FNB Corp (FNB) 2011 Q2 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to today's FNB Corporation Second Quarter 2011 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the presentation we will conduct a question and answer session. Instructions will be provide at that time for you to queue up for questions. As a reminder, today's conference is being recorded. And now I'd like to turn the conference over to Cindy Christopher, Manager of Investor Relations for FNB Corporation. Please, go ahead.

Thank you and good morning, everyone. Welcome to our Second Quarter of 2011 Earnings Call. This conference call of FNB Corporation and the reports that are filed with the Securities and Exchange Commission often contained forward-looking statements relating to present or future trends or factors affecting the banking industry and specifically the financial operations, markets, and products of FNB Corporation. These forward-looking statements involve certain risks and uncertainties. There are a number of important factors that could cause FNB Corporation's future results to differ materially from historical performance or projected performance.

For more information about risks and uncertainties which may effect us, please refer to the forward-looking statement disclosure contained in our second quarter of 2011 earnings release and our reports and registration statements FNB files with the Securities and Exchange Commission and available on our corporate website. FNB Corporation undertakes no obligation to revise these forward-looking statements or to reflect events or circumstances after the date of this call.

You are reminded the disclosure contained in our earnings release regarding the fact that additional information about the proposed merger between FNB Corporation and Parkvale Financial Corporation referred to will be found in the registration on Form F4 that FNB Corporation will file with the SEC and the proxy statement of Parkvale Financial Corporation and a prospectus of FNB Corporation and other relevant documents to be filed with the Securities and Exchange Commission in connection with the merger.

A replay of this call will be available until midnight August 3, 2011 by dialing 888-490-2761 or 719-325-2407. The confirmation number is 4668433. A transcript of this call and the webcast link will be posted to the Shareholder and Investor Relations section of FNB Corporation's website at www.FNBCorporation.com. It is now my pleasure to turn the call over to Mr. Steve Gurgovits, CEO of FNB Corporation. Steve?

Thank you, Cindy. Good morning, everyone. It's a pleasure to welcome you to our second quarter earnings call. Joining me today on the call are Vince Calabrese, our CFO, and Gary Guerrieri, our Chief Credit Officer. Also with me today for the question and answer session are Brian Lilly, our Vice Chairman and Chief Operating Officer, and Vince Delie, President of FNB Corporation and Bank CEO.

The second quarter proved to be an active and positive quarter for FNB and its shareholders. In addition to delivering another quarter of strong financial performance, there were several other significant events. First, on May 5 it was announced that FNB would be included in the S&P 600. I would like to recognize our management team as well as our Board and outside advisors in quickly identifying this event as a unique opportunity and executing a successful capital raise in a very short period of time. FNB successfully raised $63 million of additional capital at an attractive price of $10.70 per share.

On June 15 we announced the acquisition of Parkvale Financial. This strategic end market acquisition solidifies FNB's leading status in the Pittsburgh MSA. It carries a low execution risk, is a financially attractive transaction and effectively deploys the capital recently raised. Our retail deposit market share in the Pittsburgh market increased to number three pro forma and with projected accretion of 6% in 2012 and an internal rate of return of approximately 20%, it is expected to provide financially attractive returns for FNB shareholders. We are targeting a closing date in the beginning of January 2012.

Turning now to the second quarter, FNB delivered another quarter of strong results. We are at $22.4 million in net income of $0.18 per diluted share, representing a 102 basis point return on average tangible assets. The second quarter net income is a 13% increase over the prior quarter when excluding merger costs. We are especially pleased with the quality of earnings, given that they did not benefit from reserve release.

During the quarter we continued to build on our momentum with linked quarter top line revenue growth of 8.5% annualized and continued market share gains reflected in the loan to deposit growth results. Additionally, we are pleased with our asset quality performance which improved upon already good levels.

Taking a look a our positive loan growth trends, this marks the eighth consecutive quarter of organic growth per total loans and the ninth consecutive quarter of organic growth for our Pennsylvania commercial portfolio. Growth in the Pennsylvania commercial portfolio which was nearly 9% annualized continues to primarily reflect market share gains with positive results seen across all of our markets.

Commercial lending does remain one of our core strengths. The successful growth trend accomplished for this portfolio during a challenging economic environment validates the effectiveness of the middle market model we have developed over the past several years. First and foremost this model was centered on the strength of our management team and commercial bankers. We have substantially built the team, hiring 62 of the current 100 commercial bankers over the past five years. These are experienced, respected bankers and well-known in the markets they lead.

Additionally, we recognized opportunities for growth and expanded our product offering such as the addition of the asset based lending team and importantly we have been consistent in our markets throughout the cycle, lending and very actively calling on prospects for a disciplined sales management process. All of these actions have strengthened our position in our market.

Turning to the positive growth results, linked quarter, growth in lower costs transaction accounts continued in the second quarter. The average balances in these accounts grew nearly 11% annualized through a combination of new account acquisition and customers maintaining higher average balances.

I would now like to turn the call over to Gary Guerrieri for his remarks on the asset quality results. Gary?

Thank you, Steve. Good morning, everyone. The overall asset quality results for the second quarter demonstrated continued positive movement from the prior quarter, driven by the solid and consistent performance of our Pennsylvania and Regency portfolios. These portfolios exhibited continued linked quarter improvements from already good levels in the first quarter in every major asset quality metric except for charge-offs which remained stable at a very good level.

Specifically, these results reflected 27 basis point or a 10% improvement in past due and non-accruals to end the quarter at 2.46%. A 12 basis point or 5% improvement in the ratio of non-performing loans plus OREO to total loans plus OREO at 2.42% and very good net charge-off levels at 42 basis points.

Looking at each portfolio's results, the Pennsylvania portfolio at $6.4 billion which represents 95% of FNB's total outstanding loans continues to perform very well and is tracking in a manner consistent with our expectations. Net charge-offs for the quarter were very solid at 34 basis points. The year to date net charge-offs for the portfolio at 30 basis points is consistent with our historically good performance.

The level of non-performing loans and OREO to total loans and OREO improved 3 basis points during the quarter to stand at 1.36%, representing the best level in six quarters. Total past due and non-accrual loans at 1.79% improved 11 basis points as early stage delinquencies were downs in the commercial portfolio.

Moving next to Regency Finance, at $163 million, this portfolio represents 2.4% of FNB's total loan portfolio and demonstrated continued strong and consistent results. Charge-offs for the quarter improved 28 basis points from solid first quarter results to stand at 3.62% and the portfolio remains well reserved. Total past due and non-accruals improved by 31 basis points, also at 3.62%, reflecting historically good levels.

Turning briefly to Florida, our ongoing focus is the $74 million land related portfolio which consistent of $21 million in OREO and $53 million in loans at quarter end. These levels are down $2 million from the prior quarter and were driven by a combination of write-downs and the sale of one property at book value. The loan portion of the land related portfolio represents less than 1% of FNB's total loan portfolio.

In summary, our portfolios continued to perform in line with our expectations, reflecting five consecutive quarters of improving trends in our credit metrics. We attribute this consistent performance to our sound underwriting philosophies, experienced banking team, and our diligent risk management approach which are proven to be a winning combination through both good and challenging economic cycles. We anticipate and look forward to ongoing solid performance from the portfolios as the economy continues to improve.

I'd now like to turn the call over to Vince Calabrese, our Chief Financial Officer.

Thanks, Gary. Good morning, everyone. As Steve discussed, second quarter results, the $0.18 per diluted share reflects strong performance from our key drivers, building on the first quarter's solid results. I will focus my remarks this morning on additional highlights of these key drivers and guidance for 2011.

First, let's review our expectations for the remainder of the year. Second quarter's results continue to validate our expectations and therefore we are reaffirming our guidance for loans, deposits, fee income, expenses, and asset quality and slightly revising guidance for margin. I will discuss these throughout my remarks.

Turning to the balance sheet, we continued to have success growing both loans and deposits. As Steve mentioned, loan growth results reflect a continuation of positive trends with total average loans grown 5.1% annualized in the second quarter, driven by strong linked quarter growth in our Pennsylvania commercial portfolio of 8.7% annualized. We saw growth across all of our regions, primarily with mid-market share gains in our middle market business.

Consumer loan balances saw a slight increase linked quarter of 1.1% annualized. Our average indirect auto lending balances experienced an increase of 8.2% annualized due primarily to seasonally higher volume. The other consumer portfolios are primarily residential real estate related and remained essentially flat on a linked quarter combined basis, decreasing less than 1% annualized. Based on the national trend of consumer demand for these products remaining soft, we are relatively pleased with these portfolio results.

Average security balances increased $34.6 million on a linked quarter basis, primarily reflecting the partial quarter impact of investment capital raised proceeds. As Steve mentioned we successfully raised $53 million in conjunction with our capital raise. We are very pleased with the successful growth trends results in loans and expect these to continue.

To reaffirm our expectations for full year 2011 organic loan growth in the mid-single digits, excluding any impact of Florida reductions. On the funding side, we remained focused on attracting lower costs, relationship-based deposits. The strong results seen in transaction deposits and customer repo, average balances increasing 10.7% annualized in the second quarter. This growth reflects new account acquisition and customers increasing the average balances carried in their accounts which is typical during the second quarter.

Given this focus on gathering new transaction accounts combined with the liquidity position of the balance sheet, there was a planned reduction in deposits. Over the next two quarters, we expect normal seasonal factors to slightly temper deposit growth from recent high levels. We therefore reaffirm our guidance for the full year to expected low single digit organic growth in total deposits and customer repos and mid-single digit organic growth in transaction deposits and customer repos.

Consistent with last quarter, we remain funded primarily with customer relationship balances. Between deposits, commercial customer repos and consumer subordinated notes, 96% of our total funding is based on customer relationships. This provides us with significant flexibility to fund future loan growth.

Moving to the margin, it narrowed 3 basis points to 3.78 for the second quarter. Half of this narrowing was due to increased liquidity in the second quarter, including the impact of investing the capital raised proceeds and securities, high cash balances invested on an overnight basis. Looking ahead, we expect the margin to be under some pressure given the effect of competitive pricing on new loan spreads and are projecting a slight narrowing of a couple of basis points over the next two quarters.

Non-interest income results for the second quarter improved 11.7% annualized on a linked quarter basis. The quarter included seasonally higher service charge revenue and an improvement in securities, commissions, and trust income due to positive results from initiatives started towards the end of last year, combined with increased volume, organic growth, and improved market conditions.

Swap fee revenue remained historically strong given the level of commercial lending activity during the quarter. Given our diverse fee income sources, we are continuing to target a quarterly non-interest income run rate in the $29 million to $30 million range for the remainder of the year.

Turning to non-interest expense, total expenses decreased as expected by $6.2 million on a linked quarter basis, due mainly to a $4 million decrease in one time merger costs as well as lower personnel, occupancy, and FDIC insurance expense. In addition, we realized the benefits of CB&T related cost saves for the entire second quarter. Looking forward, we are reaffirming a targeted quarterly non-interest expense run rate, $69 million for the third quarter trending down toward $68 million for the fourth quarter which would translate into an efficiency ratio near 60%.

Switching over to credit quality, as Gary discussed we remain pleased with the solid results for FNB. These results are trending within our expectations and for the remainder of the year reaffirm our prior guidance. This includes our expectations for level of non-performing loans and OREO to continue to gradually decline and for provision for loan losses to be approximately 25% better than 2010 levels which translates into around $9 million per quarter for the remainder of 2011. This provision continues to take into consideration the possible reappraisal risk for Florida land related properties.

Regarding our capital position, the higher levels at the end of the second quarter reflect the capital raise completed in May. As Steve discussed, we executed the raise in conjunction with the S&P 600 addition which we recognized as a unique opportunity. The raise was completed with the expectation that it would be deployed to support growth, including potential M&A opportunities and with the targeted closing date for Parkvale in early January of 2012, we are pleased at the capital raised and attractive level of $10.70 will be effectively deployed on an accretive basis within a relatively short time period. The targeted closing date is slightly revised from the fourth quarter 2011 date previously provided. Looking ahead, we expect to continue to exceed well capitalized thresholds and remain at capital levels consistent with second quarter levels for the remainder of the year. Lastly, we reaffirm our GAAP basis tax rate. To be in the 27% to 28% range for the remainder of the year.

Steve, that completes my remarks.

Thank you, Vince. To touch briefly on the regulatory front and issue all banks more clarify on is the Durbin Amendment. As you know, FNB is currently within the exemption afforded institutions with under $10 billion in assets. It is our belief that this exemption will provide relief from the interchange pricing constraints in the near-term post implementation. Once the threshold is reached at a year end date, regulation provides an additional six month period before it is affected. Therefore, the earliest it can apply to FNB is July 1, 2012 and perhaps as last as July 1, 2013 since the Parkvale acquisition will not close until January 2012. However, we are evaluating a number of initiatives to mitigate potential fee impact while continuing to provide value to our customers.

In closing, we are very pleased with 2011 results and accomplishments thus far and we remain committed to creating shareholder value. We believe that today bank investors have shifted their focus to a bank's ability to grow revenue. We believe that FNB has clearly demonstrated over the last seven consecutive quarters an ability to grow top line revenue. We have been successful in producing quality loan growth, sustained our margin, generated fee income in a more onerous regulatory environment, maintained expense control, and executed an important strategic acquisition, vaulting FNB to number three market share in Pittsburgh. Looking forward to the remainder of the year, our pipelines remain healthy and we expect to see continued loan growth, deposit growth, and solid credit quality results.

That concludes our remarks and I would now like to turn the call over to the Operator for questions.

Thank you, sir. (Operator Instructions) We will take our first question from Frank Schiraldi with Sandler O'Neill.

Good morning. Just a couple questions if I could. I just wanted to see if, Steve, you could remind us of your plans with Regency in terms of expansion and where those plans are currently?

As you know, we're always looking for ways to expand Regency through either acquisition or the opening of de novo branches. Acquisitions are difficult to time in terms of we're looking for companies similar to Regency which is a relatively conservatively run consumer finance company. So, recently we had the opportunity to acquire some talent experienced in the consumer finance industry and we announced that we were opening de novo branches in Kentucky and those branches are open. They are performing as expected. It doesn't take long to get them profitable in terms of lump booking loans and so far they're performing to our expectations and will likely contribute to our operation in a way they were expected to continue when we did the initial analysis.

Okay. Great. And then just a question on M&A. When you announced Parkvale, I believe you talked about other potential geographies. I believe you mentioned Harrisburg. Just wondering if you could give us sort of your updated thoughts on where you're looking or where the potential would be for bank M&A.

Frank, the overriding -- let's say the bigger picture, we still think Pennsylvania is an unconsolidated banking space and is likely to continue to consolidate over the next several years. Pittsburgh was our primary focus originally and that's why Parkvale represents the third significant deal that we've done in that market. It's an important deal for us because it really rounds out our presence in the market, boosts us to number three and we still expect to have a lot of opportunities to continue to draw on in the Pittsburgh market. Having said that, the other two areas we were focused on was Central Pennsylvania and further East in Pennsylvania. We would be intrigued with an opportunity in Central Pennsylvania to grow. We have a presence there in the Harrisburg State College area now. We don't have a significant presence in the Harrisburg market however and it is the state capital.

And then if you go South from Harrisburg into South Central Pennsylvania and even down in through the Maryland area, there are some pretty good demographics in that region. So, we would expect to maintain contacts with bankers in those areas and should the opportunity present itself we would expect to be interested in any opportunities presented our way in those markets. And so our main focus now is obviously closing the Parkvale transaction. That's high on our radar list of things to get done while at the same time we're always talking to bankers and trying to find out what's happening in the landscape.

Great. And then finally, just -- sorry if I missed it, but I wondered if you had quantified or you could quantify your interchange revenues before any sort of revenue offset, what level of revenue was at risk here?

It's on an annual basis. Today, Frank, it's about $8 million for First National Bank of Pennsylvania.

That's what it currently is running? The run rate? Okay. Thank you.

No, Frank. That's not the run rate. That would be the effect of the new regulation.

That would be the at-risk revenue. That's at-risk before mitigation strategies.

Got you. Thank you.

We'll take our next question from Andy Stapp with B. Riley & Company.

Good morning. Nice quarter.

Good morning, Andy. Thank you.

The net interest margin guidance you gave. Was that 2 basis points per quarter or 2 basis points overall in the second half of the year?

No, it's a couple of basis points between now and the fourth quarter, Andy, is probably the best way to characterize it. Not per quarter.

Okay. And your trust income and securities commissions were both up nicely. To what extent did the Marcellus shale play have a role in this?

This is Vince Delie. I would say there has been some impact in trust revenue and in FNIS opportunities which is our broker-dealer subsidiary. We've seen some actively directly related to Marcellus Shale. I would say however that we've gotten some help with the overall economic climate, the market improvement that we've seen from a trial perspective, an elevation of net asset values. We've also had some very good success with some changes with incentives in the broker-dealer and pushing out a new scorecard that really focuses the retail operation on cross selling those products and services. Probably more of the latter.

Okay. And is there any color you can provide on the quarter increase in OREO expense?

Nothing particular there, Andy. That's, as you would expect, that number is a little bit lumpy and as we continue to work through the portfolio, the OREO portfolio builds a little bit. Nothing of any significance to point to. Over the rest of the year I would think we'd be around that $1.5 million to $2 million type range per quarter for the next couple of quarters. So, nothing of significance to point to.

Okay. I'll hop back into the queue.

I'll move on to Damon DelMonte with KBW.

Good morning, guys. How are you? I think in your prepared comments you made mention of some growth in the indirect auto portfolio this past quarter? How does the upcoming pipeline in that lending category look for you guys?

We've seen good activity there through the last quarter and it continues to remain very solid at this point. We are continuing to work very closely with our relationships with the dealers there and continuing to underwriting to our standards and that portfolio has performed very nicely and we're pleased with the position of it at this point.

Could you just tell us a little bit about the characteristics, the types of loans you're putting out, like the FICO scores?

The FICOs are averaging north of 720. We're continuing to focus on a very solid book of business there and it has performed as we have anticipated that it would.

Great. And then, Vince, this is probably more for you with regards to a modeling question with expenses. I got the range you're talking about but is there any -- I guess versus the salary line, a good run rate? And is there anything, any other line items that would maybe be one time in nature we should look to back out?

No. I would say in the other line item it was pretty clean. I mean, the main driver first to second quarter was really the merger costs from the first quarter. So, really nothing of particular significance there. On the salary side, that's kind of part of the overall guidance for expenses but that's a pretty good run rate of where we are in the second quarter. We did get a benefit there from the very strong commercial origination we have as far as the deferral of origination costs which always happens when you have volume kick off like that. We had a very strong quarter. But that's not a significant number. I would look at that overall as a good run rate.

Great. That's all I have for now. Thank you very much.

Moving on to Bob Ramsey with FBR.

Good morning, guys. I was wondering if you could talk a little bit about the loan pipeline at the end of the quarter versus the end of last quarter? And then also what you're seeing in line utilization trends?

The pipeline has remained relatively steady. It's been pretty good. I would say it's consistent. We've continued to see opportunities in the markets that we serve. So, we did have a big floor, so we burned through a little bit of it. But I think we've been rebuilding that. It looks pretty good. In relation to your other question, we basically -- I think things are doing well for us. I don't see a change.

The line utilization --

Line utilization has been consistent. Just up a notch. Nothing to talk about really.

Great. And you all mentioned in your introductory comments some market share gains. What source of institutions would you categorize those as coming from? Is it larger institutions? Smaller institutions? And maybe if you could share some thoughts on the general competitive landscape out there? How competitive is it? Is it rate? Is it terms? Sort of what's driving the competition?

The opportunities that we're seeing are pretty much across a broad spectrum. We focus in segments as a Company. We're seeing growth from small business to the larger opportunities. Our primary focus is on middle market companies where we're the primary credit provider and we have the full relationship. And many, many players play in that space. I would say competitively we're seeing competition increase slightly. I think that it's more robust than it was obviously because there were some players that were on the sideline that have now reentered the market and are trying to grow earning assets. There's always pressure.

As far as the opportunity we see, we are pretty consistent in terms of how we provide credit. So, we really haven't changed our standards. I have seen a little bit of loosening in the marketplace in terms of term and structure but from our standpoint we're able to sell through that. So, I think that the borrowers value having a seasoned banker who can get them through a cycle more than they do shopping structure.

Bob, I would also add that we've had continued success in attracting talent selectively in key markets and being able to get kind of some of the best bankers in some of these markets that aren't part of our team to come and join our team. So, that also helps get the momentum going.

Thank you, guys, very much.

We'll move on to Mike Shafir with Sterne, Agee.

Good morning, guys. I was just wondering, as you guys were talking about the non-interest margin guidance and things are getting a little bit more competitive, one, I think I might've missed your loan growth guidance. But along those lines, how competitive is it and the new product that's coming one, what kind of rates is that stuff coming on to the balance sheet?

The new product, Mike?

Yes, the new commercial lending.

The commercial banking origination, I'd say there's been a reduction in credit spread. We were probably seeing about a 25 basis point reduction year over year. So, really it's hit or miss. When we're grabbing share, I would say it's probably 25 BP. For existing customers, it's not so dramatic. It really depends on the opportunity. But from a market share standpoint as we continue to grow share, obviously it is becoming more competitive. We have seen a little bit of a slide in the overall spreads so that we're able to bring in -- we try to deploy strategies to offset that by taking over the treasury management business and have free balances to help support that loan growth and support the overall margin.

Mike, I would add, regarding the margin, as you know, our overall policy is to manage to a neutral position. At the end of June we're still slightly sensitive, very comparable to where we were at the end of March. Some of the levers that we still have, we still have a significant amount of CD maturities, $375 million to $400 million a quarter. We pick up 70, 80 basis points on that each quarter. And then our securities portfolio is also very short. We have about $600 million in cash flow over the next 12 months. And we're pretty close now to where we're reinvesting it at a rate within 5 basis points of the rate this stuff's coming off. And with continued growth on the commercial side, we've had some success bringing in DDA balance. That obviously helps the margin too. So, I mean there's a lot of pieces to the margin of course that we're managing but that helps to mitigate a lot of the pressure on the loan spreads.

So, you reiterated your guidance at mid-single digits then for the commercial loan growth on an annual basis organically?

Mid-single digits for total loan growth.

For total loan growth? Okay. Then the consumer LSE portfolio has really been growing pretty significantly over the last several quarters. Could you just maybe talk about that and what you're seeing moving forward there?

That's our home equity portfolio, Mike. We're seeing season a lot activity there as we do pretty much every year. Right now that pipeline is as strong as it has been all year and it's continuing to grow at this point.

This is Brian, Mike. Over the last number of quarters, the interest rate environment has been very low. That product is as well as our installment home equity loan moves with the interest rate pretty quickly. So, the consumer has opted more to take advantage of the lower rate environment with the variable rate nature of the line of credit and we'll see. If rates were to move up we'd see a number of those jump into the installment category. So, it's not the product over the last four or five quarters were ranked and have been historically low than we've had more action in that product than we did in the installment.

Okay. Thanks a lot, guys. I appreciate all that detail.

David Darst with Guggenheim Securities has our next question.

Good morning. Could you give us maybe a little bit more discussion on the loan demand and the growth that you're seeing within the Pittsburgh market relative to what is throughout the Western Pennsylvania market?

I would say as Steve indicated in his comments, we've been seeing some pretty good growth across the entire footprint. So, not just in Pittsburgh. We've had some very good success in Youngstown and Erie, Penn State College and Harrisburg College in Harrisburg. So, we're seeing it across the footprint. I would attribute our success more to a very disciplined sales management approach. We're very focused on tier one prospects. We follow-up on them throughout the sales cycle.

So, I would attribute it to that. That plus the people that we've been able to attract at the Company that Steve mentioned in his comments. Those two factors are key drivers to our success. Pittsburgh obviously has been a very good market for us. I think there are a number of competitors in Pittsburgh to contend with but I think because of the people we have and the sales management process that we've put into place, we've been able to take advantage of that market and what it provides.

The only other thing I would add to that, David, is success breeds success. For four or five years, six years now, with rebuilding the team with additional experienced bankers, we've had a lot of success. I think we have a lot more brand recognition across our footprint. That would also be true obviously in Pittsburgh. So, the momentum that we've established, we're optimistic that we can continue this.

I guess as you continue to build out that franchise with the acquisition in Pittsburgh next year, do you anticipate hiring more business bankers or commercial lenders to complement that franchise that they may not have?

Absolutely. It offers us -- it rounds out our delivery system with our branch network which is a good thing for us and also they've been more of a traditional trip with single family residential mortgage lending, maybe a little bit of commercial real estate but not much C&I lending or not much other type of consumer lending. So, yes, we expect to have some business bankers hired to develop these opportunities in this marketplace.

Would you do that ahead of the acquisition and train them and bring them on to your platform?

Absolutely. In fact, we're already in our communication process with Parkvale. Any opportunities they would have, we'll certainly try to help them all we can, even between now and the end of the year when this deal closes in January. But, yes, we're anticipating adding to staff now so that we're up and running, we hit the ground running in January.

Okay. Thank you.

We'll take a follow-up question from Andy Stapp.

Do you have the balance classified assets at quarter end?

We do, Andy. That number quarter end is $278 million and we've got a five month positive trend running there, excluding naturally the combination of CB&T in the first quarter and that's running right around 4% of the portfolio. It's down $11 million over the prior quarter.

Alright. Thanks.

We have no further questions at this time.

Okay. I want to thank everyone for your participation in our call this morning and for your continued interest in FNB. We appreciate your participation and have a good day.

Again, ladies and gentlemen, that does conclude today's conference. We thank you for your participation. Have a good day.