Preferred Bank Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
April 19, 2023

There are 11 speakers on the call.

Operator

Good day, and welcome to the Preferred Bank First Quarter 2023 Earnings Conference Call. All participants will be in a listen only mode for the duration of the call. After today's presentation, there will be an opportunity to ask questions. Please do note that this event is being recorded today. I would now like to turn the conference over to Larry Clark of Financial Profiles.

Operator

Please go ahead, sir.

Speaker 1

Hello, everyone, and thank you for joining us To discuss Preferred Bank's financial results for the Q1 ended March 31, 2023. With me today from management are Chairman and CEO, Lee Yu President and Chief Operating Officer, Wellington Chen Chief Financial Officer, Edward Cieca Chief Credit Officer, Nick Pye And Deputy Chief Operating Officer, Johnny Hsu. Management will provide a brief summary of the results, and then we will open up the call to your questions. During the course of this conference call, statements made by management may include forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward looking statements are based upon specific assumptions that may or may not prove correct.

Speaker 1

Forward looking statements are also subject to known and unknown risks, uncertainties and other factors relating to Preferred Bank's operations and business environment, all of which are difficult to predict and many of which are beyond the control of For a detailed description of these risks and uncertainties, please refer to the SEC required documents the bank files with the FDIC. If any of these uncertainties materialize or any of these assumptions prove incorrect, Preferred Bank's results could differ materially from its At this time, I'd like to turn the call over to Mr. Lee Yu. Please go ahead.

Speaker 2

Thank you. Good morning. I'm very pleased to report the 1st quarter net income of $38,100,000 All $2.61 a share. We are satisfied with the results that was achieved during this very stressful quarter. The events of March Truly humbled all of us in the banking industry.

Speaker 2

Personally, I'm very sad to see 2 good sized banks went away in just a matter of hours, especially when Both these brands have certain expertise in certain sizable industries and they have been servicing these industry faithfully, diligently in the past 20 to 30 years only to see Those customers are the first one to run, okay? In any event, the whole matter taught us a lot. And personally, I have the following observations. The textbook definition of transactional accounts being a core Deposits need to be revisited. True, they are called deposits, but only during the good time.

Speaker 2

But in stressed environment, they seem to be the first to run. I'm so very pleased with our PCD portfolio, not because We know exactly how much it costs us and how much how long we can have them. But During this difficult period, we have not seen one T3D The golden rule of not borrowing short and land But I want to tell you to do this, it is really a difficult process. Throughout the years, I don't know how many times we have to face the disappointment of our officers knowing their loans We'll be taking out our loss to the low fixed rate mortgages. But now as we look back, We now must respect The regulator or government risk even more as a banker.

Speaker 2

If you recall in 2021, when we are all convinced, The country's inflation was transitory. To be practical, How many of us, you and us, how many of us is preparing for a near 500 basis point interest rate increase in 2022. And now as managers Of a public traded bank, we will face each quarter like now with earnings Beat or miss. I can't help but think sometimes the things That may be good for a short term fix may or may not probably may not be necessarily good I wish all of our investing public will Having expressed my personal opinion, I now must report to you on deposit situation. During the 3 days in March, March 9, March 11, March 12 and March 13, okay, the 3 working days.

Speaker 2

Preferred Bank also experienced Deposits outflow. The good news is we have a total of less than 10 accounts Pull the money out. The bad news is that 3 of them is very good sized. For the quarter, our deposit reduced or decreased by 2.7%. As of yesterday evening, which is April 18, we have Our deposits increased 1% back to increase 1%.

Speaker 2

We're working very hard to gain back The deposits we lost because most of them Having a borrowing relationship with us. But I do want to tell you that During the process, we have received many, many heartwarming phone calls from From our deposit to former customers telling us they have faith in banking industry, Telling us they are facing us, telling us that we have a good balance sheet and we have good capital and especially we have good With their confidence, with their blessing and I also believe it's our shareholders' wish, We will continue to maintain a flexible balance sheet. We will continue to maintain Good liquidity. We continue to control our overhead like we always do, And we will continue to operate Preferred Bank with a simple business model. Thank you very much.

Speaker 2

I'm ready for your questions.

Operator

We will now begin the question and answer session. And our first question here will come from Matthew Clark with Piper Sandler. Please go ahead.

Speaker 3

Hey, good morning.

Speaker 4

Good morning.

Speaker 3

First one for me, just on the available liquidity, the cash and Now the borrowings that are available of $1,500,000,000 relative to the uninsured amount of deposits, I think roughly Half of your deposits are about 2 point just under $2,700,000,000 I guess what's the plan or what's the kind of the targeted coverage you're looking to get to? Do you are you looking at it sounds like you're looking to pledge more loans, but is there something to be done on the security side too, knowing it's only about 6% of assets to be able to pledge those.

Speaker 2

Thank you. Thank you very much. It is a two way approach we're doing it. Scheduled to be converted to, I mean, what is that?

Speaker 5

Enhanced insurance coverage, Paul.

Speaker 2

Yes, I mean, ICS, okay, and the letter Okay. We have scheduled for the Q2 now is a little bit right around $600,000,000 Customers will be converting them to SEDAR and converting them to ICS. That should reduce so called uninsured deposits number to Right around about 35% to 36%, okay, assuming the same amount of total deposits. And in the meantime, we have roughly estimated about $600,000,000 additional borrowing capacity from Fed, a Federal Home Loan Bank as of now, okay. So that will also bring up our so called the total capacity of liquidity To $2,700,000,000 or $2,500,000,000 2.6 percent.

Speaker 2

The 2 number is will be very close. I don't know whether there's any importance at the bank. You have to cover every uninsured dollar With so called your off balance sheet liquidity, but I do think the most important things Yes, you have to have a good operation to earn your customers' trust. But we will be getting on June 30, two numbers will be converged to each other.

Speaker 3

Okay, great. And then just kind of a related question, in terms of your the incremental kind of balance sheet composition going forward, Is this higher cash level likely to kind of stick around? I know it's Above average to begin with, but I guess what I'm also trying to get at is how do you think borrowings were up in the quarter? Is that Do we kind of do borrowings continue to increase from here with some potential deposit pressure or And I guess it somewhat also depends on your loan growth outlook. I mean balances were slightly lower.

Speaker 3

So I'm just trying to get a sense for the moving parts of the balance sheet going forward.

Speaker 2

Based on what I understand from the industry today, okay, And based on whatever I'm reading, especially from you guys and all the other information, I see that the country's deposit situation is probably more of a concern to everybody As compared to the loan area, okay. True, loan demand is down as everybody has reported Every paper, every service is recorded. But I think the uncertainty of deposit will last And we at Preferred Bank will be closely watching the trend in the second quarter, Okay. We're now in no hurry in putting up whole lot of loans just to earn us extra dollars, okay, For I mean, as compared to the adversity maintain a good liquidity and safety. And frankly, let me be a little bit funny that I think we're making enough money

Speaker 4

Clearly.

Speaker 3

Yes, no doubt. And then just on the cost of deposits or spot rate on deposits at the end of March, I don't know if you have that, Ed, or even the monthly Average for the month of March on deposit costs and as well as the average name in the month of March?

Speaker 4

The net interest margin in March was 4.67, cost of deposits was 2.63.

Speaker 3

Okay, great. And then last one for me, just some cautionary commentary on office Commercial real estate in the press release, not a surprise since everybody's talking about it. But can you size up your Exposure there and also give us some additional details and characteristics, owner versus non owner, Average loan size, what's downtown, kind of considered metro downtown or more at risk and how LTVs are At origination versus maybe some new appraisals you're getting in, rent rolls, what your plans are for Borrowers that renew, that want less space, I could go on, but any granularity there would be helpful.

Speaker 2

Okay. We have roughly 10% of total loan portfolio in office property Office property loans, okay? But of this amount, Roughly $8,000,000 is in the downtown area. We have faithfully have been trying to avoid, especially Los Angeles, downtown area for the past 20 years. And most of our Office properties in the urban, suburban area, okay, that in California, especially in Los Angeles, it's a big, Really suburban urban town, okay?

Speaker 2

So there's a little communities everywhere and basically the property there It's a lot more stable than the downtown area. And what we have the $8,000,000 downtown area It's really in San Francisco that was leased and the long term lease to, I think, one of the famous university over there. And it is very, very, how should I say, underwritten quite well. It's Loan to loan to value ratio probably less than 40% in the event. But I will have Nick to bring you up to date with some of our underwriting

Speaker 6

Yes. Thank you, Mr. Yu. Matthew, our entire portfolio at this time, our asset quality is pretty stable up to date and also resilient. The key thing that we used to underwrite our loans, a little bit different as other banks, a little bit different as those regional banks, We request for 2 major areas to be considered, okay?

Speaker 6

The first is the location. Just like Mr. Yu mentioned that we avoid Metro LA Downtown area and we try to do a more Office loans near the residential needs or some other urban area. And the other thing is that we need to have Strong sponsorship behind it. That's always our credit underwriting, major two areas other than the normal underwriting process.

Speaker 6

So with Aldo's strong sponsorship behind it, so even though the property has a little bit weakening the cash However, their global cash flow, their liquidity is very strong at this time. So we do not see any immediate threat to our office product or some other CRU side.

Speaker 2

To further on that, we don't have any non Classified or even 30 to 89 days, I mean, loans in the office Okay. Thank you.

Operator

And our next question will come from Andrew Terrell with Stephens. Please go ahead.

Speaker 7

Hey, good morning.

Speaker 2

Hi.

Speaker 7

Maybe just following up on the last point, I think it's pretty reassuring to hear that only $8,000,000 or so that Would be considered true kind of downtown type office. I guess, so 10% of total loans are office properties. Can you Size up maybe the chunkiness within that like what's the size of the largest 1, 2 or 3 type loans in the office category?

Speaker 2

Well, the largest 2 or 3 average about $40,000,000 okay, 3 of them. Well, I mean, And our average total average loan is $4,100,000 in our office properties, Jay, with average LTV of See 1% at the entry place. Many of them is coming in, I mean, in the early days. Each one is underwritten with a complete underwriting process individually, especially those larger loans. The office building that is one of the office building in the $50,000,000 range is in one of the hottest area In Los Angeles' call, the Discover City, which we have the creative and entertainment combination, The first floor are all upscale, I mean, not upscale, the good restaurants that is bustling business.

Speaker 2

The second and third floor is rented out to A neocritic type of company was LC support from a major bank. So that's one. And also that we have a very rational, very reasonable sponsorship behind it. The next largest one is in is one of the buildings called Kareem Town, where the owner of that has Rearrange his office building, make that office building near fully occupied and underwritten. The owner of the hospital building is very, very, very substantial, very, very successful.

Speaker 2

And his credit in Los Angeles is top notch. Okay. Its cash flow is huge, okay. So these are the top 2 as you have Okay. And I might as well explain the third one is in a very ritzy area of Newport Beach, Well, a group of people bought office building and my idea that group of people have dealt with us for many, many, many years with many projects there And a substantial group of people bought the office building and vacated everything and is going to demolish it and Convert into apartments, okay.

Speaker 2

It is in the process of getting doing that. So it's right now, it's really empty. But because nature when they come into us, it's office building, we'll put in the office building category. And also the 4th one is in the Okay. So these are the larger ones, but predominantly, our building majority of our loan is smaller ones, let's say in San Francisco downtown, San Francisco area of the Flushing and Brooklyn, if you know these area, the lifestyle and the things in those area are all small Commercial office unit sometime has retail downstairs and upstairs.

Speaker 2

But if you know them, the real estate over there It's really good. It's not like the Magnum.

Speaker 7

Yes. Okay. Very good. I really appreciate all the extra color there. I want to go back to the deposit flows for the quarter.

Speaker 7

I was wondering if anything specifically was or I guess if you could quantify maybe the drop in the interest bearing demand deposits, I think down $540,000,000 or so quarter on quarter. Was any of that a move to time deposits or were those just excess out of the bank? I'm just trying to get a sense of How much was more kind of geography across the deposit segments versus maybe relationships loss for those that left the bank?

Speaker 2

Ed, you want to answer the first? Okay. Maybe I'll add into it.

Speaker 4

Yes. From what we know and what we've looked at, Andrew, it's not so much relationships as it is pairing down balances. And to Mr. Yoo's point earlier, a lot of those were really entered in just a very few accounts. These depositors or clients that we call them have some form of Fiduciary obligations with respect to their funds.

Speaker 4

And so in what they felt was their best interest, they moved them out Following what happened with Signature in Silicon Valley, however, we have been in constant contact with all of them and are working to either Get them into a reciprocal deposit program to bring them back or going through Lee, with their senior leadership and our senior leadership and going over what we're doing as a bank to mitigate all the risks That have been brought forth through these 2 bank failures. And so we feel very good about that process and what we're going through. And also to Mr. Yu's point, a number of them have Credit relationships with us. And so we fully expect to have a lot of that back.

Speaker 7

Yes. Okay. Very good. And to the point, I think you it was mentioned at the start of the call, deposits quarter to date up 1%. I guess, Within that, should we expect that the bulk of that is just driven is driven by time deposits?

Speaker 7

And what I was specifically getting at is the NIB flows Since quarter end, does it feel like there's been any kind of deceleration in the drawdown of NIBs?

Speaker 4

Most definitely since the end of the quarter, Andrew, that's a good question. What we've seen since the end of the quarter is really more of a business as usual, I would say. And So that's why we see the tick up of 1% from the end of the quarter. And obviously, I think we'll have much better news to report at June 30 with Johnny,

Speaker 2

I want to tell you want to add to that? I mean as far as nature deposits increase, I mean the flow In the first half, I mean of the quarter, first half of the month.

Operator

Yes, I

Speaker 5

think the nature of deposit inflows is just Ed said, this is as usual for a lot of our clients,

Speaker 8

not and we're working on regaining back some of

Speaker 5

the positive loss like Ed has said, but this is as usual for clients coming in.

Speaker 7

Okay, very good. Well, I appreciate you guys taking the questions today. Thanks.

Operator

And our next question will come from Gary Tenner with D. A. Davidson. Please go ahead.

Speaker 8

Hi, there. This is Clark Wright on for Gary Tenner. Quickly, if I could, you previously indicated you had asked regulators for approval with regard to $150,000,000 stock buyback. Could you provide any color on how you are thinking about capital in the buyback right now, given your valuation near tangible book value and the potential for getting that buyback approved by regulators?

Speaker 2

Let me first of all, I mean, describe the process. In order to get the regulators approval, they require us to share We will provide a bank, okay? That's the state of California with state bank, okay? So we have completed Our proxy statement, which is just being released and then asking our shareholders approval for $150,000,000 Buyback authorization. And from that point of time, we'll go our Board will decide When?

Speaker 2

How much amount? It will be the buyback happening. And when they decided they want to do that, We will ask the Board regularly to approve. Usually, it takes about the DPM takes about 2 weeks to in the past 2 months to prove it, okay. So in any event, that's a process.

Speaker 2

So we are getting ourselves ready to do that. But in the meantime, that's from the legality aspect. From the operation aspect is that I must tell you that In the last phone call, I'm fully confident that we're going to buy back the stock, okay, because it's so cheap in our opinion. You must know we're selling in 5.2x of 2023 earnings, okay? That's obviously, I mean, Advantage for us to buy back, we will.

Speaker 2

But right now, we have a bigger picture Of the liquidity issue and the so called unstableness in the public's Vision about the banks. So most likely, in Q2, We will be looking very carefully to make sure that the liquidity issue is down. We don't need any additional Long term, that will happen. Obviously, one thing will happen if our sapphire is doubled, Maybe we don't do that, okay? We hope that's the case.

Speaker 2

But most like it looks like with our trajectory of our Stock value is concerned, it will be very beneficial to our shareholders.

Speaker 8

Got it. Thank you for that. And then just in terms of loan growth for the full year, how are you thinking about it just given the economic uncertainty and Q1 contraction balances?

Speaker 2

Well, loan growth has a 3-dimensional situation. Again, I cannot give you any guidance other than that because I truly do not know. On the micro side, you have a reduced loan demand, Especially right after this meltdown, I mean, credit crisis, so called crisis, It changed a lot of people's investment priorities. You see the things slow down, Okay. And although the payoff still continued and by those familiar name, you wonder they still want to do that, but they're still paying us off with a 5% 10 year mortgage or 5 year mortgage.

Speaker 2

Maybe it's because they can't I mean, they committed a time ago. But again, that's something as we stand as a Corporate strategy, we won't match that, okay? That's a micro situation. So we really don't know after May, When the Federal Reserve has indicating if they are holding rates stable versus what, whether that We'll spur up the investment, I mean, activity of our customers, okay? And so that's one thing in the security.

Speaker 2

The macro side is, Again, under the current liquidity environment, will we be able to get Substantially more deposit like we used to do, okay? The question is also how much you have to pay for Right now, everybody is competing for these deposits uselessly, okay? So these are the things we're facing. If you ask me in May, I will tell you our vision better. Right now, I have no

Speaker 8

Sorry about that. You're saying?

Speaker 2

No, I'm sorry about that. I can't answer any questions.

Speaker 8

No worries. Understood. Lastly, SBA production and demand trends, it looks like you had a gain on sale of SBA and resumed selling. Maybe if you could just point to some of the demand trends are going on and as well as the gain on sale premiums.

Speaker 2

Okay. Wanda, do you want to answer the SBA?

Speaker 5

Well, SBA, definitely, again, as we mentioned earlier Yes. This is a new initiative. We are trending very carefully methodically and especially during the current situation. However, we are moving forward, we do have a pretty solid SBA pipeline and we think that So small business and it's something that we will continue to move forward.

Speaker 8

Got it. Thank you.

Operator

And our next question will come from David Feaster with Raymond James. Please go ahead.

Speaker 9

Hey, good morning, everybody.

Speaker 5

Good morning.

Speaker 2

Good morning.

Speaker 9

Maybe just following up on I know you don't the loan question is hard to answer, but if you just ask it a little bit different way, I mean, you've done a phenomenal job Actually pricing loans and getting paid for the risk that you're taking. And I get you not having as much of Appetite for credit here, but where and demand, especially given the structure and the standards and pricing that you have, But where are you still seeing good risk adjusted returns? What segments are still able to make projects pencil? And Is it a market or geography? I'm just curious, where are you still seeing good opportunities at this point?

Speaker 2

Well, what we are seeing right now is really not so called categorically type of situation. We're seeing the individuals. We still have customers that they have individual customers that they have projects they want to continue to do, Okay. Right now, it seems to be by the way, I want to tell you the C and I side, right now, we don't see C and I being the big growth factor As of right now because the interest rate situation, okay. But on real estate side, we've seen there are still projects going on, So these are the individual cases.

Speaker 2

They will be subject to Much intense individual underwriting of the loan. So these are the risk return Unless there's a good return, we won't do it. We'd rather just keep a good liquidity in the situation right now. Now long term, as you all know, there's so many $1,000,000,000 or $1,000,000,000 So called the CMBS for offs from the current maturities, okay? It is the report of everyone, including you, that many of them will be either re margined For closed, whatever rearranged, okay?

Speaker 2

And traditionally, if PES is any experienced future, once every few years, we face situation that There's a lot of value changes and these things become valuable. We're ready to pick up few of the re margin items.

Speaker 9

That makes sense. And so some of those CRE projects that you're talking about, how is pricing in those types of deals? Where are you able to price those types of things at right now?

Speaker 2

It's basically time based, time based lenders. It usually is Prime plus I mean, we go up and down from prime plus half. That's what we do now.

Speaker 9

Okay. And then you guys have been one of the most rate sensitive banks around. You guys have done a phenomenal job. And Ed, you and I have talked about it before. I'm just curious How do you think about managing your rate sensitivity at this point in the cycle?

Speaker 9

And potentially maybe taking some rate sensitivity off the table? And How do you think about doing that?

Speaker 2

We have several initiatives we're doing. One of them is If some of our customer wants to convert their loans into fixed rate, we will now start to consider it, but the rate has to be I mean, acceptable to us, okay. So there are a number of them has been started to try to Thinking about converting, okay, that's one of them. 2nd of them, Almost all of our floating rate loans, as you know that with the floor. Currently, the floor is averaging over 6%, Everything, there are some older loans that is in the 4% range, there are newer loans in the 7% range, right?

Speaker 2

Maybe 5% as opposed to 6%. Eric, here the number we can that serve as a so called a management tool during a rate decreasing environment. That's why I think Ed has provided you previously with a chart, Shows you during the rate reduction time, Preferred Bank's earning actually increases.

Speaker 9

That makes sense.

Speaker 2

And then

Speaker 1

I guess

Speaker 9

just last one for me. Maybe just given some potential revenue headwinds, just given the rate environment, rising deposit costs and those types of things, obviously, You guys run an incredibly efficient institution, but there are some headwinds, right? I mean, you got inflationary pressures rising at the IT costs. You guys are continuing to invest in the future with Texas expansion and SBA build out and all those types of things. I'm just curious, How you think about expenses in the near term?

Speaker 9

And any commentary on that front?

Speaker 2

We are continuously looking at opportunities, Kelly. We have previously committed to a couple of new branches and one of them is to We will get into that. But basically, the growth really have to come from The adding of the personnel, which is a continuous and laborious task We will continue to do that. As long as any opportunity for the expansion in sort of Like you do a big office or big operation type of thing. We hope that it will fall on laps.

Speaker 2

I didn't see anything right now.

Speaker 9

Okay. So we've kind of talked about like an 18.5 $20,000,000 kind of quarterly run rate, is that still pretty reasonable?

Speaker 4

Yes. Probably going to be just 20, maybe just slightly north of 20, David.

Speaker 9

Okay. Okay. All right. Thanks, everybody. Appreciate the time.

Speaker 2

Thank you.

Operator

And our next question will come from Tim Coffey with Janney. Please go ahead.

Speaker 3

Hey, Ed, I was wondering, can

Speaker 10

you kind of talk a little bit about the brokered CD market right now and how that if that has any kind of interest At this point, I mean, given the stuff that you've already done, conference call to date.

Speaker 4

I'm sorry, what's the question again, Tim, specifically on broker?

Speaker 10

Yes. Are you looking to add more? Or do you feel like you've done enough?

Speaker 4

No, no. We're not looking at more. We've done what we're going to do. And yes, to Mr. Yoo's point, we took out the FHLB advance as well.

Speaker 4

I don't envision us replacing that once that matures. But Obviously, we don't know the future, but given everything we know right now, if things progress out the way we expect to, we won't renew that one.

Speaker 10

Okay.

Speaker 9

But the broker market has

Speaker 4

actually calmed down since the crisis.

Speaker 10

Yes, it has, hasn't it? And then if we start to see kind of rates roll over back half of this year, do you think that you'll start seeing a bigger pipeline in terms of loans?

Speaker 2

Yes. Our economy is kind of a rate sensitive situation. Under lower rate situation, our production It's really jumping up.

Speaker 10

Great. Okay. All right. Those are my questions. I appreciate the time.

Speaker 10

Thank you.

Speaker 2

Thank

Operator

you. And our next question will be a follow-up from Matthew Clark with Piper Sandler. Please go ahead.

Speaker 3

Hey, thanks. Just wanted to get an update on kind of the health of your variable rate borrowers, Given that you got 80%, 85% of your loans variable rate, you've seen loan yields up 300 basis points from the lows. Just wanted to get an update on how debt service coverage ratios look and how you might be working with certain segment of those borrowers to kind of deal with The increased debt service?

Speaker 2

At present time, not that I know of, okay. We are not Having any, but I'd rather have Nick answer that.

Speaker 6

Just like Mr. Wu mentioned that we do not see anything Happening at this time. No, I don't have any information on that.

Speaker 3

Okay. Thank you. Maybe just go ahead.

Speaker 4

Matthew, I think it's that's Good question. It actually leads me to another point I'd like to bring up. But it's interesting as Mr. Yu talked about the CMBS debt clip that's coming to $1,500,000,000,000 or whatever it is over the next 3 years. With those assets repricing up, the debt repricing up, I think it's very notable That our portfolio has already gone through that as opposed to most banks portfolios are still waiting for Cliff, ours because we're 80% prime based have already seen that.

Speaker 4

And to the effect to the fact that delinquencies are almost 0, Non accruals are almost 0. I think bodes well for the fact of our credit quality and our underwriting and for the fact that this cliff That everyone talks about may not be as devastating as it originally has thought.

Speaker 3

Great. Yes, good color. And then Just last one for me, some clarification on the non interest expense run rate outlook. Ed, I think you mentioned maybe $20,000,000 slightly above $20,000,000 run rate. Assume that's the high end of the range you're anticipating this year?

Speaker 4

I would call that the middle part of the range, Matthew. As mentioned, there's inflation and wage inflation continues as well. So Okay.

Speaker 3

Do you want to reset that range or?

Speaker 4

Oh, I'm good with it.

Speaker 2

Okay.

Speaker 3

Okay. Fair enough. Thank you.

Operator

And this concludes our question and answer session today. I would like to turn the I'll turn it back over to Mr. Li Yu for any closing remarks.

Speaker 2

Thank you for your interest. But it is interesting to have everybody asking about Coming CIE crisis, especially in this office building area. But I want to recall my personal experience, seems to be last 4 years, first started was retail, okay? That big problem that we will have in the electronic I mean, merchandising and then of course pandemic And the hospitality situation comes along playing big and so on. Then probably combination or something and now obviously It's office meeting.

Speaker 2

Although it sounds funny, it looks like a flavor of the year. But in any event, Last two, we are fortunate that our underwriting Standard underwriting procedure, as we previously explained to you, how do we underwrite our hotels, underwrite our retailers, basically, We avoided the mall situation we emphasize on the neighborhood center and so on, see that everybody needs every day. So I hope this time, knock on wood, we'll be Equally as fortunate with our office portfolio. Thank you very much. And it's truly be a very, very eventful quarter and thank you

Operator

The conference has now concluded. Thank you very much for attending today's presentation. And you may now disconnect your

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