it was closer to $100,000. So it's still relatively low and it hasn't changed much in the last 1 or 2 years.

[Christopher W. Marinac:]

Okay. And then as you evolve Coppermark, would that be similar? Or would that be a lot different as Oklahoma evolves?

[H. E. Timanus:]

In terms of the average size?

[Christopher W. Marinac:]

Right. Or just even what you did, the type of that new loan deal that you pursue.

[H. E. Timanus:]

Well, I think that this kind of lending they do parallels us quite closely. So I don't think there's going to be a material change in the type of lending. They maybe do a few larger transactions relative to some of our banking centers so that would be a good thing, as far as we're concerned. But I don't think it's going to result in any kind of material difference.

[Christopher W. Marinac:]

Okay. And I guess, the last question just related to Coppermark, and it's probably way premature to ask this. But just observing what the runoff that you were talking about at American State earlier, would something similar like that be possible at Coppermark? Or would that be less likely, given what you know?

[H. E. Timanus:]

Well, it's certainly possible. And there will be some of it, there always is. Exactly how it will compare to American State Bank, I really can't say right now. But I don't think it's going to be materially different. There might be a little less runoff. But there's going to be some runoff. There always is.

[Operator:]

[Operator Instructions] We'll take our next question from Bryce Rowe with Robert W. Baird.

[Bryce W. Rowe:]

My question was already asked and answered, so thank you.

[Operator:]

[Operator Instructions] And it appears we have no further questions at this time.

[Charlotte M. Rasche:]

Thank you, Zach. Thank you, ladies and gentlemen. We appreciate you taking the time to participate in our call today. We appreciate the support that we get for our company and we will continue to work on building shareholder value. Thank you very much.

[Operator:]

This does conclude today's conference. You may now disconnect and have a wonderful day.