Simmons First National Corp (SFNC) 2015 Q3 法說會逐字稿

Good day, ladies and gentlemen and welcome to the Simmons First National Third Quarter 2015 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to hand the meeting over to Burt Hicks. Please go ahead.

Good afternoon. I'm Burt Hicks, Investor Relations Officer of Simmons First National Corporation. We want to welcome you to our third quarter earnings teleconference and webcast. Joining me today are George Makris, Chairman and Chief Executive Officer; Bob Fehlman, Chief Financial Officer, Marty Casteel, President and CEO of Simmons Bank, our wholly-owned bank subsidiary and David Garner, Chief Accounting Officer. The purpose of this call is to discuss the information and data provided by the Company in our quarterly earnings release issued this morning and to discuss our Company's outlook for the future.

We will begin our discussion with prepared comments followed by a question-and-answer session. We have invited institutional investors and analysts from the investment firms that provide research on our Company to participate in the Q&A session. All other guests in this conference call are in a listen-only mode. A transcript of today's call, including our prepared remarks and the Q&A session will be posted on our website under the Investor Relations tab.

During today's call and in other disclosures and presentations made by the Company, we may make certain forward-looking statements about our plans, goals, expectations, estimates, and outlook. I remind you of the special cautionary notice regarding forward-looking statements and that certain matters discussed during this call may constitute forward-looking statements and may involve certain known and unknown risk, uncertainties and other factors, which may cause actual results to be materially different from our current expectations, performance, or estimates.

For a list of certain risks associated with our business, please refer to the forward-looking statements caption of our earnings press release and the description of certain risk factors contained in our most recent annual report on Form 10-K, [always] filed with the SEC. Lastly, any references to non-GAAP financial measures are intended to provide meaningful insight and are reconciled with GAAP in our earnings press release.

These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. With that said, I will now turn the call over to George Makris.

Thanks Burt and welcome everyone to our third quarter earnings conference call. In our press release issued earlier today, we reported record core earnings of $25.6 million, an increase of $14.9 million or 139% compared to the same quarter last year and record diluted core earnings per share of $0.85, an increase of $0.22 or 35% compared to the same quarter last year.

This is a sixth consecutive quarter in which we've reported record core earnings. We continue to make good progress with our revenue enhancement and efficiency initiatives. Our core efficiency ratio for the quarter was 57.5% compared to 64.9% in the same period last year. Our core return on assets for the quarter was 1.33% compared to 0.95% in the same period last year, and our core return on tangible common equity for the quarter was 15.99% compared to 12.84% in the same period last year.

As a result of our recent acquisitions and ongoing efficiency initiatives reported in last several periods, we have and will continue to recognize one-time revenue and expense items, which may skew our short-term financial results, but provide long-term performance benefits to our Company and shareholders.

Our focus continues to be improving in our core operating income and core efficiency ratio. Core earnings for the third quarter of 2015 exclude the following non-core items: $521,000 in after-tax merger-related expenses, a $1.3 million after-tax gain on the sale of three Salina, Kansas branch banking operations, $185,000 in after-tax branch rightsizing costs, and $4.5 million in after-tax charges related to the termination of the Company's loss share agreements with the FDIC.

Including these non-core items, net income for the third quarter was $21.6 million, an increase of $12.8 million or 146% compared to the same period last year. Diluted earnings per share were $0.72, an increase of $0.20 or 39% compared to the same period last year. For the quarter, we achieved strong legacy loan growth totaling $228 million over the second quarter of 2015 and an expanding core net interest margin of 3.93%, up from 3.51% in the same period last year and 3.87% in the second quarter.

On a core basis, we increased non-interest income by $13.5 million or 89% over the same period last year. This increase is driven primarily by the integration and expansion of our acquired business lines. Core non-interest expense increased by $26.2 million or 65% over the third quarter of 2014. This increase is primarily due to incremental operating expenses of the acquired Delta Trust, Community First and Liberty franchises.

As previously mentioned, during the quarter, we announced that we entered into an agreement with the FDIC to terminate our loss share agreements related to the four FDIC-assisted acquisitions that we completed in 2010 and 2012. The one-time after-tax charge of approximately $4.5 million is primarily related to the write-off of the remaining FDIC indemnification asset and settlement charges paid to the FDIC.

It's important to note that the charge was only timing in nature as those expenses would have been included in our financial results over the next several quarters. We expect to realize future benefits associated with determination including reduced operating cost, retention of all loss recoveries, and simplified financial reporting. However, we will assume all of the risk of loss associated with any assets or expenses previously covered by the loss share agreements. As a result of the loss share termination, all FDIC acquired assets are now classified as non-covered.

All acquired loans are recorded at their discounted net present value. Therefore, they are excluded from the computations of the asset quality ratios for the legacy loan portfolio, except for their inclusion in total assets.

At September 30, 2015 the allowance for loan losses on legacy loans was $30.4 million while the loan discount credit mark and related allowance on acquired loans was $71.4 million. This equates to a total of $101.8 million of coverage or a total coverage ratio of 2.1% of gross loans. The allowance for loan losses on legacy loans equal 1.07% of total loans and 181% of non-performing loans.

Non-performing loans as a percent of total loans were 59 basis points, which is an improvement from 65 basis points in the second quarter. During the third quarter of 2015, the year-to-date annualized net charge-off ratio excluding credit cards was point 0.12% and the year-to-date annualized credit card charge-off ratio was 1.3%. Our capital position remains very strong. At September 30, common stockholders' equity was $1 billion and tangible book value per share was $21.89. Our tangible common equity ratio was 9.1%.

Before opening the line to questions, I'd like to discuss few recent announcements and other significant events. On August 17, we announced that David Bartlett, our President and Chief Banking Officer will retire in January 2016 following a distinguished banking career. David has played a key role in positioning our Company for continued growth and success. David will be missed, but we have a deep and talented bench of bankers. They are prepared to assume new and expanded roles.

Concurrent with the announcement of David's pending retirement, we made the following announcements: Barry Ledbetter who most recently served as Regional Chairman with Central and Northeast Arkansas has assumed the duties of Chief Banking Officer. Barry has been with our Company for more than 30 years and has an exceptional record of performance including serving as Chief Executive Officer of Simmons Bank of Northeast Arkansas prior to our charter consolidation in 2014.

Matt Reddin has been named Chief Lending Officer, which is a new position for our Company. Matt will work to develop community bank lending teams. He will also have a leadership role in the bank's loan approval structure. Adam Mitchell was named Chief Retail Officer, which is also a new position for our Company. Adam will work to ensure the efficient delivery of products and services throughout our retail branch network. Freddie Black has assumed the duties of Regional Chairman for the State of Arkansas. Freddie will now oversee all of Simmons' banking operations in Arkansas. Bary, Matt, Adam, and Freddie are each uniquely qualified to assume these new roles that we feel position our Company well for future growth and continued success.

Over Labor Day weekend, we completed the conversion and integration of First State Bank, headquartered in Union City, Tennessee. This significant conversion completes the integration of all bank acquisitions today. Simmons now operates under a single bank charter.

In April of this year, we announced that we signed a merger agreement with Trust Company of the Ozarks of Springfield, Missouri. TCO has scheduled a special meeting with shareholders on October 28 to consider approval of the merger agreement and the merger transaction. If approved by the TCO shareholders, the transaction is expected to close shortly thereafter. We anticipate merging TCO and Simmons First Trust Company into Simmons Bank in late 2015 or early 2016. As a reminder, this acquisition will increase total assets under management for our [Trust department] by more than $1 billion.

This concludes our prepared comments. We'll now open the phone lines for questions from our analysts and institutional investors. I'll ask the operator to come back on the line and once again explain how to queue in for questions.

(Operator Insturctions) Stephen Scouten, Sandler O'Neill.

I'm doing well, maybe not as well as you guys given the move in your stock here today. So congratulations on that.

Sort of scary, isn't it?

It's fun. I like -- my whole screen is green today. It's a good day. So curious a little bit about kind of the expense run rate from here. If I could get a little more detail here especially as it relates to the first day, the conversion and kind of what we're going to see in regards to the cost saves to come out and kind of the timing of those remaining cost saves on that deal.

Okay, I'll start with that and David and Bob may want to jump in. I'll tell you that of all the numbers that we report in this quarter, we're a little disappointed in the non-interest expense and we're really to blame for that because as we did the acquisitions, we probably didn't press the pedal as hard as we could have. Making sure that we didn't cut into any of the muscle in any of those locations and once again I want to remind you that both with Liberty and First State, we did not close any branch locations.

So we expected minimal cost saves to begin with. We also had the severance payments for those folks at First State who were not retained in the third quarter. So, that's a little bit of a tick up. We also had a change to our incentive programs that you probably recall our shareholders had to accrue in June of this year and some of those accruals added about a [$1 million] to our expenses this quarter, sort of catch-ups. So we've gone from a one-year incentive plan to a multi-year performance plan and some of the shares that were included in that plan were sort of a catch-up this quarter.

We have some room for improvement there and if you're asking what we expect going forward, I would tell you that probably $62 million to $63 million a quarter. That's what we would consider to be normal as of today's operations. Obviously, our budget process is underway and what our expenses will be in 2016 is going to be a prime focus for us.

I guess what I'm telling you is we're still trying to get our arms around all the integration pieces from quite honestly 11 bank conversions over the last two years and now that we're all under one umbrella, it's pretty clear to us where we have opportunities to improve and I think we'll target those in 2016.

It's Dave and let me clarify a couple of things. First, the non-interest expense on the GAAP basis was [$67.9 million]. The non-core items were [$1.3 million, so our core non-interest expense was $66.6 million] and as George said a minute ago, we had several items that did come up during the quarter that were somewhat acquisition and timing related. They were core items but some of them may not be recurring going forward.

We also -- the foreclosure expense was elevated for the quarter. There were several properties that appraisals came in on an annual basis and those were updated. So what would I give you as George said, there was [about $3 million of that $66 million] that is really non-recurring on a regular basis but it is core items. So that $63 million range as George said is how we came back to that number.

Okay. So you kind of think about the run rate [around $63 million], then you'll have the First State cost saves coming out more meaningfully what's left of those and still think you can get in that $62 million to $63 million] range and on a net basis?

That's correct.

Okay, great. And organic loan growth looked really strong in the quarter, but I know you get some of the movement from the acquired book over into the organic books. Can you talk about what the breakdown is there and kind of what you saw on a true kind of legacy organic growth perspective and kind of where that growth came from?

I'd be glad to try to that. Our legacy loans were up $228 million. Of that number, $36 million migrated from acquired to legacy. So we had a pretty good net legacy loan growth of $192 million. We did have $151 million decrease in the acquired bucket. Some of that was anticipated with the result maybe some pay downs in Liberty and First State customers, but we also had a considerable amount of impaired loans paid off this month, some $17 million which we like to see.

So we're still pleased with our legacy loan growth and the markets that are still driving that are the Little Rock MSA, Wichita, actually Pine Bluff in Southeast Arkansas, St. Lewis & Jonesboro markets. They're still very, very good for us and we see a lot of upside potential in those markets.

Okay, what do you think you guys can sustain? Do you still think you can sustain a net kind of mid-double digit sort of loan growth pace or is that a little too aggressive given continual pay down levels or where are you guys feeling you can shake out?

It's probably a little aggressive considering that I'm not real sure all of the play downs have happened yet. So we still plan in the 7% to 10% range. We think that is sustainable over the next couple of quarters [anyway].

Okay. Makes sense. And any additional upside from your ag growth this quarter or is that -- because the pay downs there kind of the seasonal effects starts to migrate out in the fourth quarter, right? So is there any upside impact in the current quarter there?

Well, yes we were at our peak lending level in the third quarter. It will start paying down in the fourth quarter and accelerate into the first quarter of next year. It used to be a real significant issue, but based on our current size and the percentage of agri loans that we have in our portfolio today, while we'll see a little tick down, it won't have the same seasonal impact that most of you have been used to seeing over the last three or four years.

Okay, make sense. Then maybe just one last clarifying question from me is. On the accretion numbers that you guys gave in the presentation and the number that you tend to give as you calculate your core NIM, what are those two numbers, just to make sure I'm clear on that. I think I saw $14.9 million in the presentation. Is that correct?

Our accretion for the quarter was $14.9 million. What we did, on a run rate, there's about $7.5 million in normal accretion that's being amortized related to the purchase accounting for the quarter.

As George mentioned, we had significant pay down in some non-performing impaired loans that were acquired. Those loans had substantial marks on them. Those are non-accretable marks while you still have them on the books. When they pay off, you accrete that to income. So [about seven of that million] was related to those loans.

Okay. So when you guys normally talk about your core NIM, you just back out the kind of scheduled accretion, is that right?

Yes, if you go back a couple of years, we used to talk about the excess accretion, but now that we no longer have the -- under the FDIC loss share agreements, it's all the same number. So this quarter and going forward, all you'll see is the total accretion that's on the books and we back all of that out to get to the core NIM.

Okay. So the numbers like -- we talk about the last couple of quarters, I think it was $6.1 million in 1Q and like $2.9 million in 2Q, do those numbers kind of pair with the $7.5 million number that you mentioned?

Well I can give you the quarter for the total. We had $14.9 million total accretion in Q3. In Q2 it was $10.1 million, and it was $10 million in Q1. And I would say, the numbers change every quarter, but somewhere in that $7.5 million. So going forward, we would expect $7.5 million, that will be decreasing over time but yet on the other side, we don't know what loans will pay-off especially in the non-performing. We want those to pay-off and as they do, that number can increase. So, that's one of those volatile numbers that -- it's hard to project.

Thank you. Brian Zabora, KBW.

Maybe just a follow-up on that question on the accretion side, you also have with the FDIC, your loss share expiring if you get to keep all any improvement there. So looking at that $7.5 million schedule, does that change at all with the loss share now exited?

No, Brian, this is David. No, it really doesn't change. That's where our projections going forward is that the accretion is going to be about $7.5 million. What it will do is it will eliminate the indemnification asset amortization. That's been running about $2 million in negative non-interest income on a quarterly basis. So, no, you won't see any change in the NIM based on the exiting the loss share, but you will see a bump in our non-interest income of about $2 million a quarter by eliminating that amortization.

And Brian, under GAAP, the accretion is completely separate from loss share. So whether you're in or not, the accretion is the exact same. So there's nothing to do at all with the loss share. Just as David said, just that loss share exit in the non-interest income.

Got it. So, all the historical numbers that you gave include the accretion from the FDIC?

Exactly. Yes, the numbers I gave a minute ago David, total accretion was just FDIC and non-FDIC.

And then on the deposit side, you have a lot of liquidity there. Is there a target for loan and deposit ratios we could think about. Do you still want to try run off maybe some CDs given that liquidity. Just your thoughts around those deposits?

Well, what we're at 80 now. That's a whole lot better than 70, which I think is about the number we were about a year ago. 85 to 90 would be the ideal spot for us. We've had great shift in our balance sheet. Our securities are shrinking a little bit. Our loans are growing and we'd like to continue that trend.

I'm not sure we want to actually manage that through running off any more deposits. I'm pretty comfortable with where we are. Our cost of funds is reasonable. We may have a little bit of an opportunity over in our Tennessee market where their costs of deposits were a little higher than ours, but we're pretty comfortable with our level of deposits right now and I wouldn't see us taking any proactive efforts to run-off anymore of those deposits.

And Brian what you're seeing on the liquidity is we did have a decrease in the security portfolio of about some $120 million, $130 million. A lot of that was due to calls and as the 10-year dropped and rates dropped for a period of time, we're holding back reinvesting that.

Our intent is not to hold back for a long period time, but we're looking for the right opportunity to put it back in. So you'll see our security portfolio go back up we would expect over the fourth quarter. That will keep us at that 80% level. We've said this several times, we don't intend to keep a $1.8 billion security portfolio. We've let drop down to [about $1.6 billion]. If we had the loan growth there and the deposits held where they were, we'd be willing to let that security portfolio migrate down to [$1.3 billion, $1.2 billion] somewhere in that range.

Well, I would say yes it does. I'm not sure we can quantify exactly what that is. As you're probably aware, we have really beefed up our risk management team internally to prepare for that and as we're taking a look at DFAS expense and other compliance expenses.

In the first year of DFAS, we're probably going to expect $3 million of expense and past that point, probably $1 million of ongoing expense with regard to the additional staff validation and all those other expenses that deal with the DFAS process. We've talked about the government amendment cost to us and we still expect the [by roughly $5 million] (multiple speakers). So there are going to be some significant expenses once we hit that point, but all of the DFAS expenses will be prior to that $10 billion mark. So I would expect over the next 12 to 18 months, a lot of that expense will be built in to our expense structure.

Matt Olney, Stephens.

A lot of my questions have been addressed, but one of the metrics we've talked about before in this call that you guys have been focused on is the efficiency ratio? I'm curious what your updated thoughts are on the efficiency ratio [over the few quarters]?

Well, they're probably ahead of our projections. I'm not sure that -- we couldn't have done better as we mentioned earlier. From an expense standpoint, we've been really pleased with our revenue generation and of course we're going to have a Trust Company. Those are [due will be] on board with another $1 billion in managed assets.

So we expect that number to continue to rise as far as revenue goes. Our target was below 60% for the fourth quarter. I think I feel pretty comfortable that we're going to able to hit that. As we're talking about internal goals for 2016, I'm going to really press for a 55% or lower efficiency ratio because I think that's very realistic now. If you had asked me a year ago if that was realistic, I probably would have said no, but I think we've done a really good job of managing both sides of that equation with some obvious upside potential on the expense side.

Okay thanks, George. And then going back to loan growth. It sounds like there could be some more pay downs that you mentioned earlier. How do I think about trying to quantify the amount of pay downs and in terms of the timing, what would you expect on the pay downs?

I would tell you Matt, we're not aware of any other relationships that may have pay downs. That usually comes early on in the process. I hope we're not talking about pay downs going forward. We usually build in 10% to 20% pay downs in both loans and deposit run-off.

So far we've not hit those numbers with any of the acquisitions. We're not anywhere close with First State and we think we're stable up in Springfield and we're actually grown that portfolio. We've hired a couple of lenders up in Springfield. We think Tennessee has great upside potential. So I'm not expecting any more, but my caution is that the run-off has not hit our model numbers. So we still want to put that out there for consideration.

Okay, that's helpful. And then last question from me. The outlook for the loan loss provisions over the next few quarters. What are you guys expecting right now?

I would tell you that what we did this quarter is going to be pretty normal going forward assuming we don't have any unexpected problems. One of the things that we need to realize with regard to our provision is that the loans that migrate from the acquired loan bucket to the legacy loan bucket and therefore the ones that are going to require an allowance are only the good loans.

So if we have acquired loans that are impaired that have a credit mark against them, they will stay in that acquired bucket for the life of the loan with that credit mark against them. So, whereas a normal portfolio will have risk ratings across the entire gambit that will require allowance against them, what's migrating over are only the good loans out of the acquired portfolio. So that percentage is likely to continue to shrink because we're only adding good loans to that legacy portfolio.

And as you migrate loans over to that bucket, how do you think about the provisioning for those loans. The good loans that you mentioned George during the migration process?

Well, they just figure into our normal loan loss calculations based on their rating.

But as George said, when they migrate over obviously the provision will need to go up, but it's going to be at the lower applicable rate because they're much -- the healthy loans. The impaired loans don't move over.

They're not moving the needle much on the allowance.

So, as George said, I think what you saw in the third quarter plus it could be a little bit higher because of the migration, but not a lot of difference.

David Feaster, Raymond James.

Most of my questions have been answered, but we talked a lot about accretion expectation. Could you give us your thoughts on the core NIM? Is the [38 to 39] realm still fair as you increase your securities portfolio next quarter?

Yes, I think what you'll see, third quarter is going to be our highest of the year. Fourth quarter will tick down a little bit with the seasonality, but I think we're still comfortable in that [380 to 390] range probably and Q4 going down closer on the [380] side. Keep in mind, in Q1 it will drop. That is our most seasonal quarter, while there's not as much of an impact as George said a little while ago on the ag piece, but when you take ag piece, the credit card piece, Q1 will drop and it will be below [380] and you'll notice the significant drop in Q1.

Okay, that's helpful. Could you give us an update on the Trust Company in the Ozarks, how they've been performing and maybe some of what's happening there and what led to the delay in closing?

David, its Marty Casteel. The Trust Company Ozarks, our entire staff there are doing a great job. They're all hanging in there with us. We have just been looking for the closing. They are just part of the regulatory process. We will close this next week as we mentioned earlier.

All of the people are still in place, maintained all the customer relationships. They're excited about joining our operation. We're excited to have them. We're making plans to do some relocation of actual facility to move them over to our largest concentration of banking associates and banking assets in Springfield. Everything is going according to plan at this point.

David, I'll say this, we're probably 30 days behind where we anticipated closing in the first place. We were a little bit late getting in our applications and getting the S4 filed and then the SEC had just a couple of minor questions related to the S4. So, every time something like that happens, you can add a week or two to an expected timeline and that was the delay. No real issues at all.

Last one from me. Has the continued low rate environment changed your outlook at all and how you're trying to position the bank whether it be balance sheet in general or just your overall strategy?

Well I would say that, it really hasn't changed our strategy much. We're still trying to stay as shown in our investment portfolio on our reinvestments as we possibly can. I think we mentioned a couple of years ago, we made some longer term tax-free municipal investments of sort of balance out our yield in our securities portfolio.

From a loan perspective, it's pretty competitive out there regarding pricing. Right now, what we try to avoid are the long-term fixed rate commitments. So we're trying to keep that maturity at a very short reasonable rate. So the markets adjusted, at least the ones we compete in seem to be very similar. So I would say we hadn't changed our philosophy a whole lot. We like to see some certainty in market-driven rates instead of artificial rates but that's the environment we work under and I think we would have to fair well.

(Operator Instructions) Peyton Green, Piper Jaffray.

Yes, good afternoon. I just want to make sure I heard this right. So you mentioned you've got about $300 million in liquidity that you could run off. So that would take the balance sheet from about $7.6 billion then to $7.3 billion, which would give you kind of 35% growth give or take [to] the $10 billion mark. And did you mention you're going to spend the $3 million or $4 million going forward to prepare to be a $10 billion asset bank or is that something that will take place further out in the future?

Well, that's a good question with regard to timing. The earliest it would be over the next 12 to 18 months. And quite honestly, nobody's asked about M&A yet, so I'll just go ahead and talk about that a little bit. We continue to be pretty active in some discussions with what we think would be some very good merger partners across our footprint and even outside our footprint. I have no timeline for any of that today except that we believe that is still a great strategy for our organization and just depending on what might develop over the next six to nine months.

We really might not have any choice as to the timing of spending that DFAS money. I will tell you this. We have spent a lot of time with advisors who have been through this DFAS model creation and it's an eye opener, at least it was for me to find out everything that's involved. So what the timing is going to be, I can't tell you exactly. If we're successful with some of these merger partners, it would be sooner rather than later, but organically, if that was going to be our growth strategy, you're right, we can delay that DFAS preparation for some period of time.

(Operator Instructions) Peyton Green, Piper Jaffray.

Well, I would tell you that I would expect expense savings to make up for any additional expense of DFAS to stay in that $62 million to $63 million range.

Okay. So at the margin you would expect a very low marginal efficiency ratio, given loan growth?

Yes, I would say that that's probably accurate. If we're at [58 or so now to get to 55] would be an achievement that I would think would be very good for 2016.

Stephen Scouten, Sandler O'Neill.

Yes, thanks guys. Sorry to hop back in but I was wanting to ask about M&A and you touched on a little bit there George, but I'm curious, on the last call, it sounded like any incremental M&A would -- sounded like 2016 type event. Is that still the case or do you guys feel like you could announce a deal, you'd be prepared to announce a deal if the right deal came alone today?

We would be prepared at any time to announce a deal, if the right deal came alone. I feel pretty good about where we are today. All the integration is behind us. We're sort of doing the post-mortem now to say okay, what did we do well, what can we do better, how do we manage the next acquisition. So we're learning as we go along.

The timing is not always up to us. Most of the time it's up to the merger partner and really what works for them. So we continue our discussions and as that gets slotted appropriately, we would announce that. We would be prepared any time to do that. So I really can't tell whether to expect something in first quarter of 2016, second quarter or fourth quarter of 2015. I mean, discussions are ongoing today.

No, that's fair and then I guess two things with that, you don't feel like, even I guess with the delay of the Ozarks Trust, you don't feel like there's any regulatory impediment that would slow your potential to do incremental M&A and secondarily, kind of given the conversation around the DFAS expenditure, would it be fair to assume that deals you're looking at today could be much more sizable maybe than you were more in the past that would take us near or through that $10 billion number?

Well I would say individual acquisitions would not be greater than what we've done in the past. We just got through with a $1 billion and $2 billion acquisition at the same time. So there aren't a whole lot of [lows] out there that we're looking at today, but cumulatively, we could over a 12 to 18 month period accumulate many more assets than what we've done recently. Regulatory-wise, I will say this that it's my belief that our regulators expect us to continue to be active in the M&A arena and they expect us to get to the $10 billion level. And this is my take, okay, nothing that they said obviously. I think they expect us to be mature in our process instead of promising that we will do it at a later date. So the way they're looking at our readiness is a little bit different than it has been in the past and I think that's a good thing because last thing we want to do is get into an acquisition, file an application, and all of a sudden say, well, you really need to have this done before we're prepared to give you approval.

So we're trying to avoid that pitfall. I don't see that happening. You just never know and I'll say this too. We continue to hear that public comments and activist comments are becoming more and more prevalent. Recently there have been some favorable rulings that have said, look, these comments really don't hold water. So we're going to ignore them and let this transaction move on through. We hope that's what's happening. As you know, we had a six-month delay because of the public comment with both the Liberty and First State transaction. So you never know when that's going to happen and what we would consider to be a normal approval process goes into overdrive and a whole new set of eyes come into the picture, if a public comment happens. You never know when that that might occur.

Thank you. (Operator Instructions) And this concludes our question-and-answer session for today. I would like to turn the conference back over to George Makris for any closing comments.

Okay, well thank you all for your interest this afternoon. We appreciate all you do for our Company and if you ever have any questions, feel free to call Bob Fehlman. You all have a great day, thanks.

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may now disconnect. Everyone have a good day.