FNB Corp (FNB) 2014 Q3 法說會逐字稿

Greetings and welcome to the F.N.B. Corporation Third Quarter 2014 Earnings Conference Call. (Operator Instructions). I would now like to turn the conference over to your host Cindy Christopher Manager of Investor Relations. Thank you. You may begin.

Thank you. Good morning everyone, and welcome to our earnings call.

This conference call of F.N.B. Corporation and the reports it files with the Securities and Exchange Commission often contain forward-looking statements. Please refer to the forward-looking statement disclosure contained in our earnings release, related presentation materials and in our reports and registration statements filed with the Securities and Exchange Commission and available on our corporate website.

A replay of this call will be available until October 30, and a transcript and the webcast link will be posted to the Shareholder and Investor Relations section of our corporate website.

I will now turn the call over to Vince Delie, President and Chief Executive Officer.

Good morning, and welcome to our earnings call. Joining me today are Vince Calabrese, our Chief Financial Officer; and Gary Guerrieri, our Chief Credit Officer. I will be highlighting our operating performance and providing a strategic overview. Gary will review asset quality, and Vince will provide further detail on our financial results, and then open the call up for any questions.

Let's begin by looking at the quarter. Operating results included continued high quality earnings, with year-over-year revenue growth, strong loan growth, solid deposit growth, excellent asset quality, a favorable efficiency ratio and stronger capital levels. Operating net income available to common shareholders was another record high at $35 million, and resulted in $0.21 per diluted share, a penny increase from the prior quarter. On an operating basis this translates into 107 basis point return on average tangible assets, and 15% return on average tangible equity.

Average organic loan growth was strong at an analyzed rate of 16%, lead by 15% growth in the commercial portfolio. While commercial remains a growth driver, all portfolios contributed to the quarters positive results. The consumer book delivered a very solid quarter with 19% annualized organic loan growth and favorable results across product lines, including indirect auto and the home equity portfolio. Organic growth on a spot basis was also strong, and pipelines remain healthy as we enter the fourth quarter. Organic growth and average transaction deposits in customer repos was 9%, led by 24% annualized growth in non-interesting bearing deposits. Non-interest bearing balances accounted for 22% of total deposits and repos at quarter end. And our deposit mix and funding remain strong with a loan to deposit ratio including customer repos of 89%.

When looking at results on a regional level we experienced growth across all markets, with a significant concentration coming from our metro markets of Pittsburgh, Baltimore and Cleveland. Looking specifically at the newer Baltimore and Cleveland markets, our success continues to exceed our original expectation. We are in the early stages of deploying our strategy with only one of the past four acquisitions, Annapolis Bank Corp, exceeding the one year mark. These markets present tremendous opportunity, and as we continue to gain momentum, we are confident the teams we have in place will contribute meaningfully to FNB's overall results.

The acquisition of OBA Financial was completed on September 19th. And we welcome OBA's employees, clients and shareholders. I would also like to recognize the FNB team for another seamless integration. Our ability to integrate consecutive acquisition from due diligence through conversion is a distinguishing core competency. Over the past 17 months we have converted four banks. With the addition of OBA's $400 million in assets, we have assembled a scalable presence in the Maryland market that stands over $1.4 billion in assets with 31 locations. From a market position our presence is now expanded to the demographically attractive I-270 corridor. Financially the transaction is capital accretive as evidenced by the 16 basis point increase in the tangible common equity ratio, which stands at 6.9% at quarter end. Given its relative size, we look for EPS accretion following the first full year.

I want to remind everyone that our movement into Baltimore and Cleveland was very deliberate and strategic. In order to manage through a challenging economic environment and deal with regulatory imposed costs and revenue loss while maintaining our growth trajectory and risk management philosophy, we determined we would need to add scale and expand our footprint and universe of prospects. A significant amount of effort was put forth by our team to assimilate the past four acquisitions. And it is important to note that for the first time in 24 months we do not have a pending acquisition.

Now as result of our expansion strategy FNB is extremely well-positioned to drive high-quality sustained organic growth. Slide eight illustrates the significance of our opportunities. With our expansion into Maryland and Cleveland, we have effectively increased our potential client base by 54% when measured by total population. Our overall demographic profile has improved and importantly potential commercial prospects have expanded by over 144,000 or double the prospects in our legacy community footprint. This will benefit FNB in the future through organic growth, scale driven efficiency and geographic and prospect diversification enhances our ability to maintain our lower risk profile.

Before turning the call over to Gary and Vince, the first nine months of 2014 have been very successful for FNB. We have delivered high quality operating results and made significant progress on many strategic initiatives. Looking at year-to-date trends over the past three years provides insight into our progress and the challenges we have successfully managed through. Year-over-year revenue has grown 15% and 20% when compared to the last year and 2012. This revenue growth was achieved despite a $10 million to $12 million annual Durbin related revenue loss. Since the beginning of 2012, we have achieved linked quarter revenue growth at 10 out of 11 quarters.

With revenue growth rate exceeding the expense growth rate, we have achieved improved operating efficiency. As an example of a contributing initiative, since 2012 we have repositioned our retail delivery channel through the consolidation of over 40 branches and the opening of eight de novo locations. Average deposits per branch have increased 16% over this time. The efficiency ratio has improved to 57% from 59% in 2012. Year-to-date pretax pre-provision EPS has increased 4% on a year-over-year and 6% compared to 2012. We have strengthened our capital levels. The TCE ratio has grown over 100 basis points since the beginning of 2012 to 6.9%, an improvement that has occurred through the completion of four acquisition given their neutral to capital accretive impact and as a result of our August 2013 capital raise.

In addition to the industry wide challenges faced over this time, including the interest rates environment and increased regulatory related costs, we have been faced with FNB specific challenges in order to grow the franchise value of the Company. Most significantly the Basel III related capital issuance has negatively impacted current year-to-date earnings per share by $0.04 per share. This combined with Durbin revenue loss resulted $0.06 negative EPS impact compared to the prior nine month period and has masked the underlying core operating performance of FNB. Looking ahead, these items are fully embedded in our run rate. When considering these results, recall that we are only now beginning to realize the full potential benefits from our recent acquisition, and as I mentioned we expect momentum to build.

On a final note FNB was recently recognized by the Pittsburgh Post Gazette as a top work place. Placing first in the large employer category based on a survey of over 1200 companies conducted by Work Place Dynamics. This is the first time we have received a number one ranking in the large employer category and the fourth consecutive year to be named a top employer. Congratulations to the entire team on this recognition, which validates FNB's distinction as an employer of choice. As a management team, I would like to reiterate that we believe FNB's fundamentals are exceptional particularly in the face of a challenging environment. I look forward to sharing our continued success and progress as we complete this year and enter 2015 better positioned.

With that, I will turn the call over to Gary, so he can share asset quality results.

Thank you, Vince, and good morning everyone. We had a very solid quarter with our credit results reflecting an acceleration of continued positive trends for both the originated and acquired portfolios. This quarter's performance was highlighted by substantial improvements in delinquency, good net charge-off levels, significant problem asset resolution and the seamless conversion of the OBA portfolio. I will touch on these points in greater detail as we review our originated portfolio first followed by some remarks on the portfolio and finally some highlights on the OBA transaction.

Turning first to the originated portfolio at $9.2 billion the level of NPLs in OREO improved during the third quarter to 1.25%, representing an 11 basis point linked quarter reduction. Delinquency also improved over already solid levels to end September at 1.06%. Quarterly net charge-offs at $6.5 million or 29 basis points annualized remain at a good level and are tracking slightly better than our 2014 targeted levels. The originated provision of $9.9 million increased during the third quarter by $1 million to support our continued loan growth resulting in an ending reserve position of 1.24%, a slight decline from the second quarter following improved credit metrics and reduced problem loan levels.

I would now like to touch on our core lending and credit underwriting philosophy's. As Vince mentioned earlier the number of credit prospects in our markets has doubled in just the last 18 months, with the Baltimore and Cleveland expansions providing significant new lending opportunities. This abundance of new prospects being generated across these metro markets enhances our ability to be very selective in our credit decision making process while continuing to meet our internal growth objectives. By carefully evaluating each opportunity we can effectively manage risk, diversify our loan portfolio across greater geographies and borrowers within our footprint and maintain our stringent disciplined underwriting and approval standards just as we have always done in the normal course of business. These moves have positioned us favorably to remain selective and focus only on the highest quality credits and borrowers.

I would now like to turn your attention to our $1.7 billion acquired loan portfolio carried at fair value, which includes $300 million from the OBA acquisition. The delinquency in the acquired book at $68 million decreased significantly on a linked quarter basis, down $21 million a majority of which occurred in the 90 plus category. This large improvement is reflective of the collaborative and proactive approach we take in managing our problem assets on an ongoing basis. The continuous efforts of our credit officers, commercial bankers and experienced work out team were clearly visible this quarter as we were able to resolve, exit or upgrade a number of problem credits. Several factors contributed to this very positive action including pay downs resulting from the sale of collateral by various borrowings, upgrades on credits that we have been closely monitoring and working with, note sales and refinancing by more aggressive lenders as credit eases.

As it relates to the OBA acquisition, this portfolio was converted during the quarter and is positioned in line with our expectations highlighted by very low delinquency. The smooth integration of OBA demonstrates the continued success we have had in managing our acquired portfolios throughout the entire M&A process and thereafter.

As we prepared to finish out 2014, we can reflect back at what has been another successful quarter marked by positive performances in both our originated and acquired portfolios that support our high quality earnings as well as the integration of OBA. Looking ahead we will continue to leverage the knowledge and experience of our banking teams to manage our book using the same consistent and balanced approach that has positioned us to where we are today.

I would now like to turn the call over to Vince Calabrese, our Chief Financial Officer, for his remarks

Thanks, Gary, and good morning everyone. Today I will discuss the third quarter's operating performance and provide high level guidance for the fourth quarter. Overall the quarter's results exhibited the continuation of our strategy to organically grow loans and deposits, benefit from diverse fee revenue sources and closely manage expenses and risks in order to deliver high-quality leading profitability. With the completion of OBA on September 19th, we also benefited from our M&A strategy; adding $400 million in assets, $300 million in loans and deposits with this capital accretive transaction in a very attractive market.

Looking at the balance sheet on slide 13. The quarter again included strong organic results, with average loans growing 15.7% annualized driven by commercial loan growth of $221 million or 15.3% annualized. As we discussed on last quarter's call, our commercial loan pipelines were at a record high at June 30th, which combined with the benefit of our expanded footprint and another quarter of robust activity footprint wide resulted in a stronger than expected quarter for loan growth.

Organic growth in average consumer loans was also very good, at $153 million or 18.9% annualized. These results were led by a combination of organic growth and consumer home equity loans of $91 million and indirect auto loans of $62 million. Representing a record month of September for our indirect lending business. For the fourth quarter we are targeting organic annualized growth in the mid to high single digital range. Our core funding mix further strengthened, with organic growth in non-interest bearing deposits of $144 million or 24% annualized. We continue to deploy our strategy focused on bringing in these valuable funds. On an organic basis average transaction deposits of customer repos increased $195 million or a 8.6% annualized. While average total deposits in customers repos increased $102 million or 3.4% annualized despite a $93 million decline in deposits.

During the quarter, new business account acquisition was solid, and we also benefited from larger relationship with seasonally higher balances. For the fourth quarter we expect organic annualized growth in the low single digits.

Looking at net interest income and margin. Net interest income grew $6.5 million or 5.6%, as a result of strong average earning asset growth of 3.8%, a relatively stable cost of funds and higher acceptable yield adjustments of $4.1. The reported net interest margin expanded 3 basis points to 363 benefiting from strong average earning asset and deposit growth and a higher accretable yield. Recall that accretiable yield adjustments can move quite a bit from quarter-to-quarter. I should also mention that this quarter's accretable yield was partially offset by $800,000 in increase provision for loan losses related to the credit actions Gary discussed earlier. Positive margin benefits were offset by lower yields on the significant new loan volume we generated over the past two quarters. This is more a function of credits rolling off at higher rates than new volume rates, which on average have not changed significantly over the past year.

To put this in perspective our guidance on last quarter's call was for continued modest narrowing throughout the second half of the year. With this quarter's core narrowing several basis points higher than previously projected. There are several item contributing to this, including the current rate and competitive environment have resulted in narrower spreads, to strong loan volume we have generated over the past two quarters. Total organic growth was $724 million over the past six months or 7% of our total loans. The majority of this growth was in the commercial book but over $120 million of the growth was in the indirect auto lending portfolio which saw narrower spreads due to a heavier mix in new purchase volume. The auto lending paper is short in duration at around 2.5 years. On a linked quarter basis there was also a two basis points impact from a combination of reinvestment activity in our securities portfolio and terming out $250 million in federal home loan bank debt to take advantage of the current rate environment.

Obviously there are a number of moving pieces to the margin, and like others in the financial services industry, the rate environment will continue to influence our margin. Therefore we reaffirm our prior guidance for modest narrowing through the end of the year. We will continue our same strategy to manage the balance sheet through our diligent [ALCO] and pricing processes and align our objectives with the field. We like the position of our balance sheet at this point in the cycle with the relatively short duration of 3.5 for the securities portfolio and a favorable loan portfolio mix with 58% of the portfolio variable or adjustable and over half of that repricing in the next 12 months.

On the deposit side 78% of total deposits and customer repos are core transaction based deposits, and 22% are in non-interest bearing balances. Turning to non-interest income and expense. Non-interest income results reflect consistent contributions from our fee based business units and steady transaction volume for deposit service charges. In total non-interest income declined by $1.6 million or 4.2% on a linked quarter basis, with $1.3 million attributed to the higher swap fee income realized during the prior quarter.

Year-to-date results for Wealth Management reflect solid results. With total revenue increasing 11% compared to the prior year as we benefit from our newer markets and our continued success generating new business. Non-interest expense excluding merger and severance costs increased $1.6 million or 1.7%, with the increase due to seasonally higher marketing expense and increase accruals for performance based compensation. Absent these expense items core non-interest expense would have been flat compared to the prior quarter.

Third quarter efficiency ratio was 56.7%, improved from 57.3% and 59.7% in the prior and year ago quarters respectively. As Vince discussed, diligent expense management remains a focus for us, and we have undertaken several actions Company wide over the past several years. These include more stringent vendor management, branch repositioning and effective personnel management. These are all necessary to improve efficiency during a period where regulatory related costs continue to build. For the last quarter of the year, we expect non-interest income to be consistent with third quarter levels and non-interest expense to reflect the first full quarter of OBA's operating expense. Gary discussed our positive asset quality results with you. We expect consistent results through the end of the year and provision for loan loss to remain around third quarter levels. Turning to capital. The linked quarter increase in the September 30th capital ratios reflect the expected benefit from the capital accretive OBA acquisition.

In summary, we are very pleased with our results this quarter in a continuing challenging operating environment for banks throughout the country. Quarter's results were characterized by continued revenue growth, enhanced efficiency, solid profitability metrics, meaningful improvement in asset quality from already good levels and bolstered capital ratios. I would also like to commend our team on another very successful integration during the quarter. It is to the efforts of our entire team that have positioned us strongly as we look forward to closing out another successful year, beginning to realize additional benefits from our metro market expansion strategy.

Now I would like to turn the call over to the operator for your questions.

Thank you. (Operator Instructions). Our first question comes from the line of Bob Ramsey with FBR. Please proceed with your question.

Good morning. This is actually Andrew Karp on the line for Bob. On the M&A front, I know there is nothing pending, but have you guys had any discussions recently on that and are you looking to make a move maybe in the near term?

We typically don't comment on pending M&A activity. But I will tell you that as we stand today we are fairly focused on continuing to benefit from the integrations that took place over the last few years with the acquisitions that we have done, and we have not changed our position relative to opportunities. We have a very stringent criteria for acquisition candidates, and if we can embellish what we have done we certainly would be open to looking provided that the opportunity would provide the Company with EPS accretion in the first full year and hit the threshold from an IRR perspective that we speak. So that's the best I can tell you. The acquisitions that were completed over the last few years in our estimation they are performing better than we had anticipated. We are just about fully staffed in all of the markets. We have been able to recruit some very talented bankers across the footprint and our metro strategy is providing the opportunity for us to grow in a very competitive climate without taking on additional risks. Our view is that the deployment of the resources in the metro market is doing exactly what it had intended to do.

Thank you. And just looking at the efficiency. Do you have a number that you are targeting both for the fourth quarter and for 2015? I know it's been on the way down, but I think mid 50s is something that had been said. I wanted to see if we're still in that range.

I would say we have historically talked about mid 50s, and as you know from our results we have been able to continue to improve the efficiency ratio particularly relative to the peers but also own an absolute basis too. And I think the expansion strategy we have deployed helping us to grow revenue faster than expenses creating a positive operating leverage is obviously contributing to that. We don't have a set number we are looking to, we are looking to continue to improve it. The mid 50s is kind of a goal that we have talked about but without a specific timeframe. But we expect there is still room to continue to improve from the third quarter level.

All right. Thank you.

Thank you. (Operator Instructions). Our next question comes from the line of Collyn Gilbert with KBW. Please proceed with your question.

Thanks. Good morning, guys.

Good morning, Collyn.

Vince, if I could just get a little bit more color on the discussion that you had on the newer loan yield originations are lower than what is rolling off. And specifically on the indirect, so the $120 million of production that you spoke of what was the rate that you saw there?

I would say a couple of comments. As I stated in my prepared remarks, we had significant growth over the last six months over $700 million, and the origination rates and spreads are down less than 25% if you look year-over-year so the gross rate is down inside of that. But we are putting them on at about 50 basis points to 100 one basis points lower than the rates on the loans that are paying down or paying off, which is kind of normal in this rate environment. What's different is we had such a huge volume of growth in the second and third quarter. Also I should point out that part of the impact on the yields is that a good portion of our lending business is short, and a lot of it is 40%, for example, is tied to prime or LIBOR, and as I mentioned earlier, 60% is adjustable variable. So you are also putting stuff on at the shorter end of the curve which obviously has lower rates. On the indirect I don't know if --

The margins are in the mid 350s on the indirect portfolio, on the new originations.

And that is a very short paper, Collyn. It is averaging about two and a half years.

Okay. So when you say the margin, that's the spread (Inaudible) actually yields higher than that.

That is correct.

Okay. Is this all A paper?

It is. It's very solid paper, average FICO nearing mid 750 range.

Okay. Okay, that's helpful. And then, Vince, just on that thought then just thinking about the NIM and the trajectory, so you had indicated that maybe we would see modest compression in the fourth quarter. I guess then that would suggest that the environment you expect it to improve, because I think going into the third quarter it was kind of modest compression came in at 7 basis points on a core basis. Do you think pricing starts to stabilize? Do you think volumes starts to slow or what drives your comment in thinking the compression in the fourth quarter will be less than the third quarter on a core basis?

Sure. The best way to actually talk about it is you have the slides in front of you. Slide 14 is really the key slide to discuss the margin. I guess let me make a few comments on it. As we have said in the past accretable yield will be lumpy each quarter. It obviously depends on the re-estimation of cash flows and the level of activity we have resolving acquired loans. As Gary discussed in his remarks, we have very proactive approach to moving problem or potential problem assets off the books. This quarter environment was ripe. We were able to resolve kind of more than what we would achieve in a normal quarter and realized the accretable yield benefit. While the margin benefited from that, juicing us up to the 363, the 7 basis point compression is obviously driven by the new loans we just talked about. We also termed out some borrowings, about $115 million in August at a rate of 161 for four and a half years, so in the short term that reduces margin but in the longer term, obviously, that is going to benefit us in the longer term. On the other hand, GDA growth as you saw in our numbers is very strong and that continues to support the margin obviously and we expect that to continue. The success our teams have in bringing in balances in the expanded footprint with the metro market strategy. And then when you look at the year-to-date on this slide 14, you can see that the margin -- nine months of 2013 and nine months of 2014 core is down 4 basis points. So from 362 to 358, and as you can see at the top, net interest income is actually up 18%. So part of the 7 basis points is just the sheer volume of what we put through plus the funding side and reinvestment rates on securities were pretty low during the quarter too. So I think as we look ahead to the fourth quarter, we would expect loan growth to be a little bit slower than what we put on. Some of it is seasonally higher in the third quarter on the consumer side. So we are comfortable with modest narrowing from here third quarter to fourth quarter.

Okay. That is super helpful. Thank you. And then just a question on expenses. Again, Vince, in your comment you had said that if you backed out some of the higher marketing expenses and accruals, the core number would have been flat. And I think, again, going to the third quarter you were thinking a flat expense level, so just trying to get a sense of the run rate from here. Is that like a $91 million run rate, is it $93 million run rate? Just trying to think about again the trajectory from here.

Yes. I would say it's more like the latter. With OBA coming on it came on late in the quarter, that adds about $2.5 million in run rate expenses to the fourth quarter. You only saw a little bit of that in the third quarter obviously. So it would be more at the $93 million, $94 million kind of level as opposed $91 million.

Okay. And is there something that's changed or increases in investments that you are making or something that is causing that sort of pick up I think from what, I think, would have been like a $91 million expense level in the third quarter had it been flat from the second quarter?

No. There is really nothing unusual. The main thing is adding OBA in to the mix, so there's nothing particularly unusual in the third quarter versus the fourth quarter. We did have the items we talked about we had some additional incentive accruals that we booked and then on the marking side was seasonally high. But there is nothing as you sit here and look ahead for the forecast for the expenses the fourth quarter other than OBA coming in.

Okay

There's nothing unusual.

Okay. Okay, that is helpful. And just one quick final question. The swap fee income does that fall through the other, other line?

Yes.

Okay. Great, that's all I had guys. Thanks, guys.

Thank you.

Thank you. (Operator Instructions).

Are there any further questions?

One moment please. Thank you. And our next question comes from the line of Brian Martin with FIG Partners. Please proceed with your question.

Hi, guys.

Brian, how are you?

And maybe can you just talked a little bit about the loan growth the last quarter or two just by geography, which markets were stronger than others? And I realize all the metro markets are driving most of it but any one more so than the other?

We have had some good solid growth across the entire footprint, so when you look at spot balances from the beginning of the year through the 9/30 period, it has been fairly good across the entire Company. Obviously the largest percentage gainers, the biggest contributors Pittsburgh has been a tremendous contributor. Now Pittsburgh includes some groups that draw upon the entire footprint so ABL and the large CRE group based in Pittsburgh have contributed significantly, but they are working across the entire footprint. The Cleveland are has performed exceptionally well. The team it's a great team, they have good leadership. There has been a very positive response in Cleveland in the middle market, and we are making good progress there. Baltimore has gone very well. I would say it exceeds our expectations. We have been able to attract some very, very good talent in the Baltimore market. Again, good leadership and double digit growth there, so very, very good. And the quality of the opportunities that we have been able to surface. Gary mentioned in his remarks the strategy was to try to provide us with an opportunity to go after many more prospects. If we were relegated to the community markets that we were in where we had a high saturation point from a market share perspective, we would have been tripping over ourselves looking for good quality earning assets. So by moving into these metro markets and positioning the Company to go after thousands more prospects we have been able to hit our growth trajectories and still maintain a good risk profile for the Company. Everything seems to be working and those people are doing a tremendous job. But the three metro markets are really providing a good bit of the growth for us.

Okay. Do you have sense or can you give us some color on where the footings are in Baltimore and Cleveland today?

We don't really break that information out for you. I will tell you that the footings in those markets are not huge, that this is really a market share gain play. And like Pittsburgh where we started earlier on, you know we had a very small commercial portfolio, today it is significant. Our game plan is to roll out the same strategy in Cleveland and Baltimore with a deep product set and very high caliber bankers we are going to go after market share. And it is appears it is all working the way we thought. So we are going to stay focused on that and keep moving forward.

Okay. And maybe I missed -- I joined a little bit late, but the margin commentary just the outlook perspectively as far as the amount of compression that is just looking at the core number; is that correct?

Yes.

All right. And then maybe lastly earlier on the M&A comment, is there any sense in looking at deals perspectively more interest on the smaller end, the larger end or maybe where you're seeing more opportunities today if any different than what you have seen over the last couple of quarters.

I think truthfully again we are going to do acquisitions that position the Company to fulfill our organic growth objectives. That is what we have done over the last few years. The relative size of the company we acquire if it is a strategic fit and really it has to be of a certain size to make sense for us, we have always said above a half billion in total assets was more appealing to us. But I think we are more focused on the strategic fit versus the size. So if a larger opportunity that came long that fit strategically, we would be very interested. We will look at smaller opportunities if they work for us, if they help build out the delivery challenge. But everything we do is really hinged on being able to perform at a high level, drive organic growth, it has to be additive to what we have assembled and we have to hit the EPS accretion that we require in every deal in the first full year.

When you look at the Maryland strategy, for example, this is a good time to talk about that, we did several smaller transactions, OBA and BCSB and Annapolis were smaller banks, but when you look at it collectively, we are in that market today with a number nine deposit market share with just under $1 billion in deposits and $1.4 billion in total assets. And when you look at it on a cumulative basis while it was a little more work to do smaller transactions we are there at around 1.4 times tangible book. So what we have created in that market is a great delivery channel, we have some good location, we've got a great team and now we have a bank, a $1.4 billion bank that we paid 1.4 times tangible book for. If we were to go out and find something of that size in a market like that, it would be north of 2 times tangible book today. So we brought value to the table in a couple of ways. One was by being a value buyer. The second is building out the platform to drive growth for the shareholders.

Okay. That is helpful. Thanks very much.

Okay. Thank you.

Thank you. This concludes today's question-and-answer session. I would like to turn the floor back to management for closing remarks.

I would just like to thank everybody for participating on the call. I particularly would like to thank our management team. We have gone through several years of acquisitions that have truly transformed the Company and the growth prospects for our Company all while we were facing the changes that occur when you go above $10 billion, so we did that late in the game. And I know in my comments I keep bringing it up, but the pressure from going over $10 billion, the Durbin impact, the adds to staff for compliance we have added over 100 people in risk management areas that's embedded in our run rate since 2008, all of that is in our run rate. And we are now at a point where we are really well positioned and we are in markets that provide us with good growth prospects. We are very optimistic about the future here and really it's because of the hard work of the entire team here that has kept us in this good position. So I appreciate the time everybody invested on the call, and I look forward to the next quarter and our earnings call. Thank you.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. And thank you for your participation.