Kelly Adams Dominic Ng - Chairman, Chief Executive Officer, Member of Executive Committee, Chairman of East West Bank and Chief Executive Officer of East West Bank Julia S. Gouw - Vice Chairman, President, Chief Operating Officer, Member of Executive Committee, Vice Chairman of East West Bank, President of East West Bank and Chief Operating Officer of East West Bank Irene H. Oh - Chief Financial Officer, Principal Accounting Officer, Executive Vice President, Chief Financial Officer of The Bank, Principal Accounting Officer of East West Bank and Executive Vice President of The Bank

David Gong - Keefe, Bruyette, & Woods, Inc., Research Division Ebrahim H. Poonawala - BofA Merrill Lynch, Research Division Timur Braziler - Deutsche Bank AG, Research Division Herman Chan - Wells Fargo Securities, LLC, Research Division Joe Morford - RBC Capital Markets, LLC, Research Division Jennifer H. Demba - SunTrust Robinson Humphrey, Inc., Research Division Lana Chan - BMO Capital Markets U.S. John G. Pancari - Evercore Partners Inc., Research Division Aaron James Deer - Sandler O'Neill + Partners, L.P., Research Division Matthew T. Clark - Crédit Suisse AG, Research Division

Good afternoon, or good evening. Welcome to the East West Bancorp Fourth Quarter 2013 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Ms. Kelly Adams, the Senior Vice President. Please, go ahead.

Good morning, and thank you for joining us to review the financial results of East West Bancorp for the fourth quarter and full year of 2013. Here to review the results are Dominic Ng, Chairman and Chief Executive Officer; Julia Gouw, President and Chief Operating Officer; and Irene Oh, Executive Vice President and Chief Financial Officer. We will then open the call to questions. Second, we would like to caution you that during the course of the call, management may make projections or other forward-looking statements regarding events or future financial performance of the company within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may differ materially from the actual results due to a number of risks and uncertainties. For a more detailed description of factors that affect the company's operating results, please refer to our filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2013. Today's call is also being recorded and will be available in replay format at eastwestbank.com. I will now turn the call over to Dominic.

Thank you, Kelly. Good morning, and thank you for joining us. Yesterday afternoon, we were pleased to report financial results for the fourth quarter and for the full year. 2013 was another year of record earnings for East West and we achieved many financial successes. East West reported strong earnings of $75.8 million, or $0.55 per diluted share, for the fourth quarter. We increased full year net income by 5%, or $13.4 million, to a record $295 million from $281.7 million in 2012, and increased earnings per diluted share by $0.21, or 11%, from $1.89 in 2012. In 2013, we achieved the highest net income in the history of the bank, grew loan and deposits to record levels, and experienced strong improvements in credit qualities while maintaining good operating efficiency. Also in 2013, our stock price increased over 62%. Our market capitalization was increased to over $4.8 billion as of the end of the year. We also increased common dividend by 50% during the year and bought back 200 million of stock, returning a total of 283 million, or 96% of 2013 net earnings, to our common shareholders. Additionally, we were pleased to announce yesterday a further increase to our annual common stock dividend to $0.72 for 2014, up 20% from last year. During 2013, we grew total loans by 20% or $3 billion to a record $18.1 billion. Our loan growth was broad-based and came from commercial industrial loans, commercial real estate and residential loans. Additionally, total deposits grew nicely at 11%, or $2.1 billion year-to-date, to a record $20.4 billion, achieved through healthy growth in low-cost commercial deposits. In 2013, net income totaled $295 million, which is the fourth consecutive year of record net income for East West. Once again, our annual return on equity and return on…

Thank you very much, Dominic. And good morning to everyone. I would like to spend a few minutes discussing the loan growth we experienced during the quarter, our net interest margin and our expectations for the future. Finally, I will review the guidance we provided in the earnings release yesterday for the first quarter and the full year of 2014. Our total loan portfolio increased to a record $18.1 billion at December 31, 2013, an increase of $879.3 million or 5% from September 30, 2013, and an increase of $3 billion or 20% for the full year. The loan growth for the fourth quarter was driven by strong, diversified loan originations throughout the bank. Increases in commercial loans continue to drive our total loan growth with non-covered commercial and industrial loans and commercial real estate loans up 10% or $478.8 million, and 4% or $172.5 million, respectively. Single-family residential loan growth continued to be robust during the fourth quarter of 2013, increasing 6% or $192 million quarter-to-date. During the fourth quarter, we originated approximately 940 single-family residential loans, totaling $350 million with an average loan size of $370,000 and an average loan-to-value of 53%. Although still very strong, residential loan originations are down in the fourth quarter as compared to the third quarter, in line with industry trends. In the coming year, we do expect that the origination volumes will be lower than in 2013. Although the growth in the non-covered portfolio will continue to be offset by the expected reduction in the covered portfolio, at this point, we project that we can grow total loan portfolio by 8% to 10% through the end of 2014. Along with strong growth, we have continued to successfully acquire new commercial deposit relationships, resulting in healthy core deposit growth. Total deposits increased $53.8…

Thank you very much, Julia. And good morning to everyone. I'd like to discuss our financial results for the fourth quarter and full year of 2013 in more detail, specifically credit quality, noninterest income and noninterest expense. Starting with credit quality, the total nonperforming assets, excluding covered-assets-to-total-assets ratio has been under 1% for over 4 consecutive years with nonperforming assets of $130.6 million or 52 basis points of total assets at December 31, 2013. Non-accrual loans, excluding covered loans, totaled $111.7 million or 62 basis points of total loans at December 31, 2013, a decrease from 72 basis points of total loans at December 31, 2012. For the fourth quarter of 2013, the company recorded a provision for loan loss for non-covered loans of $6.3 million, as compared to a loan loss provision of $13.8 million for the fourth quarter 2012. For the full year 2013, the provision for loan losses for non-covered loans was $18.3 million, a decrease of $41.8 million,, or 70%, as compared to the year ended 2012. East West continues to maintain a strong allowance for non-covered loans of $241.9 million, or 1.54% of non-covered loans receivable at December 31, 2013. Total net recoveries on non-covered loans totaled $1.3 million for the fourth quarter of 2013 compared to net charge-offs of $334,000 in the third quarter of 2013 and $9.6 million of charge-offs in the fourth quarter of 2012. During the fourth quarter of 2013, the company recorded a reversal of provision for loan losses of $820,000 on covered loans. As these loans are covered under loss share agreements with the FDIC, for any charge-offs, the company records income of 80% of the charge-off amount in noninterest income as a net increase of the FDIC receivable, resulting in a net impact to earnings of 20% of…

Thank you, Irene. I would now open the call to questions.

[Operator Instructions] And our first question comes from Julianna Balicka of KBW. David Gong - Keefe, Bruyette, & Woods, Inc., Research Division: This is actually David Gong for Julianna. I just had a question on the dividend increase. So think about future dividend increases. Do you have a target dividend payout ratio that you target to, or would that be kind of in line with EPS growth in the future?

Well, we have some guidelines. We think that a dividend payout of 30% to 35% seems to be a good dividend payout. And depending on the growth, we'll take a look in whether we continue to accumulate capital or we need the difference to support our growth. So -- but we would like to see that if we increase our EPS in every year, that we can continually increasing our dividend each year. David Gong - Keefe, Bruyette, & Woods, Inc., Research Division: Okay. And any thoughts on repurchases now that MCBI has closed?

At this point, I would say that because our capital ratio is at the level that we are very comfortable with, and also, we're looking at where we are in terms of our growth plan, we don't think that it will be the best use of our capital to buy back at this point. David Gong - Keefe, Bruyette, & Woods, Inc., Research Division: Okay. And also a question on the loan growth items for 2014, the 8% to 10%. Just want to confirm, that does not include any MCBI, so it's based on the total loan from 12/31/2013, right?

Correct, yes.

Yes, because MCBI -- at the Metro Bank, we already picked up $1.1 billion of loans as of December 31, so that is not included in the 8% to 10% growth. The 8% to 10% will be strictly the East West organic growth, on a net basis.

Yes.

And our next question comes from Ebrahim Poonawala of the Bank of America Merrill Lynch.

I just have a quick follow-up question on loan growth. One, just in terms of, obviously, your guidance implies a slowdown relative to the kind of growth we've seen for the last 3 quarters. I just wanted to get a sense in terms of specific -- I know you mentioned, Julia, in your opening remarks that originations are going to be lowered 2014 versus last year, but I wanted to get a sense of what areas you see growth slowing in and is there -- are you being conservative? And because it seems like what we are hearing from other banks, especially in the commercial side, that things are picking up so loan growth could actually trend the NAV move into 2014. So I would appreciate if you can give any color on that.

In terms of our projection, we look at a few different scenario. One is what the market condition, the other one is East West balance sheet. If we look at what we've done for the last 2 or 3 years, particular on the residential mortgage origination, we have done extraordinary well because the market allow us to be able to book a lot of very low loan-to-value, very nice yield type of residential mortgages. But we got ourselves in a situation now that we actually have a pretty nice balance of residential mortgage. If you look at the residential mortgage balance today, as a percentage, it's at the level that we look at, is that if we continue the same volume of growth, it's not going to be conducive to our principle of having a well-diversified portfolio with different mix of different type of products. So within the East West situation, we want to not have this kind of like repeat our 2013 of residential mortgage growth anyway. Then you look at the market condition, I think, in general, last year, because of the rate environment, many banks who originate home mortgages were all doing very, very well. So with no exception. We just don't expect that the market will be as strong as it was in 2013. So we expect the market to slow down. We also, within our own balance sheet diversification and risk oversight purpose, we also do not want to see that much growth. And as a matter of fact, what we've done also is that we have also changed our product mix in the home mortgages area. In 2013, we offer 3 years fixed-rate, 5 years fixed-rate. So this year, we decided -- in fact, not only is that not an issue. Actually, in the…

Got it. Thank you, very much. And I guess, just one -- a second question. I appreciate your comments on not really viewing buyback as the best use of capital. I guess, as you look in terms of capital deployment in 2014 and with your [indiscernible] in the fourth quarter, do you see additional M&A opportunities? And would it be within footprint or could you go to newer markets, as well?

Well, in terms of the M&A, we have always taken position and said, again, at East West, we have a pretty strong organic growth engine. So we can do without M&A for years and still be able to grow faster than many of our peers. So from an M&A perspective, we have always been under the principle that while, the deal would have to be very attractive from a financial point of view; and also, the deal will have to be very attractive from a strategic point of view. So we have the capacity. We have the human resources that can take on another acquisition anytime, any day. However, we would not do acquisition for acquisition's sake. And at this point, I would say that, just like I said in the last few years, the likelihood of acquisition is relatively low but while sometimes, while I'm saying that it's highly unlikely that we'll do an acquisition, suddenly, we end up doing one. But this all depends on -- in a very opportunistic way, we will always be looking out for good deals. And if we find one, we jump into it. But if we don't, we can continue to focus on what we do best, which is we are one of the best in terms of helping U.S.-China business, to do business together. And then in between, we are providing banking services. And so those are the kinds of things that we will continue to make sure that will improve our platform capacity from our product mix and so forth. And then I think that there's still going to be plenty of room for us to grow.

And our next question comes from Dave Rochester of Deutsche Bank.

This is actually Timur Braziler filling in for Dave. First question's on NIM guidance for this year. It's a pretty big drop from the fourth Q NIM of 3.41. I was just wondering if you think the pressure is going to be more front-end loaded or are you expecting a progression throughout the year?

Yes, this is Irene. I think it'll be throughout the year. The guidance that we did give out is for the entire year of 2014, not necessarily in the first quarter. But when we talk about the drivers for the NIM, I'd say it's a couple of things. One, certainly when we look at 2014, we do not expect the same amount of accretion income that we had even in 2013, which was also a lot less than 2012. And in fact, when we look at the fourth quarter as well, one thing that is positive is the -- if you look at the impact of all the accounting income related to loss share SOP accounting, it nets to about 0. That, as you may recall, was about a negative $2 million in the third quarter. So we're at the point right now when the earnings really are poor earnings. Although it's still a little bit confusing as there's a growth in the income statement. But next year, when you look at kind of the drivers, certainly, with our strategy to not take on too much interest-rate risk on the loan portfolio and investment portfolio and with the reduction in the accrete-able income, those are related drivers.

Okay, that's helpful. So it's fair to say that year-to-year comparison in the fourth quarter '14, we could likely see a NIM that's below the 3.40 or below the guided range, is that correct?

Yes.

Okay. Okay, great. And then, just how were you thinking about your core loan yields, actually covered portfolio? Should it be pretty stable from here going forward? It seems like they've done pretty well this quarter and still have their resi product coming out around 5% That should help support it, is that fair?

The yield will continue to drip down a little bit. I want to just clarify, this quarter, we did have a little bit of interest recovery on the non-covered portfolio. That probably added maybe 2 basis points to the margin. So that's something that's a little bit not recurring. Certainly, hopefully, we hope actually, that does recur in the future, but it's not necessarily something that we factor into our modeling. But over the course of 2014 and really, until short-term rates go up, you will see that continue to drift downward in the yield of the non-covered loans.

Okay, great. And regarding this jump in the securities yields, what are you guys saying there? Is that an extension of the duration a little bit? And should we expect to see any more upside to the yield in the near term?

There has been a slight extension of the duration.

Okay. Okay, great. And then just kind of a modeling question. When looking at the fee income line excluding the loan sales, which I know can be a little bit lumpy, you had a bump up in other income and some other line items. Is there any way you can give some color on where you see that trending in 1Q?

Yes. I'd say I'll use a run rate of about $30 million.

Okay, $30 million. Okay, and then lastly, now that you've closed the MetroCorp deal, I'm just wondering if you could frame what you're thinking about the potential opportunity to grow in Texas on the loan and deposit side. And what portion of your '14 guidance on the loan side factors in Texas growth?

Well, in terms of 2014, we've been basically doing in a kind of two-step approach. The first thing first is that we wanted to make sure that we do a good job in system integration. So as you know, Metro Bank has 2 subsidiary bank, 1 in Texas, the other one in California. So actually, they have 2 system, 2 separate systems. We need to do 2 separate system conversion. So in that regard, we are scheduled to have the system conversion completed in May for one, and then June for the other one. So we're going to get that out of the way. In the meantime, East West offer many more different products than what currently MetroBank offer. So we wanted to spend some time to help train the Metro staff to learn and understand our products and follow through our policy procedures and things like that. And we're not going to try to rush too much because again, I think that we can afford to do the right thing, make sure they set up properly. And then we've got plenty of years, I mean, we have the next decade or 2 to help them grow the balance sheet and so forth. But the first 6 months or so, we really wanted to help them to focus on system conversion. There are going to be a few consolidation of the branches that we need to work with the staff to make sure how we move the branch staff from one location to another and learning our products, well, it's going to take some time. And then in any type of potential merger, there's always going to be a small degree of deposits and loans runoff. So we expect that probably the second half of the year, with new hires that we are going to -- we will try to bring in to help supplement the C&I growth in Texas, and also, with the existing Metro lenders and business development folks, we're going to start growing in the second half. And some growth there and then with also some runoff in the beginning of the year because of some consolidation and so forth, net net, it's all probably going to wash out to, like coming out even for the year. And that's why we can certainly project it, that with Metro in 2014, we're just going to keep it like a 0 growth. And then going to 2015, then we have very ambitious plan for the Texas region to do a lot more. And then also you have a business model that resemble the East West business model.

And our next question comes from Mr. Herman Chan, Wells Fargo Securities.

Just another follow-up on the question on MetroBank. You mentioned 2015, you had expectations for a strong growth there and transforming that franchise to mirror that of East West currently. Should we expect similar growth trajectory from Metro relative to the overall franchise at East West in 2015?

I didn't catch the question. Can you repeat the question? I mean, the last sentence, I missed.

Sure. I just want to know, in 2015, if the Metro operations should be growing as quickly as the overall bank outside of Texas?

Oh absolutely, absolutely. Yes, that's what we expect. Every...

As a percentage compared to their base.

Because, I mean, Texas is a very strong market. And also, when it comes to the U.S.-China opportunity, obviously, if you look at the opportunities like California and New York, no doubt it's very, very strong. However, if you look at Texas, it may not have as much a Chinese business investing in that region. The reality is that, there's also not that many banks out there competing against us, so in this field. So we think that for us, once we get all the merger conversion and then all the administrative things taken care of, our staff in that region can really do some great work in terms of helping the companies in Texas, connecting with potential equity investor from China, or maybe exporting their goods to China and then also vice versa.

Got you. And in terms of the high-end process of adding new commercially focused relationship bankers, when do you expect that process to occur?

We did -- actually, we're going to start now. In fact, we have already hired like a person in Dallas. And then we will continue to look into opportunities -- now, the only thing is that, I -- we're not doing it like in a very intense focused manner. Because on one hand, our senior leaders in that region also have to put their priority into system conversion. But we are letting people know that we are interested to hire people who have C&I experience. People who have a strong international background. People who have any particular industry expertise that is attractive to us, strategic direction in the future. And we're looking for all kinds of commercial banking talent that we can bring on. So if we get lucky, maybe in the next few months, we will end up bringing in like a big group of people that quick. But since we're not sort of like going through an intense -- since we're putting our primary focus on system conversion and I would say that at this moment right now, I think that we're just going to continue on a part-time basis on a look out for the next 6 months and then after, the system conversion's done, then we're going to get more intense in terms of finding the right people.

Understood. And if I can squeeze one more in here. I wanted to revisit the expectations on residential loan growth in the year. As the QM rules kick in now, does the new regulation have any impact on your expectations for a slowdown in resi mortgages?

There may be some. Like obviously, we are following all the rules of the new non-QM. But I think that given that we do not want to grow the portfolio a lot more to increase the percentage of concentration of single-family residential loans, that would be like one of the main driver. Well, we also don't think that we will grow that portfolio significantly in 2014.

And the next question comes from Joe Morford of RBC Capital Markets.

I just wanted to circle back on the strong commercial loan growth on the quarter and just wondered if you could talk a bit more about the drivers there, how much generally came from, say, the international trade finance side versus some of the niche portfolios that you've been pursuing?

Yes, you're right, you covered them all. Mainly, I would say that international trade finance is the -- as the primary driver. And then from some of the other niche -- industry niches, like, for example, in our entertainment, that we actually also have some nice gain. And then from the technology life science area, we have a few good loans that we booked. And I would say that pretty much across-the-board, some manufacturing small, middle-market business. But clearly, I mean, I would say that a primary international trade finance and then, with a good mix, very diverse coverage of these strategic industries that East West made a commitment to invest a few years ago and we are getting results from all categories. And that, actually, is the reason why we feel relatively confident that in 2014, we should have the ability to carry the momentum to continue grow our C&I portfolio. Because few years ago, we made a very strong commitment to invest in these various industries with expertise that are relevant to our mission of being the bridge between the east and the west and being the bridge for U.S. and China business. And I think that to a certain degree, slowly, gradually, it is paying off. And we hope that, that momentum will continue and allow us to continue to not only be able to bring additional new hires, but the fact is, now, we have more and more of our homegrown professionals that we brought in on the entry-level. But a few years of more intense and on-the-job training, they also can step up on their own, to also help increase the organic growth. And then with all of that, I think that we are expecting -- this direction will help us to grow our loan portfolio for the next 10 years.

Also, the last few years, while traditionally, most of our trade finance customers are importers, we have been very successful in growing our exporters customers and many of them are very sizable companies. So we are very pleased with the progress in like increasing our exporters, customers, in addition to the importers.

Okay. I guess along those lines too, can you just update us on the China portfolio, what's the current size of that, and any growth you may have seen this quarter?

China portfolio remains small. I think that it's by design. We do not want it to, as we stated before, we do not want to aggressively get into the domestic market. We don't think that -- while China's growing nicely in terms of GDP, despite the fact that it's slowing down, it's still stay at a 7.7% and substantially higher than most nations around the world. But in reality, the domestic market can be somewhat volatile. And also, we're not -- our capital, our capital level is not at the size that we should sort of get into China in a much deeper way from a domestic market point of view. So Day 1, when we took over the United Commercial Bank through this FDIC acquisition, we have made a decision that our East West bank's involvement with the U.S.-China business will predominantly -- in this cross-border lending. And on top of that, we will be advising companies from China in terms of investing in U.S., we'll be helping U.S. companies then in terms of open their operations in China, and so forth. And we're going to continue to stay in that circle. And there's plenty of opportunity for us now. Because of our strategic position, many of the loans that we booked that involve Chinese company and many of the business that we advised from U.S. investing in China and so forth or have relationship in China or have a strong operation in China are U.S. companies. And we ended up booking most of these loans and deposit in the United States. So we see that trend continue. And we'll continue to offer value proposition to our clients in U.S. that have substantial business operation in China, but we are not doing banking relationship or taking their deposits or…

Our next question is from Jennifer Demba of SunTrust Robinson Humphrey.

Just a follow-up question on the Las Vegas branch. I think, Dominic, you said you already have some commercial relationships in that market. Was wondering if you could quantify that and kind of frame what you think the opportunity is there for loan growth over the next few years.

Yes. In fact, throughout the years, I would say that for the last 15 years or so, we have clients, I mean long-term East West Bank clients, who also have expanded their business into the Nevada region. In fact, many of them have commercial real estate, investors or commercial real estate developers and so forth. So in addition of investing in real estate in California, they also look at states like maybe Arizona and Nevada. In fact, from our perspective there are more people interested in Nevada instead of Arizona. So as they continue to move beyond the California region, East West Bank followed them. And that we have made loans in Nevada and also in the past, with our long-time existing customers. And some of these customers now also get into commercial business, other -- the C&I type of business that really fit into our future growth direction. So sort of like following the existing customers. And through them, they also introduced their friends in Las Vegas and so helping us grow. So we actually, for many years now, have clients in Las Vegas, we just didn't have a branch there to take on their deposits. So we've been thinking about opening a branch in Vegas, actually, for the last 2 or 3 years. We've just been so busy doing something else, we haven't really gotten around to it. And finally, I think that we decided it's about time. Now the other thing that I also wanted to mention is that when we did a lot of, let's say, commercial real estate loans with these sort of like East West clients that who happen to have business in Vegas. Frankly, most of their deposits -- they have a house with us in California anyway. So it wasn't that compelling…

And our next question comes from Lana Chan of BMO Capital Markets.

So on the MetroCorp deal, I think you said before, the estimate is expected to be $0.02 accretive to earnings this year which, correct me if I'm wrong, I think that's a little bit less than what you originally estimated when you announced the deal. Is that right? And what's changed?

No, the $0.02 is after that $0.05 1x charge-off. So the growth is $0.07.

Okay. And then if I look at the noninterest expenses, which came in higher than expected this quarter -- a couple of reasons for that, obviously. But with the guidance for 2014, could you sort of help us frame what the sort of trajectory would be? I mean, what's a good base to use for the first quarter? Because it seems like there's a couple of puts and takes there on the expense side.

Are you talking about the NII for the...

Noninterest expense.

Oh, that expense. About $100 million? It will be a lot more than that, right, because of the Metro.

A lot of the specifics of it, if you like, I can go over with you maybe after the call. But I'd say, with the different line items, where there was an increase from the prior quarters, certainly, the amortization of affordable housing tax, that's something that should go back to when we normalize run rate. We have some more tax credit investments that we purchase. So maybe a little bit higher than what we had in the third quarter, but certainly nowhere near the 14 million or so in the fourth quarter. Additionally, from a comp line item, I think there were really 2 areas when we have hired additional staff, so payroll is higher. And then also, we made a little bit refinement to our bonus accrual. So if you look at the increase in comp, those are about 50-50 for those 2 categories. On the legal side, I'd say legal expense was elevated during the quarter. There were some settlements and resolution of litigation. Additionally, also ongoing costs for the litigation as well. If you look at the kind of run rate in the fourth quarter, I'd say about $7 million or so relates to litigation that will no longer occur. So that's something that you can use for your modeling.

And our next question comes from John Pancari of Evercore.

So that -- just back to that answer you just gave on the compensation. So the payroll piece, the 50% of it that's attributable to the higher payroll, then that should remain in the run rate. But the incentive comp true up, the other half of the increase should come out next quarter, correct?

That seems reasonable.

Okay, alright. And then just on the outlook for the reserve, can you just update us on what your thoughts are for a good assumption for the long term, loan loss reserve level, given your growth expectations? I believe you might have implied in the past that 150 basis points will be a good trajectory, but just wanted to see if that's still what your thinking is.

I think so. But roughly, about 1.5%. But it will change based upon the mix of the loans. But I would say for long term right now, we think 1.5% is a good number.

Okay, alright. And then lastly on -- actually back to the expense base, just -- the increase in the other expenses, was that at all related to the tax credits, or was that all purely in the amortization line?

Could you repeat that one more time? The [indiscernible]?

What was the driver of the increase in the other expenses?

Oh, the other expenses increased a little bit in the fourth quarter, we had increased our charitable contributions. So that...

Okay, alright. So that's also an area that could see a decline going into the first quarter.

That could be.

And our next question comes from Aaron Deer of Sandler O'Neill + Partners. Aaron James Deer - Sandler O'Neill + Partners, L.P., Research Division: If you've answered this question already, forgive me. The commercial real estate non-accruals ticked up again this quarter. I was wondering if you could talk about what's kind of behind that trend, if there's a specific borrower or property type?

Yes. We had a couple of loans where the loans have gone more than 90 days past due. When we look at them, given our historic kind of low LTV, we don't think necessarily there'll be any credit loss content from that and there were no charge-offs. But certainly, from time to time, that does happen. It's the borrowers having their own problems, but we feel that the value is there that it will not, like, result in any charge-off or losses.

And our next question comes from Matthew Clark of Credit Suisse. Matthew T. Clark - Crédit Suisse AG, Research Division: I just want to clarify the core fee question. I think -- I'm not sure if your answer was for other income on an annual basis or if it was for the core fees actually changing the indemnification asset. I think you had mentioned $30 million. Can you just clarify that?

It's a core fee per quarter, it's $30 million.

[indiscernible] we break out the fee income, so in the fourth quarter, that was $33.4 million. That's what we're comparing that against, the $30 million. Matthew T. Clark - Crédit Suisse AG, Research Division: Okay. And does that $30 million incorporate MCBI?

It does not. Matthew T. Clark - Crédit Suisse AG, Research Division: Okay. And then on the expenses?

I would say MCBI, their fee income is pretty low, so I don't think that's going to be a big difference, one way or another, quite candidly. Matthew T. Clark - Crédit Suisse AG, Research Division: Yes. And on expenses, the guidance of $430 million to $440 million includes the $7 million of merger charges. But also, I would assume, it would include Metro too. I just want to make sure?

Yes.

[Operator Instructions] At this time, I see no other questions in the queue. Therefore, this concludes our question-and-answer session. I would like to turn the conference back over to Mr. Dominic Ng for any closing remarks. Mr. Ng?

Well, thank you, all, for joining us in the call today and I look forward to speaking with you again in April. Bye-bye.

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