SEATTLE, July 28, 2015 (GLOBE NEWSWIRE) -- Sound Financial Bancorp, Inc. (Nasdaq:SFBC), the holding company (the "Company") for Sound Community Bank (the "Bank"), today reported net income of $1.2 million for the quarter ended June 30, 2015, or diluted earnings per share of $0.48, as compared to net income of $1.2 million, or diluted earnings per share of $0.46, for the quarter ended March 31, 2015 and $1.2 million, or diluted earnings per share of $0.47, for the quarter ended June 30, 2014.
“For the first time in the bank’s history we exceeded $500 million in total assets at quarter end,” said Laurie Stewart, President and CEO of both Sound Financial Bancorp, Inc. and Sound Community Bank, “We are also pleased with our year to date return on assets of 1.00% and our annualized loan losses of just 5 basis points. The economies in the markets we serve continue to prosper and allow us to further develop relationships with both businesses and consumers.”
Highlights for the quarter include:
- Total assets increased 2.4% to $503.4 million at June 30, 2015, from $491.7 million at March 31, 2015 and increased 7.4% from $468.9 million at June 30, 2014;
- Net loans increased 2.7% to $430.0 million at June 30, 2015, from $418.7 million at March 31, 2015 and increased 7.6% from $399.7 million at June 30, 2014;
- Deposits increased 0.6% to $418.6 million at June 30, 2015, from $416.2 million at March 31, 2015 and increased 12.0% from $373.9 million at June 30, 2014;
- The gain on the sale of loans was $390,000 for the three months ended June 30, 2015 compared to $396,000 for the three months ended March 31, 2015.
- The mortgage servicing asset increased in value by $381,000, or 13.2%, to $3.3 million at June 30, 2015, from $3.0 million at March 31, 2015 and increased in value by $278,000, or 9.3%, from $3.0 million at June 30, 2014;
Capital ratios exceeded regulatory requirements for a well-capitalized financial institution at June 30, 2015.
Operating Results
Net interest income increased $42,000, or 0.9%, to $4.7 million during the quarter ended June 30, 2015, compared to $4.7 million during the quarter ended March 31, 2015 and increased $86,000, or 1.9%, from $4.6 million during the quarter ended June 30, 2014. The change from the prior quarter was primarily a result of higher loan balances and lower average outstanding borrowings. The change from the comparable period a year ago was primarily a result of higher average loan balances and lower average outstanding borrowings partially offset by higher balances of interest-bearing deposits.
Interest expense on deposits was $661,000 for both the current and prior quarter and increased $109,000, or 19.7%, from $552,000 during the quarter ended June 30, 2014. The increase from 2014 was primarily the result of amortization of the deposit premium from deposits acquired in the third quarter of 2014. The total cost of borrowings decreased $9,000, or 32.1%, to $19,000 during the quarter ended June 30, 2015, from $28,000 during the quarter ended March 31, 2015 and decreased $25,000, or 56.8%, from $44,000 for the quarter ended June 30, 2014. This decrease is primarily due to lower average outstanding borrowings and a larger percentage of short-term borrowings compared to prior periods.
The net interest margin was 4.11% for the quarter ended June 30, 2015, compared to 4.06% for the quarter ended March 31, 2015 and 4.40% for the quarter ended June 30, 2014. The decline from the year ago period is primarily a result of lower loan yields.
The provision for loan losses in the quarter ended June 30, 2015 was $200,000, compared to $100,000 for the quarter ended March 31, 2015 and $200,000 for the quarter ended June 30, 2014. The increase from the prior quarter was primarily due to an increase to the loan portfolio during the current quarter.
Noninterest income increased $535,000, or 45.7%, to $1.7 million for the quarter ended June 30, 2015, compared to $1.2 million for the quarter ended March 31, 2015. Noninterest income increased $586,000, or 52.3%, from $1.1 for the quarter ended June 30, 2014. This increase was primarily the result of an appreciation in the market value of mortgage servicing rights for the linked quarter and an increase in the value of mortgage servicing rights and gain on sale of loans for the year ago period.
Noninterest expense increased $376,000, or 9.3%, to $4.4 million for the quarter ended June 30, 2015, compared to $4.0 million for the quarter ended March 31, 2015. The increase was primarily a result of increased operations, regulatory and occupancy expenses during the current period. Noninterest expense increased $625,000, or 16.6% for the quarter ended June 30, 2015, compared to $3.8 million for the quarter ended June 30, 2014, primarily from higher salaries and benefits, regulatory, occupancy and data processing expenses.
The efficiency ratio for the quarter ended June 30, 2015 was 68.21%, compared to 67.45% for the quarter ended March 31, 2015 and 63.60% for the quarter ended June 30, 2014. The increase in the efficiency ratio compared to the prior quarter was primarily due to higher operations, regulatory and occupancy expense, partially offset by higher noninterest income. The increase in the efficiency ratio compared to the year ago quarter was primarily due to higher salaries and benefits, operations, regulatory and occupancy expense, partially offset by higher net interest and noninterest income.
Balance Sheet Review, Capital Management and Credit Quality
The Company's total assets as of June 30, 2015 were $503.4 million, compared to $491.7 million at March 31, 2015 and $468.9 million as of June 30, 2014. The increase from the prior quarter was primarily a result of higher gross loan balances, partially offset by lower investment balances cash balances. This increase from a year ago was primarily a result of higher gross loan and cash balances which increased $30.7 million and $5.2 million, respectively, from June 30, 2014.
Investment securities available-for-sale totaled $7.9 million at June 30, 2015, compared to $8.7 million at March 31, 2015 and $14.1 million at June 30, 2014. The quarter over quarter decrease was a result of normal principal pay downs. The year over year decrease was due to normal principal paydowns and the sale of $1.7 million of non-agency mortgage-backed securities in the first quarter of 2015.
Gross loans totaled $434.6 million at June 30, 2015, compared to $423.1 million at March 31, 2015 and $403.9 million at June 30, 2014. At June 30, 2015, commercial and multifamily real estate loans accounted for 40.2% of the gross loan portfolio and residential real estate loans accounted for 30.2% of the portfolio. Home equity, manufactured, and other consumer loans accounted for 14.5% of the portfolio. Construction and land loans accounted for 10.2% of the portfolio and commercial and industrial loans accounted for the remaining 4.9% of the portfolio.
The weighted average yield on the loan portfolio was 5.01% for the quarter ended June 30, 2015, compared to 4.94% for the quarter ended March 31, 2015 and 5.17% for the quarter ended June 30, 2014.
Nonperforming assets ("NPAs"), which includes non-accrual loans, accruing loans 90 days and more delinquent, nonperforming troubled debt restructurings (“TDRs”), other real estate owned (“OREO”) and other repossessed assets decreased to $2.6 million, or 0.52% of total assets, at June 30, 2015 compared to $4.0 million, or 0.81% of total assets at March 31, 2015 and increased from $2.5 million, or 0.52% of total assets at June 30, 2014.
The following table summarizes our NPAs:
| Nonperforming Loans: | At June 30, 2015 | At March 31, 2015 | At June 30, 2014 | |||||||||||||||||||||
| (in $000s, unaudited) | Balance | % of Total | Balance | % of Total | Balance | % of Total | ||||||||||||||||||
| One- to four- family | $ | 1,294 | 49.5 | % | $ | 1,247 | 31.4 | % | $ | 934 | 38.0 | % | ||||||||||||
| Home equity loans | 503 | 19.2 | 445 | 11.2 | 401 | 16.3 | ||||||||||||||||||
| Commercial and multifamily | 249 | 9.5 | 1,621 | 40.8 | 764 | 31.0 | ||||||||||||||||||
| Construction and land | 41 | 1.6 | 82 | 2.0 | - | - | ||||||||||||||||||
| Manufactured homes | 54 | 2.1 | 80 | 2.0 | 39 | 1.6 | ||||||||||||||||||
| Other consumer | 91 | 3.5 | 2 | 0.1 | 4 | 0.2 | ||||||||||||||||||
| Total nonperforming loans | 2,232 | 85.4 | 3,477 | 87.5 | 2,142 | 87.1 | ||||||||||||||||||
| OREO and Other Repossessed Assets: | ||||||||||||||||||||||||
| One- to four- family | 325 | 12.4 | 433 | 10.9 | 232 | 9.4 | ||||||||||||||||||
| Manufactured homes | 57 | 2.2 | 66 | 1.6 | 87 | 3.5 | ||||||||||||||||||
| Total OREO and repossessed assets | 382 | 14.6 | 499 | 12.5 | 319 | 12.9 | ||||||||||||||||||
| Total nonperforming assets | $ | 2,614 | 100.0 | % | $ | 3,976 | 100.0 | % | $ | 2,461 | 100.0 | % | ||||||||||||
The following table summarizes the allowance for loan losses:
| For the Quarter Ended: | ||||||||||||
| Allowance for Loan Losses | June 30, | March 31, | June 30, | |||||||||
| (in $000s, unaudited) | 2015 | 2015 | 2014 | |||||||||
| Balance at beginning of period | $ | 4,436 | $ | 4,387 | $ | 4,176 | ||||||
| Provision for loan losses during the period | 200 | 100 | 200 | |||||||||
| Net charge-offs during the period | (64 | ) | (51 | ) | (185 | ) | ||||||
| Balance at end of period | $ | 4,572 | $ | 4,436 | $ | 4,191 | ||||||
| Allowance for loan losses to total loans | 1.05 | % | 1.05 | % | 1.04 | % | ||||||
| Allowance for loan losses to total nonperforming loans | 204.75 | % | 138.24 | % | 195.66 | % | ||||||
The allowance for loan losses to total loans remained at 1.05% for the quarter ended June 30, 2015, compared to the prior quarter and increased from 1.04% for the quarter ended June 30, 2014. Net charge-offs totaled $64,000 for the quarter ended June 30, 2015, compared to net charge-offs of $51,000 for the quarter ended March 31, 2015 and $185,000 for the quarter ended June 30, 2014.
Deposits increased to $418.6 million at June 30, 2015, compared to $416.2 million at March 31, 2015 and $373.9 million at June 30, 2014. FHLB borrowings increased to $26.3 million at June 30, 2015, compared to $18.4 million at March 31, 2015 and decreased from $39.9 million at June 30, 2014. An increase in total loans during the quarter ended June 30, 2015 led to the increase in borrowings.
Sound Financial Bancorp, Inc., a bank holding company, is the parent company of Sound Community Bank, and is headquartered in Seattle, Washington with full-service branches in Seattle, Tacoma, Mountlake Terrace, Sequim, Port Angeles and Port Ludlow. Sound Community Bank is a Fannie Mae Approved Lender and Seller/Servicer with an additional Loan Production Office in the Madison Park neighborhood of Seattle, Washington. For more information, please visit www.soundcb.com.
Forward Looking Statement Disclaimer
“Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release contains statements that are not historical or current fact and constitute forward-looking statements. In some cases, you can identify these statements by words such as "may", "might", "will", "should", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential", or "continue", the negative of these terms and other comparable terminology. Such forward-looking statements, which are based on various underlying assumptions and expectations and are subject to risks, uncertainties and other unknown factors, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business.
These statements are only predictions based on our current expectations and projections about future events, and may turn out to be wrong because of inaccurate assumptions we might make, because of the factors illustrated below or because of other important factors that we cannot foresee that could cause our actual results for 2015 and beyond to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. Unless required by law, we undertake no obligation to publicly update or revise any forward-looking statement to reflect circumstances or events after the date of this press release.
There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors which could cause actual results to differ materially, include, but are not limited to, general and local economic conditions, changes in interest rates, deposit flows, demand for mortgage, consumer and other loans, real estate values, competition, changes in accounting principles, policies or guidelines, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting our operations, pricing, products and services described in the Company’s latest annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission – which are available on our website at www.soundcb.com and on the SEC’s website at www.sec.gov.
| CONSOLIDATED INCOME STATEMENTS | Quarter Ended | Sequential Quarter % Change | Year over Year % Change | |||||||||||||||||
| (in $000s, unaudited) | June 30, 2015 | March 31, 2015 | June 30, 2014 | |||||||||||||||||
| Interest income | $ | 5,410 | $ | 5,377 | $ | 5,240 | 0.6 | % | 3.2 | % | ||||||||||
| Interest expense | 680 | 689 | 596 | (1.3 | ) | 14.1 | ||||||||||||||
| Net interest income | 4,730 | 4,688 | 4,644 | 0.9 | 1.9 | |||||||||||||||
| Provision for loan losses | 200 | 100 | 200 | 100.0 | 0.0 | |||||||||||||||
| Net interest income after provision for loan losses | 4,530 | 4,588 | 4,444 | (1.3 | ) | 1.9 | ||||||||||||||
| Noninterest income: | ||||||||||||||||||||
| Service charges and fee income | 671 | 645 | 700 | 4.0 | (4.1 | ) | ||||||||||||||
| Increase in cash surrender value of life insurance | 84 | 84 | 86 | 0.0 | (2.3 | ) | ||||||||||||||
| Mortgage servicing income | 214 | 255 | 80 | (16.1 | ) | 167.5 | ||||||||||||||
| Fair value adjustment on mortgage servicing rights | 347 | (178 | ) | 144 | (294.9 | ) | 141.0 | |||||||||||||
| Loss on sale of securities | - | (31 | ) | - | (100.0 | ) | nm | |||||||||||||
| Gain on sale of loans | 390 | 396 | 110 | (1.5 | ) | 254.5 | ||||||||||||||
| Total noninterest income | 1,706 | 1,171 | 1,120 | 45.7 | 52.3 | |||||||||||||||
| Noninterest expense: | ||||||||||||||||||||
| Salaries and benefits | 2,205 | 2,255 | 1,958 | (2.2 | ) | 12.6 | ||||||||||||||
| Operations expense | 1,053 | 903 | 1,009 | 16.6 | 4.4 | |||||||||||||||
| Data processing | 454 | 403 | 328 | 12.7 | 38.4 | |||||||||||||||
| Net loss on OREO and repossessed assets | 10 | 72 | 78 | (86.1 | ) | (87.2 | ) | |||||||||||||
| Other noninterest expense | 678 | 391 | 402 | 73.4 | 38.4 | |||||||||||||||
| Total noninterest expense | 4,400 | 4,024 | 3,775 | 9.3 | 16.6 | |||||||||||||||
| Income before provision for income taxes | 1,836 | 1,735 | 1,789 | 5.8 | 2.6 | |||||||||||||||
| Provision for income taxes | 589 | 527 | 573 | 11.8 | 2.8 | |||||||||||||||
| Net income | $ | 1,247 | $ | 1,208 | $ | 1,216 | 3.2 | % | 2.5 | % | ||||||||||
___
Nm = not meaningful
| Quarter Ended | Sequential Quarter % Change | Year over Year % Change | ||||||||||||||||||
| June 30, 2015 | March 31, 2015 | June 30, 2014 | ||||||||||||||||||
| KEY FINANCIAL RATIOS (in $000s, unaudited) | ||||||||||||||||||||
| Annualized return on average assets | 1.01 | % | 0.98 | % | 1.09 | % | 3.1 | % | (7.3 | )% | ||||||||||
| Annualized return on average equity | 9.56 | 9.31 | 10.22 | 2.7 | (6.5 | ) | ||||||||||||||
| Annualized net interest margin | 4.11 | 4.06 | 4.40 | 1.2 | (6.6 | ) | ||||||||||||||
| Annualized efficiency ratio | 68.21 | % | 67.45 | % | 63.60 | % | 1.1 | % | 7.2 | % | ||||||||||
| PER COMMON SHARE DATA | Quarter Ended | Sequential Quarter % Change | Year over Year % Change | |||||||||||||||||
| (in 000s, except per share data, unaudited) | June 30, 2015 | March 31, 2015 | June 30, 2014 | |||||||||||||||||
| Basic earnings per share | $ | 0.50 | $ | 0.48 | $ | 0.48 | 4.2 | % | 4.2 | % | ||||||||||
| Diluted earnings per share | $ | 0.48 | $ | 0.46 | $ | 0.47 | 4.3 | 2.1 | ||||||||||||
| Weighted average basic shares outstanding | 2,511 | 2,525 | 2,510 | (1.5 | ) | (0.9 | ) | |||||||||||||
| Weighted average diluted shares outstanding | 2,602 | 2,602 | 2,601 | (1.4 | ) | (1.4 | ) | |||||||||||||
| Common shares outstanding at period-end | 2,466 | 2,526 | 2,516 | (2.4 | ) | (2.0 | ) | |||||||||||||
| Book value per share | $ | 21.02 | $ | 20.48 | $ | 19.15 | 2.6 | % | 9.8 | % | ||||||||||
| CONSOLIDATED BALANCE SHEET | Sequential Quarter % Change | Year over Year % Change | ||||||||||||||||||
| (in $000's, unaudited) | June 30, 2015 | March 31, 2015 | June 30, 2014 | |||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Cash and cash equivalents | $ | 34,087 | $ | 35,223 | $ | 28,866 | (3.2 | )% | 18.1 | % | ||||||||||
| Securities available-for-sale, at fair value | 7,901 | 8,717 | 14,082 | (9.4 | ) | (43.9 | ) | |||||||||||||
| Loans held-for-sale | 3,061 | 1,426 | 1,921 | 114.7 | 59.3 | |||||||||||||||
| Total loans, gross | 434,597 | 423,100 | 403,938 | 2.7 | 7.6 | |||||||||||||||
| Allowance for loan losses | (4,572 | ) | (4,436 | ) | (4,191 | ) | 3.1 | 9.1 | ||||||||||||
| Loans, net | 430,025 | 418,664 | 399,747 | 2.7 | 7.6 | |||||||||||||||
| Accrued interest receivable | 1,494 | 1,448 | 1,391 | 3.2 | 7.4 | |||||||||||||||
| Bank-owned life insurance, net | 11,576 | 11,492 | 11,235 | 0.7 | 3.0 | |||||||||||||||
| OREO and other repossessed assets, net | 382 | 499 | 319 | (23.4 | ) | 19.7 | ||||||||||||||
| Mortgage servicing rights, at fair value | 3,271 | 2,890 | 2,993 | 13.2 | 9.3 | |||||||||||||||
| FHLB stock, at cost | 1,645 | 2,200 | 2,270 | (25.2 | ) | (27.5 | ) | |||||||||||||
| Premises and equipment, net | 5,739 | 5,604 | 2,006 | 2.4 | 186.1 | |||||||||||||||
| Other assets | 4,266 | 3,545 | 4,110 | 20.3 | 3.8 | |||||||||||||||
| Total assets | 503,447 | 491,708 | 468,940 | 2.4 | % | 7.4 | % | |||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||
| Interest-bearing deposits | 367,172 | 368,431 | 328,984 | (0.3 | )% | 11.6 | % | |||||||||||||
| Noninterest-bearing deposits | 51,457 | 47,789 | 44,928 | 7.7 | 14.5 | |||||||||||||||
| Total deposits | 418,629 | 416,220 | 373,912 | 0.6 | 12.0 | |||||||||||||||
| Accrued interest payable and other liabilities | 6,730 | 5,296 | 6,942 | 27.1 | (3.1 | ) | ||||||||||||||
| Borrowings | 26,256 | 18,417 | 39,899 | 42.6 | (34.2 | ) | ||||||||||||||
| Total liabilities | 451,615 | 439,933 | 420,753 | 2.7 | % | 7.3 | % | |||||||||||||
| Shareholders' Equity: | ||||||||||||||||||||
| Common stock | 25 | 25 | 25 | 0.0 | % | 0.0 | % | |||||||||||||
| Paid-in capital | 23,715 | 23,618 | 23,169 | 0.4 | 2.4 | |||||||||||||||
| Unearned shares – ESOP | (1,140 | ) | (1,140 | ) | (1,369 | ) | 0.0 | (16.7 | ) | |||||||||||
| Retained earnings | 29,046 | 29,107 | 26,239 | (0.2 | ) | 10.7 | ||||||||||||||
| Accumulated other comprehensive gain | 186 | 165 | 123 | 12.7 | 51.2 | |||||||||||||||
| Total shareholders' equity | 51,832 | 51,775 | 48,187 | 0.1 | 7.6 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 503,447 | $ | 491,708 | $ | 468,940 | 2.4 | % | 7.4 | % | ||||||||||
| CREDIT QUALITY DATA (in $000's, unaudited) | June 30, 2015 | March 31, 2015 | June 30, 2014 | Sequential Quarter % Change | Year over year % Change | |||||||||||||||
| Nonaccrual loans | $ | 1,422 | $ | 1,223 | $ | 678 | 16.3 | % | 109.7 | % | ||||||||||
| Loans 90+ days past due and still accruing | - | - | 122 | nm | (100.0 | ) | ||||||||||||||
| Nonperforming TDRs | 811 | 1,987 | 1,342 | (59.2 | ) | (39.6 | ) | |||||||||||||
| Total nonperforming loans | 2,233 | 3,210 | 2,142 | (30.4 | ) | 4.2 | ||||||||||||||
| OREO and other repossessed assets | 382 | 499 | 319 | (29.5 | ) | 19.7 | ||||||||||||||
| Total nonperforming assets | 2,615 | 3,709 | 2,461 | (34.2 | ) | 6.3 | ||||||||||||||
| Performing TDRs on accrual | 5,981 | 4,868 | 4,905 | 22.9 | 21.9 | |||||||||||||||
| Net charge-offs during the quarter | 64 | 51 | 185 | 25.5 | (65.4 | ) | ||||||||||||||
| Provision for loan losses during the quarter | 200 | 100 | 200 | 100.0 | 0.0 | |||||||||||||||
| Allowance for loan losses | 4,572 | 4,436 | 4,191 | 3.1 | 9.1 | |||||||||||||||
| Allowance for loan losses to total loans | 1.05 | % | 1.05 | % | 1.04 | % | 0.0 | 1.0 | ||||||||||||
| Allowance for loan losses to total nonperforming loans | 204.75 | % | 138.24 | % | 195.66 | % | 48.1 | 4.6 | ||||||||||||
| Nonperforming loans to total loans | 0.51 | % | 0.82 | % | 0.53 | % | (37.8 | ) | (3.8 | ) | ||||||||||
| Nonperforming assets to total assets | 0.52 | % | 0.81 | % | 0.52 | % | (35.8 | )% | 0.0 | % | ||||||||||
| OTHER PERIOD-END STATISTICS | ||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||
| Sound Community Bank: | ||||||||||||||||||||
| Loan to deposit ratio | 102.72 | % | 100.59 | % | 106.91 | % | 2.1 | % | (3.9 | )% | ||||||||||
| Noninterest-bearing deposits / total deposits | 12.29 | 11.48 | 12.02 | 7.1 | 2.2 | |||||||||||||||
| Leverage ratio | 10.21 | 9.87 | 10.37 | 3.4 | (1.5 | ) | ||||||||||||||
| Common Equity Tier 1 risk-based capital ratio(1) | 12.41 | 12.87 | n/a | (3.5 | ) | nm | ||||||||||||||
| Tier 1 risk-based capital ratio | 12.41 | 12.87 | 12.99 | (3.5 | ) | (4.4 | ) | |||||||||||||
| Total risk-based capital ratio | 13.54 | % | 14.04 | % | 14.17 | % | (3.5 | ) | (4.4 | ) | ||||||||||
| Total risk-weighted assets | 404,861 | 376,311 | 355,284 | 7.6 | % | 13.9 | % | |||||||||||||
| Sound Financial Bancorp, Inc.: | ||||||||||||||||||||
| Average total assets for the quarter | 492,846 | 492,472 | 448,034 | 0.1 | % | 10.0 | % | |||||||||||||
| Average total equity for the quarter | 52,151 | 51,875 | 47,575 | 0.5 | % | 9.6 | % | |||||||||||||
_________________
(1) The Common Equity Tier 1 (CET1) ratio is a new regulatory capital ratio required beginning for the quarter ended March 31, 2015. Under BASEL III, the regulatory capital requirements to be considered well capitalized are 5% for Leverage-based capital, 6.5% for CET1, 8% for Tier 1 risk-based capital and 10% for total risk-based capital.