Central Pacific Financial Corp New

Good afternoon, ladies and gentlemen. Thank you for standing by, and welcome to the Central Pacific Financial Core First Quarter 2020 Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. This call is being recorded and will be available for replay shortly after its completion on the company's website at www.cpbbank.com. I'd like to turn the call over to Mr. David Morimoto, Executive Vice President, Chief Financial Officer. Please go ahead.

Thank you, Grant. And thank you all for joining us as we review the financial results of the first quarter of 2020 for Central Pacific Financial Corp. With me this morning are Paul Yonomide, Chairman and Chief Executive Officer, Catherine Knoll, President, Arnold Martinez, Group Executive Vice President of Revenue, and Anna Hu, Executive Vice President and Chief Credit Officer. We have prepared a slide presentation that we will refer to it in our remarks today. Presentation is available in the investor relations section of our website at cpb.bank. During the course of today's call, management may make forward-looking statements. While we believe these statements are based on reasonable assumptions, they involve risks that may cause actual results to differ materially from those projected. For a complete discussion of the risks related to our forward-looking statements, please refer to slide two of our presentation. And now, I'll turn the call over to Paul.

Thank you, David, and good morning, everyone. As always, we appreciate your interest in Central Pacific Financial Corporation. The COVID-19 pandemic is top of mind for all of us. Overall, the state of Hawaii is doing a good job at managing and containing the pandemic. Hawaii was early to put in place stay-at-home orders and mandatory curfews and quarantines. Our residents in general are abiding by government orders as well as hygiene recommendations. Due to our geographic isolation, Hawaii was able to effectively lock down and protect the state from outside visitors with potential COVID-19 infections. We believe these measures will slow and contain the spread of COVID-19 in the state and result in a faster recovery. However, with a complete tourism shutdown in Hawaii, we are seeing a dramatic impact on the state's economy. We are hopeful that we will start to see visitors returning to the islands in the late summer to early fall of this year, particularly from Asia as they are closer to recovery from the pandemic. Central Pacific Financial is committed to supporting our employees, customers, and community during this time of crisis. Our first focus is on our employees. Safety comes first. and therefore we have temporarily closed 13 of our smaller branches to allow for adequate social distancing at our larger remaining branches. The staff from the temporarily closed branches have been redeployed to work at the remaining branches, assist other areas of the bank, or make customer telephone calls. The majority of our support staff, even at the executive level, have started working remotely on a full-time or rotating basis. We believe the actions we have taken to date will allow us to meet the needs of our customers and community while ensuring the safety of all employees. We want to assure you that we are prepared to handle this crisis. I personally led companies through prior crises, including the 2011 Tōhoku earthquake, tsunami, and radiation aftereffects while I was in Tokyo, leading IBM Japan, and the SARS outbreak in 2002 to 2004 while I was leading BearingPoint Asia Pacific. Additionally, many of our key team members that helped us through the 2008 to 2009 financial crisis remain with the company and are applying the valuable lessons learned. Despite COVID-19, our RISE 2020 initiatives are continuing. The revitalization of our building headquarters is proceeding as we continue to support the local construction industry. We're also pushing ahead with our digital initiatives, including the development of our new online and mobile banking platforms and the replacement of our ATMs. Digital technology is even more critical to our business during crises like this and will remain a high-priority strategy for our future. I'd like to turn the call over now to Catherine, who will share more about our business continuity plan. Catherine?

Thank you, Paul. Our business continuity plan includes a pandemic-preventive plan, which we successfully activated in early March, and is summarized on slides three and four of our presentation. As a result, we have not had any disruption in our business. As Paul noted, our remote workforce plan has been rolled out with an overall smooth transition. We already had virtual private network, VPN technology, capability over the last quarter, and we've expanded VPN access to over 70% of our employees. In addition to VPNs, we are well set up with the latest technologies that enable our operations to continue efficiently. Our teams are using collaboration tools, including Microsoft Teams and several other cloud-based software programs. For our customers, we continue to offer our current online and mobile banking tools, and we are making good progress on our new digital offerings as part of our RISE 2020 initiative. Banking is deemed an essential service, and I've been so proud of how our CPB employees have risen to deliver exceptional service in these challenging times. I'd like to reiterate that our employee and customer safety is of the utmost priority. We are monitoring our employees' health and well-being very closely. We are providing personal protective equipment for our frontline staff and have implemented precautionary measures to ensure social distancing in our branches, in all work areas. I'd like to turn the call over now to Arnold Martinez, our Group Executive Vice President of Revenue, who will share how we are assisting our customers during this pandemic. Arnold.

Thank you, Catherine. During the first quarter, our teams remained focused on generating revenue, even as the pandemic situation began to escalate. The bank grew total loans by $63 million or 1.4% sequential quarter. The loan growth primarily came from our residential and commercial mortgage loan categories. We were also able to grow car deposits by 45 million or 1.1% sequential quarter. Additionally, we were successful in reducing the average cost of total deposits by five basis points to 36 basis points. Going forward, we believe there are still opportunities for loan and deposit growth as our teams collaborate together to support our consumer and business customers through this unprecedented time. We have also moved quickly to put in place a number of COVID-19 relief programs for our consumer and business customers. The relief programs are summarized on slides five to seven of the presentation. For our customers, we are offering an employment disruption loan as well as consumer and residential mortgage loan payment deferral programs. For our business customers, we are an SBA-approved lender and are participating in the Paycheck Protection Program, or PPP, which is part of the Federal CARES Act. We've seen tremendous demand for the Paycheck Protection Program and have made over 4,200 loans, totaling nearly $490 million approved by the SBA. As a result of the PPP loan demand, it was necessary to redeploy employees to handle and assist with the loan processing, including augmenting the loan process by engaging outside resources to assist. Our PPP team is focused right now to fund the loans that were approved by the SBA, as well as to prioritize remaining applications that did not get processed in time under the initial funding. And of course, to submit the applications to SBA when the lender portal reopens. We are staying in close contact with our customers through increased outreach efforts. our bankers are having calls with their key customers as frequently as daily. We are monitoring our customers' financial health during this challenging time and are providing guidance and the resources they need to help them weather the storm. Furthermore, we are prudently making loan modifications for certain commercial customers to allow for deferral of loan principal and or interest for a short-term period. As of April 16, we have made loan payment deferrals on approximately $300 million in total balances, which represent less than 7% of our total loan portfolio. I'd like to turn the call over now to Anna Hu, our Executive Vice President and Chief Credit Officer, to provide further detail on our credit and portfolio risk management. Anna?

Thank you, Arnold. Central Pacific Financial has had a prudent credit risk management philosophy, which we believe will help us weather through this pandemic. Following our recovery from the Great Recession, we implemented a disciplined approach to credit that included tighter underwriting standards with a focus on making quality loans and maintaining a diversified portfolio. Our loan portfolio today is well diversified by product and by industry. While certain industries we lend to will be impacted by the pandemic, there are other industries and portfolios that we expect to have limited impact. The primary industries that will likely experience impact from the pandemic are summarized on slide nine and include accommodation and food service, retail trade, wholesale trade, manufacturing, and healthcare. This comprises approximately $378 million or 8% of our total loan portfolio. A large portion of these balances are to well-established businesses that have weathered through the last downturn. Secondary industries that may also experience impact include real estate management and other leasing, transportation, professional and administrative, and other industries and services that total approximately $487 million or 11% of our total loan portfolio. These industries have thus far experienced little impact from COVID-19. Additional details on our primary and secondary industries can be found on slide 10. We also anticipate impact on our consumer portfolio, which is approximately $560 million, or 13% of our total loan portfolio. We are actively granting 90-day payment deferrals to these borrowers. Additional details on our consumer portfolio are shown on slide 11. We anticipate limited impact on our residential, home equity, and investor commercial real estate loans. The weighted average loan-to-values in these portfolios are 60%, 58%, and 53%, respectively. These loans comprise of approximately 3.1 billion, or 68%, of our total loan portfolio. Additional details on these portfolios can be found on slides 12 and 13. In the final week of March, we aggressively reviewed our commercial loan portfolio and reached out to our customers to determine the initial impact, if any, of COVID-19 on their businesses. Through this process, we identified borrowers that were likely approximately $65 million in loans from past to special mentions. These loans are primarily accounted for as part of the outstanding loan balance of the primary industries previously mentioned. It is important to note that all of these loans were performing prior to COVID-19. As part of our assessment for the downgrade, we reviewed management and actions taken such as closing businesses and reducing expenses, monthly cash burn and access to cash liquidity and capital, and the overall ability to weather through the pandemic in the near term. We further note that it is still early to reach any firm conclusions and that these loans that were downgraded did not include the expected positive impact from the federal subsidy program. We are proactively working with our customers and many have already applied and have been approved for the Paycheck Protection Program. Furthermore, we have also provided assistance with short-term payment deferrals as necessary. Additional details and breakdown by industry can be found on slide 14. Overall, our asset quality continues to remain strong. I'll now turn the call over to David, our Executive Vice President and Chief Financial Officer. David?

Thank you, Anna. On the finance side, we have implemented several steps to effectively manage through the current environment. We will ensure our capital and liquidity positions remain strong. Through our past experience, we have developed robust capital and liquidity stress tests and comprehensive capital and liquidity contingency plans. We also decided to temporarily suspend our share repurchase program. manage our expenses as well as protect our employees. We have implemented internal policies to temporarily suspend all business travel, large group meetings, meals and entertainment. We have also re-evaluated or postponed certain consulting projects. And finally, hiring of new employees is on an exception basis and we are evaluating our compensation plans. I'd like to now briefly cover the company's financial results for the first quarter of 2020, which is summarized on slide 15. Net income for the first quarter of 2020 was 8.3 million, or 29 cents, per diluted share. Return on average assets in the first quarter was 0.55%, and return on average equity was 6.21%. Our earnings were impacted by a total provision for credit losses of 11.1 million recognized in the first quarter, which related to a new CISO methodology and the effects of the COVID-19 pandemic on the economic forecast. We also recorded a CISO day one impact of 3.6 million, which was an adjustment to our opening shareholders' equity. Our pre-tax, pre-provision earnings for the first quarter was $21 million. Net charge-offs in the first quarter totaled $1.2 million compared to net charge-offs of $2.3 million in the prior quarter. The charge-offs primarily came from the Hawaii consumer loan portfolio. At March 31, our allowance for credit losses was $59.6 million, or 1.32% of outstanding loans. Net interest income for the first quarter was $47.8 million, which was relatively flat on a sequential basis, and the net interest margin remained stable at 3.43%. First quarter, other operating income totaled $8.9 million compared to $9.8 million in the prior quarter. The decrease was primarily due to lower mortgage banking income and BOLI income, driven by market volatility during the quarter. This was partially offset by additional fee income of $1.3 million related to an interest rate swap for a commercial real estate client. Other operating expense for the first quarter was $36.2 million, which was flat to the prior quarter. Included in the total, there was lower deferred compensation expense due to market volatility, which was offset by higher provision on off-balance sheet credit exposures under CECL. The efficiency ratio increased to 63.9% in the first quarter compared to 62.8% in the prior quarter. The increase was primarily due to the decrease in other operating income. The effective tax rate was 25.3% in the first quarter. Going forward, we expect the effective tax rate to be in the 25 to 27% range. Now I'll return the call to Paul Yonomide.

Thanks, David. The global COVID-19 pandemic is an extremely challenging situation faced by all during this time. We want to assure you that Central Pacific is prepared and ready to handle this situation. We have a solid financial, credit, liquidity, and capital position to enable us to weather the storm. We remain committed to our employees, customers, and the community, and will continue to provide support to all of these areas. Earlier this month, we ran a highly successful community campaign sponsored by our CPB Foundation called Keep Hawaii Cooking. Through this program, our foundation subsidized the cost of 10,000 takeout meals to local families struggling during this time. The purchase of these meals also provided the much-needed support to our local restaurants. We are further looking at other potential initiatives to help our local economy, one of which is a campaign to continue communication and engagement with visitors, particularly from Japan, to keep Hawaii top of mind and encourage their return to Hawaii once the pandemic ends and recovery occurs. To conclude, We very focused on flattening the curve with the COVID-19 situation, and we are pulling together as a company and community to beat this. On behalf of our management team, thank you for your continued support and confidence in our organization. At this time, we'll be happy to address any questions you may have. Thank you.

We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from David Feaster with Raymond James. Please go ahead. Hey, good afternoon, guys.

Good morning. You guys have been a big part of the approved PPP loans in Hawaii. Are you accepting applications from new clients or just existing clients? Are you able to require deposit relationships with those loans? And I guess with regards to timing, I guess that a lot of those have already been approved. Do you think most of those fund in 2Q20? So most of the fee revenue should come in next quarter?

Yeah, thank you, David. You know, and I'd like to respond to all of that positively, but I don't want to take Arnold's thunder. He's been working night and day. So Arnold, why don't you respond to that?

Sure. Thanks, Paul. Yeah, so we, I would say the super majority of the applications we receive were from our customers, but we, you know, do have non-customers that did apply. And, you know, our position has been that the program is for support of the business community. And so as we obviously support our customers, we are also supporting the over broader community. With regard to the fees, it is amortized over the term of the loan, but we estimate that we are in the roughly $18 million range for fees at this point.

Okay. Terrific. And then, David, I appreciate the color on some of the expense-saving opportunities, but how do you think about the RISE 2020 initiatives? Just hearing your commentary, it sounds like things are progressing as planned, but are there any projects or investments that you might like to place on hold? Or I guess broadly, how do you think about expenses, and do you have much expense leverage?

David, this is Paul. Let me start first by just once again explaining our RISE 2020 initiatives. initiative. It's largely two components. One is a technology play and the other is infrastructure. On the technology play, you know, everything from our new online mobile platform, new ATMs, definitely converting all of our employees to become VPN ready and also give them collaboration tools. This was extremely timely and nothing has stopped there. As a matter of fact, we've been trying to accelerate that. In terms of infrastructure, you know, as of February, we already started the demolition of our first floor. And so our plan is to, you know, continue down the path and complete the full renovation of our main building on the first floor. Having said that, there are pieces and components, for example, glass materials that we're planning to place into the ninth floor of our building. There are many ancillary things that we feel that we can postpone, just to be prudent. But having said that, We do plan to push ahead on the first floor renovation, which is the lion's share of our investment. Most of it is amortized over 39 years. And I think, personally, our target date of January 1, 2021, we're hoping that that's going to be a real great celebration, that we're going to have COVID-19 contained in Hopefully the whole state, the city of Honolulu will be open for business and we'll all take a really positive view on it. But David, why don't you provide any other information on expenses?

Yeah, sure. Thanks, Paul. Yeah, so as David, as Paul mentioned, we are continuing with the major components of the RISE 2020 initiative. what we will guide to on total other operating expense is roughly, you know, we're sticking with the $36 to $38 million range. And obviously, as we said in our prepared remarks, you know, we're trying to manage that to the lower end of the range.

Okay. That's helpful. And then I guess last one for me, you know, on the – allowance for loan losses we saw a pretty big jump obviously to 132 basis points but you know given given where we are today and assuming that this might you know stick around a little bit longer how do you think about additional reserve builds um and just you know kind of your overall thoughts on on reserves and uh just any commentary you have would be helpful okay thanks david um yeah you know as as

as all banks, it's been a challenging quarter implementing one of the largest bank accounting changes in the midst of a pandemic. But, you know, the team did a nice job implementing CECL. And, you know, we took a look at the situation as of March 31st. We used a blend of economic forecasts at the time that did include some of the forecast that came out in late March. So we did incorporate some of the downside that people were seeing with COVID. And we think we ended up with a appropriate allowance, you know, 132 of loans as of 331. Having said that, you know, there have been subsequent forecasts that have come out in the first three weeks of April that have shown potential further downside. So to the extent that there is further deterioration in the economic environment, you know, there could be, there would be additional reserve build in the coming quarters. And we would think it's probably the second and third quarter.

David, this is Paul. Let me just add, you know, clearly there's a lot of uncertainty on how COVID is all going to play out. You know, as Arnold touched on, you know, our bank has also been extremely focused on a lot of the federal subsidy programs like the PPP. We, as a bank, have overachieved, you know, in terms, you know, in relation to our market share in the state of Hawaii. and with some of the fees that we anticipate in Q2, and hopefully in Q3, with the additional $310 billion that Congress is considering to, again, put into the SBA, that we can achieve a lot of fees that we feel will help us to counter additional provisions as well.

Okay. That's helpful. I guess kind of along those same lines, what are you hearing from your customers? Like, What's the pulse of it? It sounds like you're actually expecting some, you know, potential loan growth. But what are you hearing from your clients? What's the pulse? And maybe at what point, you know, do they – like how much longer if this goes on, at what point do you think they start feeling the pressure?

David, you know, as you'll see in our addendum, we have a very diverse portfolio of loans. And the majority of it, I think we're in a really good place, especially with the low loan-to-values, our real estate-based clients. Clearly, the companies that are very focused on tourism, whether it be hotels, restaurants, who have completely shut down operations, there's tremendous concern. The city and county, the mayor has just announced you know, stay-at-home mandate extension to the end of May. So clearly that has a huge, you know, implication to those businesses. So a lot of concern. You know, there's not quite, you know, much light at the end of the tunnel yet. Hawaii is doing a great job, you know, in comparison to most states, you know, in the United States. So, you know, there's some companies that are cautiously optimistic, and yet, you know, the situation is quite tough. So, you know, what we've been doing is reaching out to all of those customers, you know, trying to really understand their business, seeing how the bank can help, and we plan to continue doing that. Okay. That's helpful. Thanks, guys. Grant, next question.

Our next question will come from Jackie Bolin with KBW. Please go ahead.

Hi. Good morning, everyone. Just one more quick question on Hawaii before I change topics. But I think it may have been in your prepared remarks, Paul. You mentioned that you were hopeful for visitors to return in late summer to early fall. Is that something that's come out of one of the local organizations or the Hawaii Tourism Authority, or is that just an internal hope?

You know, I'd like to say it's a little bit of everything, Jackie. You know, nothing is very definitive yet. I mean, you know, our major markets, whether it be Japan, the mainland U.S., you know, it has its challenges today. So it's not just about Hawaii. You know, the whole ecosystem has to work. And yet, you know, Hawaii today with infections of a little under 600, 400 recovered, And our daily new infections, I think generally the state and the city have been doing a pretty good job, you know, at containing it. But the concern is naturally on the markets that we bring in tourists into. So, you know, but our view right now is, you know, wouldn't it be wonderful if the state of Hawaii can position itself as one of the safer tourist destinations globally? And in that situation, I think people are willing to pay a premium to come to Hawaii. And it really boils down to the tenacity of state government. And that's something that even our bank and all the banks actually in Hawaii are working very closely with the state and city governments and providing ideas, new initiatives, new hygiene protocol, you know, providing ideas on new technology to try and make the tourism experience a positive one. And we're very hopeful by the end of the third quarter, early fourth quarter, that we could start seeing a gradual rise in tourism.

And is it reasonable to assume that the people of Hawaii would be able to return to their new normal life you know, in advance of that because the state has done such a good job of, you know, really containing the virus and, you know, just given your status as an island state, you more than any other state in the U.S., really probably most places everywhere, have been able to keep people out from introducing the virus again. Is that a fair assumption?

You know, again, Jackie, the city's stay-at-home mandate was just extended yesterday to May 31st. And, you know, I would, you know, looking at all of the activity in the mainland U.S. right now, I think it is a fair assumption that a lot of businesses will be able to start moving towards normalcy from early June.

Okay, thank you. That's wonderful, Keller, and very helpful. Just looking in terms of growth and understanding that everybody is essentially at home through the majority of the second quarter at a minimum, how are your customers thinking about that? Is it all just coming from businesses that are looking for help through either the PPP or the other programs that you have available to them, or are there other ways for growth that, you know, that I'm not thinking of?

Well, you know, Jackie, in a pandemic, there still are winners, you know, grocery stores, for example, you know, companies that are providing, you know, health and safety type services and whatnot. So, So, again, those are reflected in our portfolio as well. But, you know, they're clearly, you know, businesses that are also, you know, benefiting from what's happening today. But having said that, you know, the vast majority of companies, especially in the tourism sector, and, again, you know, I want to emphasize that we have a very diverse portfolio, and we have those companies that are still in construction. working on the Honolulu Rail Project, doing a lot of defense contracting. Those businesses are still business as usual. The ones that are facing the tourism industry, on the other hand, with a shutdown on business, you know, the recent CARES Act subsidies are critical. And this is why CPB has invested so much time and energy in making sure we bring those PPP dollars even to the small businesses. 4,200 applications with 490 million, we averaged a little over $100,000 per application, and that was just critical during these kind of times, Jackie.

Okay, thank you. And just one last one for me, and then I'll step back. Just wondering what the expectation is for mortgage banking in the near term and whether the swing between quarters was purely driven by the MSR mark or whether it was a function of volume, too.

I was actually going to add to Paul's earlier comment to talk about growth in mortgage, but that was a perfect segue. The volume in Q1 was what I would say seasonably low, and in prior years we've seen the dip. But I will share with you that in Q2 the pipe looks really good, and we are projecting about $220 million in production. And a lot of that goes to some things we talked about earlier in regard to the unique nature of our mortgage business. A lot of it is purchased. And we have joint ventures with key developers and realtor agencies here. And so that will continue to drive the growth in the mortgage business, not just in Q2, but for the rest of the year.

Okay. Thank you. And then just the – and this might be a technical question for David, just on the difference between MSR and if that was the primary driver of 1Q. Sure.

Yes, that's correct, Jackie. The MSR amortization increased sequential quota by about 800,000. Okay.

Thank you, everyone. I'll step back.

Jackie.

If you'd like to ask a question, it is star then 1. Again, if you'd like to ask a question, star 1. Our next question will come from Lori Hunsaker with Compass Point. Please go ahead.

Yeah, hi. Good morning. Just wanted to start first over on the income statement, David. Just wondered, BOLI, a loss of $19,000 for the quarter versus it's been running about $600 or so per quarter, how should we be thinking about that?

Yeah, Lori, that was the impact of the equity market volatility So we have a BOLI policy that's used as a indirect funding source slash hedge for our employee deferred comp program. So the assets inside of the BOLI policy are equity mutual funds. So that policy declined in value by roughly $600,000. and we had our normal BOLI policies with income of roughly $600,000. So they kind of offset each other, and that's what resulted in roughly zero income in the first quarter. Assuming we don't have another downturn in our equity market, if things stay stable, we would expect BOLI income to return to the $500,000 to $600,000 quarterly range going forward.

Okay, that's helpful. And then within your net interest income this quarter, were there any non-accrual loan recoveries like you had last quarter?

Yeah, it was negligible this quarter.

Okay. Okay. Very strong margin. Okay, good. And then just shifting over to credit, your deck was phenomenal. Thank you for the detail. On slide nine, so your primary industries that you outline as potentially being more at risk from COVID-19, It looks like, obviously, you know, the majority of that is CNI. Can you tell us, of the $378 million, is there any real estate secured piece to that? And if you know, you know, percentage or dollar of that $378 million?

Sorry, this is Anna. I will say that between the primary and secondary industries, $325 million, a billion of it is real estate secured.

Okay, between both of them, $325 million. Okay, that's helpful. And then this is kind of more macro, I guess, both Anna and David, for you. You know, in terms of construction lending, I'm hoping that you can just give us a refreshed update. You're just, you're whatever, you're 2%, you're $101 million. But just in terms of sort of a... Go ahead.

Sorry, you're breaking up. Can you restart, please, your questions?

Sure. Can you hear me now? Yes. Yeah, just very high level. If you could just help us think about your construction books, since that's what really hurt you during the last downturn, and you look so different now, right? So you had 28% of your loan book and construction lending back at the end of 07, and today that's 2%. But can you just help us think about what are the differences in your construction books today versus back then, you know, outside of the obvious, which is size?

Thanks. Hi, Laurie. For our construction book today, it's very different. Back 10 years ago, we were doing a lot of land development, residential construction development. What we have today is very focused on supporting the middle market to the affordable condo builds that we have here in Hawaii, on Oahu primarily. So that's where the difference is in the portfolios. We are not in what we were 10 years ago.

Okay. And then the 101 million, is that all Hawaii-based?

Yes.

All Hawaii-based. Okay. And versus the last go-around, it was mainly in the mainland. Is that correct?

A lot of it was on the mainland, correct.

Okay. Perfect. Okay. And then if you have it, do you happen to remember what LTVs were back then versus today?

Laurie, they probably started Phoenicia conforming, you know, 60%, 65%, but they ended up, you know, upside down, obviously, once we hit the recession. Okay. But, again, you know, much different exposure. You know, as you said, it was almost – 30% of the portfolio, it was over $1 billion in construction at that time. And today, I think it peaked at $1.1 billion, and today it's $100,000. So much different risk profile in the loan portfolio.

Right, coupled with the fact that your loans were a lot smaller. Okay, perfect. I'll leave it there. Thank you so much.

All right.

This concludes our question and answer session. I would like to turn the conference back over to Paul Yonomine, Chairman and CEO, for any closing remarks.

Great. Thank you. Thank you very much for participating in our earnings call for the first quarter of 2020. We look forward to future opportunities to update you on our progress. Thank you.

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