First Financial Bancorp (FFBC) 2015 Q2 法說會逐字稿

Good day, and welcome to the First Financial Bancorp second-quarter 2015 earnings conference call and webcast.

(Operator Instructions)

Please note this event is being recorded. I would now like to turn the conference over to Eric Stables, Director of Investor Relations. Please go ahead.

Thank you, Emilie. Good morning everyone, and thank you for joining us on today's conference call to discuss First Financial Bancorp's second-quarter 2015 financial results. Discussing our financial results and the pending acquisition of Oak Street Holdings Corporation will be Claude Davis, Chief Executive Officer; Tony Stollings, Chief Operating Officer; and John Gavigan, Chief Financial Officer. Before we get started, I would like to mention that both the press release we issued yesterday our announcing financial results for the quarter, and the accompanying supplemental presentation, are available on our website at www.bankatfirst.com under the Investor Relations section.

Additionally, please refer to the forward-looking statement disclosure contained in the second-quarter 2015 earnings release, as well as our SEC filings, for a full discussion of the Company's risk factors. The information we will provide today is accurate as of June 30, 2015, and we will not be updating any forward-looking statements to reflect facts or circumstances after this call. I will now turn the call over to Tony Stollings.

Thank you, Eric. Yesterday afternoon, we announced our 99th consecutive quarter of profitability. Net income for the quarter was $18.9 million, an increase of approximately 19% over the second quarter of last year. Earnings per diluted common share for the quarter were $0.31, with return on average assets of 1.05%, and return on average tangible common equity of 11.6%. We continue to see good opportunities to organically grow our balance sheet, with competitively priced, high quality loans and longer duration, low cost deposits. Our relationship-oriented product structure, and our market-oriented community banking model, enable our local leadership teams to better serve our clients in a more meaningful way.

We are beginning to see positive loan growth that is more in line with our long-term expectations of mid to high single digits. Loans increased by $89 million, or 7.5%, on an annual basis, over the first quarter. And we are optimistic that the momentum we are seeing in the origination pipeline will result in continued balance growth. As we discussed during the call last quarter, we are also very encouraged by the amount of new, high quality development occurring throughout the markets we serve. We have funded approximately $48 million of the $156 million committed to new real estate construction projects during the first half of the year. Our balance sheet is well positioned for growth, as the remainder of these commitments are advanced over the next several months. Last week, we announced the acquisition of Indianapolis-based Oak Street Holdings Corporation, a $240 million speciality finance company that provides financing, secured by commissions, to insurance agencies throughout the United States. As mentioned in our press release, the acquisition is expected to close within 30 days. An overview of the transaction, which Claude will discuss in a few minutes, was included as a supplement to the earnings release yesterday afternoon. Our ability to generate sustainable earnings growth, combined with our strong capital position, will continue to support additional acquisition opportunities that will align with our strategic objectives, such as Oak Street, as well as significant long-term organic growth. Before I turn the call over to John, I am pleased to report that in conjunction with the earnings release yesterday, we announced a quarterly dividend of $0.16 per share, to be paid October 1. This translates into a 3.4% yield, based on yesterday's closing price, and remains on the upper end when compared to our peer banks.

With that, I will turn it over to John to discuss our second-quarter performance. John?

Thank you Tony, and good morning everyone. Net interest income for the second quarter was $58.7 million, essentially flat when compared to the linked quarter, as growth in the balance sheet and lower funding costs were offset by lower yields on earning assets. Net interest margin was 3.62% on a fully tax equivalent basis, compared to 3.67% in the prior quarter, with the 5 basis point decline being slightly higher than we anticipated, due to a decline in the yield on investment securities during the period. The yield on the securities portfolio was impacted by prepayment activity during the quarter, as well as the mix of reinvestment in recent months, and is expected to improve during the third quarter. Given the continued low interest rate environment, and excluding the impact of the Oak Street acquisition, we expect net interest margin to continue to trend lower through the balance of the year, similar to the first half. While average loan balances increased by only $22 million when compared to the first quarter, period-end loans increased by $89 million, or 7.5%, on annualized basis, and in line with long-term growth projections, as a significant amount of new loan production funded during the last few weeks of the quarter. The effective yield earned on the loan portfolio declined 6 basis points from the first quarter, to 4.45%, as we remain biased toward floating rate loan production, in preparation for rising interest rates.

Our deposit gathering activities continue to produce a well balanced, strategic mix of core transaction accounts and low-cost time deposits. Average total deposits increased by $124 million, or 8.8% on an annualized basis, when compared to the linked quarter, with solid growth in both interest bearing and non-interest bearing deposits. End of period deposits were essentially unchanged from the prior quarter. As we discussed last quarter, we continue to aggressively manage deposit pricing. The cost of interest-bearing deposits decreased by 3 basis points, to 42 basis points, during the period. Similarly, the total cost of deposits decreased by 3 basis points, to 32 basis points, partially offsetting the reduction in loan yields. Non-interest income for the second quarter was $21 million, a 22% increase compared to the linked quarter. Accelerated discount from acquired loans that paid in full during the period increased by $2 million from the first quarter, while income related to FDIC loss sharing activity increased by $700,000, and gains on sales of mortgage loans increased by $500,000. The Company also recorded gains on sales and investment securities totaling $1.1 million during the quarter. Non-interest expense increased by $700,000, or 1.5% over the prior quarter, to $48.8 million. Employee salary and benefits expense increased by $500,000, compared to the linked quarter, driven by slightly higher headcount and a full quarter's impact from annual merit increases. Other expenses increased by $800,000, while occupancy-related expenses declined by $600,000 during the quarter. Non-interest expense for the quarter also included a nonrecurring expense of $300,000, related to a legal settlement. For the balance of the year, and including the Oak Street acquisition, we expect quarterly non-interest expenses to total approximately $50 million, on an operating basis.

Turning now to asset quality, we are pleased with our credit team's efforts, and the resolution activity during the quarter. These efforts resulted in significant declines in our non-accrual loan, nonperforming and classified asset balances during the period. Net charge-offs for the second quarter totaled $3.3 million, or 27 basis points, of average loans on an annualized basis, due primarily to $1.7 million commercial real estate charge-off related to a debt restructuring during the period. Provision expense for the second quarter was $3.1 million, a $1 million increase from the first quarter, as a result of charge-off activity, as well as the higher level of accelerated discount on covered and formerly covered loans. Consistent with the declines in criticized and classified assets during the period, the allowance for loan losses declined modestly, to 1.09% of total loans at June 30. Further, the allowance for loan losses and remaining purchase accounting loan marks, net of the indemnification asset as a percentage of total loans, declined to 1.27% as of June 30, from 1.43% as of March 31. As we have previously commented, we believe this is a useful measure of the total credit risk protection on our loan portfolio. Additional detail regarding this metric can be found in the 8-K filing associated with our second-quarter earnings release.

Finally, capital levels for the second quarter remained strong. Total shareholders' equity increased during the quarter by $7 million, or 1%, to $802 million. Likewise, tangible book value per share increased to $10.65 per share as of June 30, from $10.54 per share as of March 31. We ended the period with a tangible common equity ratio of 9.08%, a tier 1 ratio of 12.35%, and a total capital ratio of 13.31%. With respect to the recently announced acquisition of Oak Street Holdings, we expect to fund the all-cash acquisition with liquidity at the bank, and anticipate that pro forma capital ratios will continue to exceed the well-capitalized minimums at both the holding company and bank levels. While we do not need to raise additional capital in order to close and operate Oak Street for the foreseeable future, we continue to evaluate our overall asset growth trajectory, dividend level, capital stack efficiency, and potential share repurchase opportunities. Given that our capital composition is essentially 100% common equity, a tier 2 component could make sense, and we are evaluating a regulatory qualifying transaction. In fact, we assumed in our modeling that slightly more than half of the Oak Street purchase price was supported by subordinated debt. While market conditions will dictate the timing and terms of any offering, our Board evaluates capital management strategies at least quarterly, and it is certainly included in our near-term capital planning. We do not anticipate that a sub-debt offering, or other capital planning strategies, would result in a material net impact on our earnings performance.

With that, I will now turn the call over to Claude to discuss the Oak Street acquisition.

Thanks John, and thanks to those joining the call today. We are excited about the opportunity to partner with the team at Oak Street, and enable them to achieve their growth potential. Oak Street's well developed business model is a good strategic compliment to our existing commercial business, and we are excited about the strong cultural fit between our organizations, and Oak Street's growth and profitability profile. As Tony mentioned earlier, an overview of the transaction was included as a supplement to the earnings release yesterday afternoon, and I will touch on some of the most relevant points. Founded in 2003 and headquartered in Indianapolis, Oak Street had $238 million in loans as of June 30. These loans, which are predominantly floating rate, yield approximately 9%. Oak Street generally describes loan relationships less than $1 million as core, and loan relationships greater than $1 million as strategic. Our balance sheet and strong capital position will enable Oak Street to more actively pursue the strategic loan market, and we expect Oak Street to continue to experience strong loan growth.

Upon closing, we will pay off all existing warehouse funding lines, and replace them with the much lower-cost funding sources available to the bank, with the combined impact driving approximately 20 basis points of margin expansion, and $0.16 to $0.20 of earnings accretion per diluted share, during the first full year of operation as a subsidiary of First Financial Bank. The tangible book value dilution of approximately $1.10 per share is expected to be fully earned back in under five years. Total deal costs are expected to be approximately $3 million pretax, the majority of which will be recognized during the third quarter. Although primarily focused as a lender to insurance agencies, the Oak Street loan portfolio is well diversified across geographic boundaries, insurance carrier names, insurance product lines, agency size, and their core verses strategic designations. Likewise, the loans are well collateralized, by commissions that are redirected from the highly rated carriers directly to Oak Street, the required cash collateral accounts, business assets of the agencies, and personal guarantees of the borrowers. Oak Street has implemented solid underwriting and credit review standards, as confirmed in our due diligence review, of 60% of their outstanding loan balances. Additionally, Oak Street has developed a robust and scalable loan origination servicing platform, which monitors the expected cash flow from the commission books on a daily basis. This proprietary technology platform could be leveraged across other asset classes, including existing First Financial business lines and product sets. Please refer to the supplement for additional information about the Oak Street transaction.

This concludes the prepared comments for the call, and we'll now open it up for questions.

Thank you. We will now begin the question-and-answer session.

(Operator Instructions)

Our first question is from Scott Siefers of Sandler O'Neill & Partners. Please go ahead.

Good morning.

Hi, Scott.

Good morning.

John, I think the first question is probably for you. Just want to make sure I am clear on the margin guidance. You suggested, in the second half of the year, continued compression similar to the first half. You are talking about the core margin compression you experienced in the first half, right? So, I think the first quarter had a little noise in it. So to put some numbers on it, you would be thinking 3 to 5 basis points a quarter in continued compression? Is that fair?

Yes. I think you've got it, Scott. As you said, there was a little bit of noise in the margin in the fourth quarter. But to your point there, we expect less than 5 basis points of compression, on a quarterly basis.

And Scott, this is Claude. That excludes the Oak Street transaction.

Right. Yes, perfect, thank you. And then the second question is, on Oak Street specifically, just reconciling the $0.16 to $0.20 EPS accretion in the first full year with the $1.10 of tangible book dilution, and then finally, four- to five-year earn-back. I think it suggests that the pace of accretion to earnings should accelerate through that earn-back period?

So if you could address what you are thinking about the pace of growth for that Company, as you look out over the course of the next several years? I think in the slide presentation, you have suggested they have done about 25% annual growth for the last few years. And I think it sounds like you're going to be able to do bigger loans, now that they're attached to your balance sheet. But maybe if you could just speak to the expectations in the years beyond the first year?

Sure, Scott. This is Claude.

You are correct. The earn-back assumption assumes accelerated EPS accretion impact, and it is through the ability for us to help them fund and grow their loan book. Their past -- or last five-year compound annual growth rates have been at 25% or so. We have not assumed that level of growth. In fact, quite a bit less than that. But we expect strong growth, and as a result, increasing EPS accretion.

Okay. All right. That's perfect. Thank you very much.

You bet.

Our next question is from Chris McGratty of KBW. Please go ahead.

Good morning, everybody.

Good morning, Chris.

Just a question -- I just want to be clear on the accretion. The $0.16 to $0.20, does that factor in the debt?

Yes.

Okay. So that assumes you raise some -- half the purchase price and subset. Okay. On the expenses, can you help me with, now, this transaction, and your prior bank deals? I think the $50 million was the run rate for the back half there, all in. As you get into next year, are there any other synergies that we should be assuming? Or should we just be assuming expenses grow at the rate of inflation?

Yes, Chris. Specific to the Oak Street deal, significant cost saves were not part of the equation around that deal, so I wouldn't model anything to that effect. I think to your point, the $50 million run rate that we expect for the back half of this year, and then probably, to your point, some inflation on top of that, is probably the best way to think about it.

And this is Claude, Chris. I think the only caveat to that is we continue, as we have done in the past, to look at efficiency opportunities within the core bank, and evaluate, are there expense opportunities there? None announced at this point. But I think, to John's comments, those are probably the safest assumptions to use.

Okay. Just one last one, if I could. You have been running the efficiency low 60s. Does this deal at all alter how you can run the Company? Or is that low 60s still the target, looking out into next year?

I think given their margin expansion that they provide to us, in terms of Oak Street, as well as their low efficiency ratio, that should be additive, and improve our efficiency ratio level.

Thanks.

Yes.

Our next question is from Emlen Harmon with Jefferies. Please go ahead.

Good morning.

Good morning.

In terms of -- you are going to have a fair amount of excess capital, still, after this acquisition closes. In terms of the opportunities out there, where do you see better opportunities? Whether in the speciality lending area verses the more traditional bank space?

Sure, Emlen. We do you -- first of all, I think as we have talked about before, and I think most banks articulate -- first, we are going to use our capital to support our organic growth rate. We are going to look at opportunities, like we did with the Oak Street transaction.

And as we've said before, we continue to evaluate both whole bank as well as product line M&A. Speciality finance is one of those areas that we think we understand well, we think we have had some real success in. So that would be top of mind area.

I would say that for the foreseeable future, though, we are going to focus on Oak Street, supporting their growth. And one of the points I made in my comments, and we make in the slides, is that one of the great things about Oak Street as a Company is, they have a really strong management team. A full platform, that we think we could look at other asset classes, potentially using that platform, in addition just to the insurance agency space. So we are hoping the combination of our organic growth within the bank, as well as supporting the growth in their traditional area of insurance agency finance, but also looking at other asset classes, as well.

Got it. Thanks.

And obviously -- this is obviously an opportunity that looks like it's going to have a pretty high return on the capital employed. Do you see more traditional bank deals that could compare to this? Or does it feel like these speciality lending opportunities tend to be a higher return? And maybe you are seeing more attractive opportunities in this form?

I think every situation is unique. I think we are all aware that bank deal pricing has moved up enough, and is competitive enough that, at least at this point, since our deals last year in Columbus, we have not seen any opportunities that we think had the type of return that the Oak Street deal has for us. Now, as we go forward, it's really situational-specific. But the point is, I think for us, strategically, we'll look at all options, and always pick what the highest return is.

Yes. Thanks. Could you provide us with the update on the spread between originated loans and what's running off today?

Yes. We've seen a little compression in that negative spread here in the quarter, so we're encouraged by that. But it's still there, it's still impacting our margin, but we have seen some compression in that. And we have also seen, over the last few quarters, the trend down in our overall payoff levels, as well.

Got it. All right. Thanks.

Thanks.

Our next question is from Jon Arfstrom of RBC Capital Markets. Please go ahead.

Thanks. Good morning.

Hey, Jon.

A couple things here. Can you talk a little bit about the construction optimism? And maybe a little more on the type and location of some of the strength you are seeing?

Sure, Jon. Construction lending is not a huge part of our portfolio, but it has been one that we've seen good growth in in the first half. We pointed out, because of the unfunded portion of it, and the fact that our originations have been higher than what it appears our balance growth has been, the location of it has been predominantly in the metropolitan areas where we operate.

So Cincinnati, Indianapolis, the Columbus, Ohio market, and the Dayton, Ohio market have been the areas of the most substantial growth. And it cuts across a few asset classes. Multi-family obviously continues to be a strong area. Healthcare is another strong area. And then some what I would call build-to-suits or speciality areas, where we had a strong credit tenant already in place. So it's been a combination, but across those geographies.

Okay. Good. John, what does Oak Street do to your asset sensitivity? I believe you said -- are these all variable rate-type loans?

Yes, they're predominantly variable rate loans, so that certainly helps. It really depends on the funding mix, but we expect to probably fund it predominantly with variable rate funding. So it will be neutral to positive to our asset sensitivity.

Okay. And when you say variable rate funding, are you talking about deposits or debt or -- I guess my assumption was, you just drop it on the balance sheet and utilize, push up your loan-to-deposit ratio. Or are you seeing something different here?

Yes. No, I think we're looking to fund it probably with a mix of retail deposits, possibly with some broker deposits. But they'll be fairly short and variable rate.

Okay. And Oak Street was warehouse-funded, predominantly? Is that right?

Correct, Jon, with the bank warehouse lines of credit.

Okay. And then, what drives losses in the business? And maybe talk a little bit about provision and reserve requirements? I guess I look at this as pretty much C&I lending. But give us an idea of the losses, and the provision and reserves, you are thinking about?

Yes. I think, as we noted in the slide deck, Jon, the credit quality of the portfolio is really strong. Their charge-offs last year, in 2014, were 30 basis points of average loans. We expect a longer-term run rate to be something closer to 50 basis points.

I think it's more similar to an asset-based lending, with the tendered commission books as collateral. So it's really around monitoring those tendered commission books, and monitoring the performance there. But we think if they continue to do it well as they have, the credit risk profile is attractive.

Okay. All right. Thanks for the help.

Thanks, Jon.

Our next question is from Andy Stapp of Hilliard Lyons. Please go ahead.

Good morning.

Good morning.

How did your -- what do you expect the effective tax rate to be in the back half of the year?

Andy, I think it should be similar to the first half of the year. There can be some minor quarterly fluctuations there, but in that 33% range.

Okay. And were there any meaningful non-core items in other non-interest income?

No, there were not.

Okay. And my last question, how did Oak Street's capital -- or credit quality fare during the financial crisis?

It fared well. They saw some increases in charge offs, but nothing of significance, certainly compared to the yield that they earn on their loans. So that's one of the things we looked at, was a life-to-date loss rate, which has been very strong, very solid. And as we pointed out in the deck, I have seen no charge-offs in anything originated since 2011.

Okay. Great. Thank you.

Thank you.

Our next question is from Erik Zwick of Stephens. Please go ahead.

Good morning. I just wanted to follow up on Oak Street. As you move into those larger strategic, as you categorize them, loans, any different expectations for yields and the losses in those loans?

No expectation of difference in loss. We'll certainly employ the same strong credit standards that they've employed to date. Yield, I think you -- any time you have larger loans, they tend to be a little bit lower yield than the core, the -- what we would view as small business and traditional banking terms. And as we get into that strategic market in a more meaningful way, I am sure we will see some variation in yield, based on the quality and strength of the borrower. But we have assumed some of that in our modeling for the deal.

Okay. Great. And then switching gears to asset sensitivity. In the press release, you make some comments regarding adding more variable rate loans, and changes to the investment portfolio, to position yourself for increasing rates. Could you just talk a little bit about how your asset sensitivity might fare under a parallel increase in rates, verses maybe a more flattening scenario, where the short end moves higher?

Sure. Yes, I think our interest rate sensitivity really hasn't changed much. We continue to pivot around a risk-neutral position. We have taken some action in recent periods. We have terminated our pay fix received float interest rate hedges that we had against our floating rate public body deposits, and our index money market deposits, as our sensitivity improved there.

So we continue, as I said, to pivot right around neutral. The loan production that we have seen in recent periods, as well as some of our investment strategies on the securities portfolio, should help improve our asset sensitivity, as we go forward.

Okay. Great. And then finally, just on loans, it sounded like you indicated that there was a pickup in growth towards the end of the quarter. Any particular segments or areas where you saw that most?

No. I think it was a combination. Predominantly in the commercial area, so a good mix of C&I, as well as some of the investment in commercial real estate. So a combination of the two, as well as, we had a strong June in our franchise finance business. And the pipeline in that business continues to grow, and I think we'll have a solid third quarter.

Great. Thank you very much.

(Operator Instructions)

Our next question is a follow-up from Scott Siefers of Sandler O'Neill & Partners. Please go ahead.

Hello. Just wanted to segue on the overall loan growth question. So the year started a little slower, but it sounds like you are feeling pretty good about the back half of the year. Is your sense, Claude, that based on the pipeline as you see it today, and the strength that you cited, for example, in June, that second-half growth could accelerate from the 7.5% end of period growth that you saw in the second quarter? Or are we now at a steady state, for both end of period and averages, just on a core basis?

Yes, Scott, I would probably be a little cautious, just because we have seen choppiness over the last couple of years. I think we still feel good about that mid- to high-single-digit growth rate through the back half. Pipelines are strong. We feel good about those pipelines.

Like you mentioned, and I referenced, we had a strong close to the quarter, a strong beginning of the third quarter. So we are encouraged. But I would probably be more comfortable assuming an ongoing mid- to high-single-digit type number, as opposed to seeing it accelerate.

Okay. All right. That's perfect. And I think the final question is, it just goes back to rate sensitivity.

I guess you guys are a little unique, in that you still have some legacy benefit embedded in the margin, from some of the deals that you did a few years back. And it's obviously much, much smaller than it's been, but represents a steady drag. Do you guys have a sense for how much rates would have to increase, at the short end, for you to be able to overwhelm that quarterly runoff? And have the margin advance on a reported basis?

I don't know that we calculated it quite that way, Scott. I think the ongoing impact, our covered book now is probably down in the mid 200s. Net yield beyond the Indem is now, I think, John I think in the 7%s.

Yes, upper 7%s.

Yes, so if you look at that difference versus, in a book coupon or loan coupons, we think the total impact is probably 10 basis points or less. So we are hopeful that you will see, if rates begin to rise, and it's more of a parallel shift verses a flattening, that that would be a positive for us. But to your point, there still is some of that accretion that's there.

Okay.

We don't really forecast with rising rates, as well, in our planning.

Yes. Okay. All right. That's perfect. Thank you for taking the follow-up.

You bet.

Our next question is from John Rodis of FIG Partners. Please go ahead.

Good morning.

Hi, John.

Just back to Oak Street a second. Had they had any issues in the past with fraud with the brokers?

Maybe one or two, but nothing significant or material to the financials. I think any of us who are in the lending business have some fraud, from time to time, but nothing of significance.

No. It's probably the -- what little bit of volatility they've had in their history has been related to that, but not a meaningful number at all.

And the important thing for us was the direct connection to the carriers, and the detailed knowledge of individual policies that secure the loans.

Okay. Fair enough. And then just one other question, I guess. I guess the acquisition -- there was a Bank of Kentucky, the deal that was recently completed. Have you seen any pickup in business, or any fallout, from that acquisition?

I would say nothing material or meaningful in either direction. Obviously, any time there is a disruption in the market, everyone, including us, tries to take advantage of that. But obviously, BB&T is a good bank, and we are certainly working on that area, and that loan book. But I would say nothing material, to our results at least, either way.

Okay. Thanks.

Thanks.

Our next question is a follow-up from Chris McGratty of KBW. Please go ahead.

Hey. Thanks for taking the follow-up. On the loss sharing -- or on the accelerated discount on the previously covered loans. It was up a couple million bucks. Can you help me with how we should thinking about it, now that your loss shares have expired? Whether those just continue? Should we be putting some level of contribution in the numbers? And I think there was a modest provision offset? Thanks.

Sure, Chris. Yes, as you noted, commercial loss share expired in the fourth quarter of last year. So we no longer have an associated reduction in the indemnification asset when formerly covered commercial loans pay off. So it's tough to say. We can't really predict what level of payoffs we're going to see there, early payoffs.

We did see some increased activity there this quarter, including a large franchise relationship. But in terms of go-forward, tough to predict. Could be some volatility in there. At the end of the day, we will get the income, whether it is through accelerated discount or through the margin, if the loans don't pay off. And I'm sorry, you had a second part of that question?

I was just wondering if we should be factoring that into our estimates? At some level, I guess, is the answer. It's what you are steering us to.

Yes, yes.

Okay. Just a last one. Maybe I missed it. On the pro forma capital ratios, I can appreciate the regulatory comments. But can you remind us where your TCE targets are? And I think -- correct me if I am wrong -- your capital will go to like around 8%, from a little over 9%. Is that a fair ballpark, with your accretion?

I think it's a fair ballpark, Chris. But in terms of targets, we set them on the leverage, the tier 1 and then total risk based. And we have set them at the [viable] three minimums, plus the buffer that they include, plus 200 basis points, is how we look at those as our internal targets. So we don't set a TCE target, per se. We set them all off the regulatory ratios.

Okay. But TCE with the deals is roughly around 8%, is your -- based on your math on the book value dilution, right?

Yes, we don't have that in front of us, but it's very close to that, yes.

All right. Thank you.

You bet.

This concludes our question-and-answer session. I'd like to turn the conference back over to Claude Davis for any closing remarks.

Great. Thank you, and thanks everyone for joining our call today. And thanks for your interest in First Financial.

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