Fulton Financial Corp (FULT) 2015 Q1 法說會逐字稿

Good morning, and welcome to this Fulton Financial announces first quarter 2015 earnings conference call. Today's conference is being recorded. I would now like to turn the call over to Ms. Laura Wakeley, Senior Vice President, Corporate Communications.

Good morning, and thank you for joining us for Fulton Financial's conference call and webcast to discuss our earnings for the first quarter of 2015. Your host for today's call is Phil Wenger, Chairman, President and Chief Executive Officer of Fulton Financial. Joining Phil is Pat Barrett, Senior Executive Vice President and Chief Financial Officer.

Our comments today will refer to the financial information and related slide presentation that are included with our earnings announcement, which we released at 4:30 pm yesterday afternoon. These documents can be found on our website at FULT.com by clicking on Investor Relations and then on News. The slides can also be found on the presentation page under Investor Relations on our website.

On this call, representatives of Fulton may make forward-looking statements with respect to Fulton's financial condition, results of operation, and business. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond Fulton's control and difficult to predict, and which could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. Fulton undertakes no obligation other than required by law to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

In our earnings release, we've included our Safe Harbor Statement on forward-looking statements and we refer you to this section and we incorporate it into today's presentation. For a more complete discussion of certain risks and uncertainties affecting Fulton, please see the sections entitled Risk Factors and Management's Discussion and Analysis of financial condition and results of operation set forth in our filings with the SEC.

In addition, in discussing Fulton's performance, representatives of Fulton may make reference to certain non-GAAP financial measures. Please refer to the supplemental information included with Fulton's earnings announcement released yesterday for a reconciliation of those non-GAAP financial measures to the most comparable GAAP measures.

Now I would like to turn the call over to your host, Phil Wenger.

Thank you, Laura, and thanks, everyone, for joining us this morning to discuss first quarter results. After I share my prepared remarks, our Chief Financial Officer, Pat Barrett, will provide details on our performance. We will refer to the slide presentation throughout our discussion. Comparisons will be to link quarter unless otherwise noted. You will find our forward-looking statements on Slide 2.

Turning to Slide 3, we reported diluted per share earnings of $0.22 for the first quarter, up 4.8% over the fourth quarter of 2014, and unchanged from the first quarter of last year. For the first quarter 2015, our return on average assets was 0.95% and our return on average tangible equity was 10.96%, increasing from 0.88% and 9.96% respectively from the prior quarter.

We reported a negative provision for credit losses this quarter, recent improvement in charge-off levels, the pace of which accelerated in the first quarter, resulted in a reduction in the estimated allowance. While the upticks in non-performing assets and overall delinquency due to two specific credits, the 2015 Outlook for our credit metrics and modest provisioning remains unchanged.

Link quarter average loan growth was due to positive C&I activity, partially offset by declines in residential and consumer loans. We were pleased with our first quarter C&I growth, as demand was tempered somewhat by weather conditions. Geographically our C&I growth came from the central Pennsylvania and Maryland markets, partially offset by reductions in New Jersey. Our commercial loan pipeline entering the second quarter is well above link quarter and year-ago levels.

The decline in residential and consumer outstandings, in addition to also being influenced by weather condition, was impacted by strong first quarter mortgage refinancing activities as consumers rolled outstanding consumer loans into their refinancing package. This put further pressure on growth. We are currently offering a one-year promotional home equity rate to qualifying new and existing customers to boost spring consumer activity along with a new fixed rate jumbo mortgage product. Our Outlook for our annual average loan growth of 3% to 7% in 2015 remains unchanged.

From a funding standpoint, we saw a good growth in average deposits that should position us well for profitable earning asset growth and margin expansion when interest rates eventually (technical difficulty). However, persistently low interest rates continue to exert pressure on asset yields and/or the net interest margin. Pat will provide more details in his comments.

Non-interest income was down link quarter, but showed good growth year-over-year. First quarter residential mortgage activity and related sales gains increased, driven by higher refinancing activity that comprised 60% of our volume. Applications were up significantly link quarter and year-over-year. Our results were positively impacted from higher gains on sale due to increased volumes and higher spreads.

Our mortgage pipeline is up by $107 million to $238 million link quarter. We believe that as long as rates remain stable, current refinancing activity should continue. We also expect purchase money activity to increase with the spring buying season. And we continue to successfully recruit additional high-performing mortgage originators.

Year-over-year, we saw solid growth in the number of other non-interest income categories, particularly merchant and debit card income. Our greatest challenge is in the area of deposit account-related revenue, particularly overdrafting.

Total other expenses remained relatively stable link quarter. We are in the process of implementing additional cost saving measures, mainly through branch consolidations. We consolidated nine branches this month and two additional branches will be consolidated in the third quarter, bringing our total reductions to 25 over the past two years.

The branch consolidations resulted in $1.1 million of implementation costs in the first quarter 2015 and will result in additional costs of approximately $700,000 in the second quarter. Going forward, those consolidations are expected to generate approximately $3 million of annualized cost savings. Other initiatives include changes to benefit programs and elimination of certain positions.

While these items resulted in costs of $450,000 in the first quarter of 2015, they are expected to generate an additional $3.5 million of cost savings annually. The total annualized savings from our combined cost reduction initiatives is $6.5 million, with $5.3 million of the savings to be realized in 2015. Our total annualized savings is approximately $2 million higher than our original $4.6 million estimate from the end of last year. We continued to evaluate all potential opportunities to lower expenses.

In the first quarter, we continued to address the requirements of our existing BSA/AML enforcement actions. We also received a consent order in February for the last of our subsidiary banks, both from Bank of New Jersey. The provisions are the most recent enforcement actions are consistent with action -- are consistent with those received previously. And, as a result, our guidance on outside services expense from the January call stands. Note that at that time we indicated we would expect to see a drop in total BSA/AML-related outside service expenses of approximately $5 million in 2015, partially offset by an increase in salary and benefit expenses for BSA/AML-related staff. Course we caution that outside services costs can be volatile from quarter to quarter.

Now turning to capital, capital levels remain above all regulatory minimums, including required buffers under the newly effective Basel III standards. We were pleased to increase our quarterly cash dividend in the first quarter, bringing our dividend yield to approximately 3%. We repurchased over 8 million of our shares last year. Last week we completed our 100 million accelerated repurchase program, receiving an additional 1.8 million shares, bringing the total shares to 8.3 million repurchased under that program. Yesterday our Board approved an additional share repurchase program of up to $50 million of our stock between now and the end of the year. These actions continue to have a positive impact on earnings per share and on our return on equity. We continue to generate and deploy capital for the enhancement of shareholder value.

At this time, I would like to turn the call over to Pat for a detailed discussion of our first quarter performance. When he concludes, we will both be happy to take your questions. Pat?

Thank you, Phil, and good morning to everyone on the call. Unless I note otherwise, quarterly comparisons are with the fourth quarter of 2014.

Starting on Slide 4, as Phil noted, earnings per diluted share this quarter were $0.22 on net income of $40 million, representing an increase of $2.1 million or 5.5% from the prior quarter. Earnings per diluted share increased $0.01, or 4.8% from the fourth quarter, and were unchanged from the first quarter of 2014. Increase in earnings reflected a negative $3.7 million provision for credit losses and an increase in securities gains, partially offset by lower revenues and a slight increase in non-interest expenses.

Moving to Slide 5, and as noted previously, our net interest income declined $4.5 million, or 3.5%, driven by two fewer days of interest accruals during the quarter, combined with 4 basis point decrease in net interest margin. The yield on average earning assets declined 2 basis points while the cost of average interest-bearing liabilities increased 4 basis points.

Average earning assets declined $68 million, or less than 1%, the result of a $119 million decrease on average investment securities partially offset by a $39 million increase in average loans. The 2 basis point decrease in earning asset yields was driven by lower interest income on debt securities as a result of fourth quarter 2014 redemptions, lower loan yields, and a decrease in average securities balances. These were partially offset by a 3 basis point benefit from a special dividend on FHLB stock.

Average interest-bearing liabilities decreased $67 million, or 1% due primarily to an increase in average short-term borrowings, partly offset by an increase related to the average balance impact of our $100 million subordinated debt issuance in November of 2014. Our average cost of interest-bearing liabilities increased 4 basis points, reflecting the impact of that November debt issuance.

Note that on April 1, 2015, $100 million of our outstanding subordinated debt, originally issued in March 2005 and having an effective rate of 5.49%, matured and was fully repaid with on-hand liquidity. As a reminder, our Outlook for 2015 was for net interest margin compression of 0 to 4 basis points per quarter on average based on the current interest rate environment. Our first quarter results placed us at the high end of this range, driven by the decrease in asset yields referenced earlier and the additional subordinated debt carrying costs. The Outlook for margin at this point remains you unchanged.

Turning to credit on Slide 6, based on our evaluation of all relevant credit quality factors, particularly the decrease in net charge-offs on smaller balance impaired loans, we recorded a negative $3.7 million provision for credit losses in first quarter. Net charge-off decreased $5.6 million, or 69% from the fourth quarter, resulting in an annualized net charge-off rate of just 8 basis points compared to 25 basis points for the fourth quarter. Our net charge-offs continued to improve, as they have over the past five years, at an even more accelerated rate in the first quarter. First quarter annualized charge-off rate of 8 basis points represents the lowest annualized charge-off rate we've seen since the third quarter of 2007.

As mentioned earlier, we saw increases in non-performing loans and delinquencies in the first quarter, primarily driven by the deterioration of two credits with total outstanding balances totalling $17 million. Total delinquencies increased $24 million, or 11% in the first quarter. Non-performing loans increased $11 million, or 8%, to 1.14% of total loans. The allowance for credit losses to non-performing loans outstanding decreased from 134% to 120% in the first quarter.

For perspective, over the past five years, net charge-offs, non-performing loans and delinquencies have improved dramatically and they have reached levels that are not expected to increase or decrease in the near term as dramatically, without significant changes in economic conditions. However, some changes in levels from quarter to quarter are likely.

Moving to Slide 7, non-interest income, excluding securities gains, decreased $661,000, or 2%, reflecting lower overdraft fees, debit card income and merchant fee income, partly offset by an increase in mortgage banking income, which was driven by higher volumes and spreads. In comparison to the first quarter of 2014, non-interest income increased $2.1 million, or 5.4%, reflecting increases in mortgage banking income, merchant and debit card fee income, partially offset by a modest decrease in service charges on deposit accounts.

During the first quarter of 2015, securities gains of $4.1 million resulted from the sales of two pooled trust preferred securities and sales of equity securities, as we took advantage of favorable liquidity and market conditions. Our original Outlook for 2015 for the growth rate in non-interest income was in the mid to high single-digit range, and that remains unchanged.

Moving Slide 8, non-interest expenses increased less than 1% in the first quarter, with net occupancy costs increasing $2.2 million due to the implementation costs associated with branch consolidations, as well as seasonally higher snow removal costs. Also contributing to the increase in non-interest expenses were higher OREO and repossession expenses and modest increases across a range of other expense categories. Partially offsetting these increases were $3 million decrease in other outside services and a $1.2 million decrease in marketing. Salaries and benefits expense also decreased $408,000, driven by fewer days and number of employees, partly offset by seasonally higher payroll taxes.

In comparison to the first quarter of 2014, non-interest expenses increased $8.9 million, or 8.1%, largely reflecting certain expenses in 2014 that were significantly lower than our quarterly run rates experienced during the preceding two years. Contributing factors in the first quarter of 2014 included lower incentive compensation and benefits costs and lower outside services expenses. So while the increase compared to the first quarter of 2014 is meaningful, much of that increase is attributable to a return to levels more consistent than with those in the prior two years. Our Outlook for 2015 for the growth rate in non-interest expenses was in the low single-digit range and at this time our Outlook for the are the remainder of the year remains unchanged.

Income tax expense increased $2 million, or 18%, while our effective tax rate was 25%. We expect that effective tax rate to continue at this level for the remainder of 2015.

Turning to Slide 9, as previously mentioned, we continue to make progress towards building out our regulatory compliance infrastructure, particularly the total BSA and AML-related staffing and outside services costs continue to be in line with our expectations 2015.

Slide 10 displays profitability and capital levels. Of particular note is the 100-basis point improvement in our return on average tangible equity to 10.96%. This reflects our most recent accelerated stock repurchase program and our ongoing commitments to capital management and improving shareholder returns.

In conclusion, we've included on Slide 11 a summary of our Outlook for the year for easy reference. Thanks for your attention and your continued interest in Fulton Financial Corporation. Now we'll be glad to answer your questions.

Ladies and gentlemen, thank you. We will open it up for questions for covering analysts at this time.

(Operator Instructions)

We'll take our first question from Casey Haire with Jefferies.

Thanks. Good morning, guys.

Good morning to you.

I'll start off on the loan pipeline. Sounds like the winter kind of slowed you down. Just how are we shaping up at the end of the quarter versus end of year?

So the winter really impacted the consumer. We saw the most profound impact on the consumer. We also don't think we anticipated quite the level that refinancing of consumer loans into new residential mortgages, I don't think we anticipated that impact either.

But going into the second quarter, our pipeline has increased substantially on the consumer side and on the promotional side and on the C&I side. It's substantially higher both link quarter and where we stood at this time last year.

Okay, great. And then, switching to fees, mid to high single digits. By my math, that implies a run rate for the remaining three quarters of 2015, that is -- that's got a jump about 9%, or high single digits, a pretty aggressive ramp.

Does sound like mortgage banking has got a pretty decent pipeline, but even with that, it does seem a bit aggressive. What are the drivers keeping that's keeping that guidance intact?

When we compare first quarter of this year to first quarter last year, I think we're up about 5.4%, 5.5%. Mortgage is the biggest driver and we do believe we can still fall within the guidance that we gave.

Debit card income is up nicely. Merchant services is another area that's growing nicely. And we expect to see some pickup in investment management trust income. The one area that we continue to battle on the fee income side is particularly consumer deposit-related fees and that would include overdraft fees.

Got you, okay. Just last one for me, on the capital fronts. Layering in this $15 million share repurchase, still with the asset growth puts you kind of well above -- not well above, but it puts you comfortably above your TC sort of targeted ratio. I'm just curious, was this your best foot forward and keeping the regulators happy or were you keeping powder dry for M&A pursuits perhaps next year?

We've been -- each of the programs we've had approved to date have been up $50 million. This one is through the end of the year. We may be able to complete it earlier and at that time we'll see if we want to do anything else.

We try to analyze where we are and take it a step at a time. There will be a point in time where making acquisitions will be obviously a much larger part of our strategy and at that time it would help us to have some excess capital available.

Understood, thank you.

Next question comes from Bob Ramsey with FBR Investment Bank.

Good morning, this is actually Andrew Karp on the line for Bob.

Andrew.

So on the expenses, I think you said that you're looking at around $3 million analyzed cost saves for the occupancy from the branch closers. What is the base that you're looking at when you're determining that $3 million annualized cost save? Is it more like the $11.5 million quarterly that we saw the back half of last year?

You know, the $3 million I believe would include occupancy and salaries.

Okay.

Not just occupancy.

Okay, thanks for clarifying that. And going back to the return of capital, are we still targeting 100% return of earnings through the combination of the dividend and the buyback?

We are. It -- you know, this year that may be difficult if you don't include the accelerated share repurchase. And if you include it, we actually may be over 100%.

Okay, and if I remember correctly, that was -- was that funded in the fourth quarter, but wasn't actually completed until this year?

Yes, 80% -- We received 80% of the shares in the fourth quarter and then the final 20%, which turned out to be 1.8 million shares, was delivered to us last week.

But we did -- this is Pat. We did write the check for the $100 million in November of last year. The dollars came out then. The shares, 80% delivered then, the other 20%, last week.

Okay, thanks. And just one more on credit. Are we still anticipating getting down to the 1.25% allowance to loan ratio? And if so, when do we think that happens?

So we're still headed in that direction and-- You know, it's hard to say when it will happen. I think in general, we have been moving that number down between 3 and 5 basis points a quarter. And I would think that maybe that pace would continue.

Okay, thank you.

Next question comes from Chris McGratty with KBW.

Good morning, everybody.

Hi, Chris.

Hey Pat, I just want to make sure I'm good on the share count. Your end of period shares were 179 [million], your average is about a half a million higher. Is the way to -- walk me through the impact of the 1.8 million, assuming you don't buy any stock in the second quarter for calculation purposes.

Yes, so the only impact on share count during the first quarter was a slight issuance, which is normal in the first quarter to fund normal compensation-related activity. So all the shares for the up around 80% were received in the fourth quarter of last year and then the final termination settlement, the additional 20%-some odd or 1.8 million shares was last week, those Q2.

So the impact in the second quarter would be that, 1.8 million almost for the entire quarter, not completely. And then anything additional that we would buy back in the new program.

Okay. Thank you for that. Can you remind us the cash that's at the holding company today? I'm just trying to get a sense of-- putting together your comments about buybacks and whether there's any contemplation of another that's already repurchase.

We don't -- I don't think we disclosed the holding company specific balances, but we maintain I'll say multiple years of liquidity at the holding company for what's necessary. We have regular dividends that come rolling up from the affiliates and, you know, are able to accelerate those as needed. But I think it's reasonable to think that we can fund repurchases on ongoing basis certainly as we're earning net income to continue to deploy 100% of our earnings if the stock price cooperates and other growth options don't present themselves.

And Chris, on April 1, we did utilize $100 million of cash to pay off these, for the $100 million of subordinated debt that came due.

On the margin, Pat, your security yields dropped-- maybe I missed it in the prepared remarks. Could you maybe elaborate what drove that 15 basis point destruction? Was it kind of premium AM, was it sales? Then maybe a comment on any update on considering the FHLB kind of restructuring?

Securities, there's a lot of activity in the quarter, so there was an impact of cash flows that we didn't pick up on dispositions, as well as on option rate security cash flows that the balances are down probably a third from where they were going into the fourth quarter due to fourth quarter redemptions. So there was a pretty significant drop from both of those.

Additionally, I should say we generate around between $25 million and $30 million per month of cash flows from securities, primarily from the CMOs and mortgage-backed portfolios, and our reinvestment activity has been extremely limited for the last six months, although we did invest about $35 million during the second quarter. We were able to re-up and find some securities in those risk classes that were around the 2% yield. So it's a combination of different kinds of security balances changing, as well as a reinvestment.

And then from an FHLB perspective, you're talking about our longer-term FHLB debt, is that correct?

That's right.

We've got a series of tranches that are maturing in the fourth quarter of 2016, first quarter of 2017, a little over $400 million with an average coupon on that blended portfolio of about 4.2%. So the prepayment penalty on doing anything with that continues to equal or exceed the total amount of interest we pay if we held it until it matures.

So although we could drag that expense forward, you know, then we would need to refinance it with something and it's still from an economic perspective, it's something that still isn't clear and compelling argument for us from an economic benefit perspective. We keep looking -- I think it's safe to assume we keep looking for restructuring opportunities and combination of opportunities to lock in really attractive funding rates that we have right now. But the balance of those two things is a continuous focus for us.

Great, thank you. Last question, just to make sure I'm clear on the guidance, the expense and the fee income guidance are adjusted for unusual items, correct, Pat? Like the charge in the quarter in the securities gains?

Well, they are really kind of -- they reflect the 2015 full-year results compared to the 2014. So for $460 million of expense run rate in 2014, we expect something in the low single-digit increase, as an example.

Right, but I guess my point is if-- I'm more interested in the fee incomes. You didn't make end securities sales and gains into your mid-upper single digits, did you?

I got you. That's correct. That's correct.

All right, thank you. Appreciate it.

Next question comes from Dave Bishop with Drexel Hamilton.

Good morning, gentlemen.

Good morning, Dave.

I was wondering if you could speak to on the funding side, maybe. Looks like the cost of time deposits ticking up a little bit here. What you're seeing in terms of current promotions in pricing and average duration of the time deposit-- deposit base?

Yes, Dave -- this is Pat. So we had a couple of different periods during the year last year, second quarter and fourth quarter, where we were pretty deliberately looking to extend, I'll call extend the maturities and duration of our CD funding. We didn't meaningfully increase the balances, but we were able to attract some new money, but also roll over existing maturities into longer-term-- particularly five-year CDs with a 2% or 2.25% handle on those.

As it became -- as our liquidity position, I should say, continued to improve and a little bit of a modification of a view on interest rates as far as when they are going to go up, I think we've dialed that back. We feel pretty good about the position that we're in now.

But you've definitely seen the impact of both the longer duration and a more expensive CD portfolio in our cost of funds this quarter and last quarter, because we were still rolling through the increasing average balances during the fourth quarter.

Maybe an update in terms of the positioning on the balance sheet in terms of net interest margin sensitivity for a rise in short-term interest rates?

Sure. So we've been modestly asset sensitive for the last several quarters and I would say that that slightly continued to grow. So for the first 100 basis points of increase, we would see 4.8%, 4.9% increase in net interest margin. We would see that increase to close to 10% for the second -- 200 basis points.

From a EVE perspective, value of equity, I think the impact is less, less prevalent, but we do remain modestly asset sensitive, in part just due to the excess liquidity that we've been carrying on the balance sheet and absence of reinvesting aggressively into things. But I think, you know, interest rates keep not going up.

And then one final question, a little bit of a tick up in OREO expenses. Did that reflect maybe beginning of the year reappraisals and the Outlook for the trend in those expenses moving forward?

Well, we -- there's some tax expense in the quarter that wouldn't be in other quarters. And I think the gains that we had on a couple of sales weren't as high as they have been running in the past.

Thank you.

Next question comes from David Darst with Guggenheim Securities.

Good morning.

Good morning, Dave.

On the fee income and your growth expectations, it sounds like the three core areas where you could see the higher growth rates offsetting that core decline in the deposit account fees is in the interchange in merchant, the investment management which you described, and then also maybe like commercial fee income.

I would say that we anticipate growth in a number of our corporate products. That would include our merchant services. That would include our cash management. That would include general fees. That would include fees from a swap program we have. So overall, we do anticipate commercial fees to increase, yes.

Okay. And then as you look at just the current quarter, did you have maybe higher origination volumes than you expected, but also higher payoffs resulting in the yield compression?

We did have a higher mortgage origination was higher, I think, than we expected. What resulted is that, you know, a number of adjustable rate mortgages that would have been on our balance sheet refinanced into fixed rate mortgages, drove those balances down.

And then also, folks rolled in consumer loans into the mortgages. So that drove that drop in consumer loan balances also.

Okay. Just maybe on asset quality, this has been the second quarter where you've had higher recoveries in the construction book. Is that still a source of benefit to your NCO rate for the next couple quarters?

You know, our recoveries have been running pretty-- flat, I guess, is the right word. They have been consistent for the last three or four quarters and we would anticipate that would continue into the next quarter.

I guess I would add to that, though, that the impact of interest reversals on recoveries and workouts has dropped in the last couple of quarters. We were seeing a higher run rate in second and third quarter than last quarter, some margin impact.

Okay so -- the real improvement you're seeing is just going to be on the gross charge-off rates.

Well, we expect it to continue at the level that it's been-- as far as recoveries.

Okay, okay. But how about just your gross charge-off rate? Is the portfolio cleaned up enough now that you're going to really kind of track something that's maybe $3 million to $5 million a quarter in net charge-offs?

You know, it's -- we think we'll continue, but David, that is so dependent, or can fluctuate quarter to quarter based on one or two credits. So that is a really hard number to say that it will stay that low. But in general, without surprises that come along, we expect it to be pretty consistent.

Okay. Thank you.

And we'll move to Bob Ramsey, FBR Investment Bank.

Thank you for taking the follow-up. Can you just talk about the --

This is Andrew?

Yes, this is Andrew. (laughter) Can you just talk about the thought process behind the reserve release this quarter, I guess given that MPLs were higher?

So-- our rate of charge-offs has been decreasing and that decrease accelerated in the first quarter. When we go -- particularly on smaller balance loans, we had to adjust our models and that drove the release.

Okay, and on a quarterly basis, I think we were targeting between zero and $5 million on the provision?

And I think that's a good number.

That's a good number for the following three quarters?

Yes.

Okay. Thank you.

(Operator Instructions)

We move next to Blair Brantley with BB&T Capital Markets.

Good morning, everyone.

Hi, Blair.

Most of my questions have been asked and answered, but did want to ask about the charter consolidation. Any update there? I know you talked about it a little bit during the conference season. I want to hear any updates that you may have.

So our primary focus remains on the BSA/AML and getting that to where it needs to be. And when that occurs, we will move forward with the consolidation of the charters.

So no hard numbers or anything kind of pen to paper, anything else been done there?

We have not put together hard numbers on costs.

Okay. All right, and then secondly, I know you mentioned some of the worth C&I has been showing some strength from a geographic perspective. Can you talk about the overall loan prospects for your markets and where you're seeing strength and weakness across the board?

Our -- the strength, the two markets that we see the most strength are central Pennsylvania, where we've always been strong, and then the other market that's really picked up for us is Maryland. Over the last 18 months, we've been able to bring on 12 new lenders in our Maryland markets from various competitors and they are really starting to gain some traction for us.

New Jersey continues to be a little slower than our other markets. And-- Virginia and Delaware also we see some strength, but not to the same degree as Pennsylvania and Maryland.

Okay. Any fallout from the recent deal that should be closing soon for one of your largest competitors? Any update there?

As we mentioned in the past, a lot of that happens over time, not upfront. But market disruptions help us and I think that we will do our best to have whatever market disruption there is. We will try hard to have it benefit as much as possible from both a customer standpoint and from a talent acquisition.

Okay, thank you very much.

Next question comes from Matthew Keating with Barclays.

Thank you. My two questions were just asked by a previous caller, so thanks.

Great, thanks, Matt.

And ladies and gentlemen, with no further questions in queue, I would like to turn the conference back over to management for closing remarks.

Well, thank you all for joining us today and we hope you'll be able to be with us when we discuss second quarter results in July.

Ladies and gentlemen, that does conclude today's conference. We do thank you for your participation. You may now disconnect. Have a great rest of your day.