Ameris Bancorp (ABCB) Q4 2014 Earnings Report, Transcript and Summary

Good morning and welcome to the Ameris Bank Acquisitions Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I will now like to turn the conference over to Dennis Zember. Please go ahead, sir.

Thank you, Denise, and good morning, and thank you for joining us on this Ameris Bank investor relations conference call. Before we begin, let remind you that some of our comments during this call may be forward-looking statements, which involve risk and uncertainty. A number of factors could cause actual results to differ from the anticipated results of other expectations expressed in the forward-looking statement. Those factors include interest rate fluctuations, regulatory changes, portfolio performance and other factors discussed in our filings with the SEC. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time. Also on investor presentation and outline, and the agreements relating to the acquisitions can be found on the SEC’s website. Obviously, the purpose of the call is to discuss the pending acquisitions and the private placements. But before I turn it back to Ed on that, let me give you a quick run-down on our financial results. We finished 2014 with total assets of just over $4 billion, up about 10% from the year earlier, thanks mostly to the acquisition of Coastal Bankshares in mid-2014. Total loans grew during the year to $2.9 billion, compared to $2.5 billion at the same time in 2013. Loan growth, when you exclude covered, rental activity and the acquisition of Coastal came in at 9.8%, which was close to where we had been projecting. Loan activity in the fourth quarter was strong, when you consider the seasonal payoffs we experienced in ag and municipal credits. Total deposits ended at $3.4 billion, up 14% from the beginning of the year. About 40% of the growth we had in total deposit came from non-interest bearing deposits which finished the year about 25% of total deposits. At the end of 2014, tangible common equity totaled $294 million, compared to $247.7 [ph] million at the beginning of the year. Tangible book value per share grew from $9.87 to $10.99 at the end of 2014. Our TCE ratio improved as well, we started the year at 6.83% and then finished the year at 7.42%. As far as net income for the year, we reported operating earnings of $41 million or $1.56 per share, compared to $21.4 million or $0.89 per share in 2013. During the fourth quarter, we reported operating earnings of $10.6 million or $0.39 per share, compared to $3.8 million or $0.16 for the same quarter in 2013. Operating earnings, the only thing we’re excluding when we refer to operating earnings are merger-related charges which were $2.6 million in 2014. The significant improvement in total operating earnings relates to several factors. First, the acquisition of Prosperity Bank in late 2013 and Coastal Bank in 2014 improved our earnings per share as we had planned. Other than improvement from acquisitions we experienced lower levels of credit costs, significantly improved mortgage results, stable margins and generally improved profitability across most of our markets. Speaking of margins, our net interest margin excluding accretion was pretty stable during 2014. During the fourth quarter, margin again without accretion was 4.17%, which was unchanged from the third quarter and we stand only about 4 basis points from the first quarter of 2014. The stability in the margin comes mostly from land deals which are held in there. In the fourth quarter loans on the liability side yielded 4.94% which was really only about 10 basis points from where the quarter’s production came in and accounted for most of the stability in the margin. Deposit cost had been pretty flat during the year and came in at 30 basis points for the fourth quarter. With the recent fall in interest rates we’ve taken another look at our deposit costs and I believe there is some room for us to move a little lower without putting any of the balances at risk. Non-interest income continues to be something that we’re proud of. Non-interest income increased substantially again in 2014 to almost $63 million, a 35% increase from what we reported in 2013. Obviously, the success with our mortgage company dropped a lot of that. The profitability for mortgage increased substantially and we’ll refer to that in a second. Total mortgage - non-interest income, excuse me, for mortgage totaled just over $25 million. Our net income from mortgage was about $6.2 million, that’s after tax and fully loaded with overhead. Mortgage net income grew at twice the rate of their revenue during 2014. We believe that symbolizes the mature state of business for our company. Besides the growth in mortgage, we had an increase in SBA revenues of about $2.5 million, and an increase in deposit related charges of [Technical Difficulty] were $150 million, compared $121 million in 2013. Excluding merger charges and credit costs the operating expenses grew almost $27 million during 2014 as we integrated the additional branches and assets from the Coastal and Prosperity deal. During the fourth quarter we incurred about $1.2 million of non-recurring expenses related to some administrative restructurings and consulting services. Also we took an aggressive mark on some lingering OREOs and took charge of about $2.2 million for related write-downs. Ed and I do anticipate some level of occurring credit costs going forward but we do not believe that fourth quarter’s credit costs are indicative of where credit costs are headed. So in inclusion I’d note that our operating return on average assets improved to approximately 1.1% compared to 80 basis points in 2013. Return on tangible common equity increased to 15.5%, compared to 9.3% in 2013. We are pleased with these results in how we’re positioned going into 2015. And we obviously we see room for improvement in several areas we are intensely focused on those areas. But we’re delighted with what we accomplished in the past year. With that quick report on financial results, I’ll turn the call over to Ed Hortman, President and CEO to discuss the NR [ph].

Thank you, Dennis, and good morning, everyone. Thank you for joining the call and your participation to that. We are very pleased and excited this morning to announce two transactions that we believe are very attractive opportunities for our company. Combining these deals with the private placement that we announced this morning produces a pro-forma balance sheet of about $5.5 billion in total assets that is slightly accreted to tangible book and more than 15% accreted to 2016 earnings. About the deals, first we’ve entered into an agreement to purchase Merchants & Southern Banks of Florida in Gainesville, Florida. Under the terms of the stock purchase agreement, Merchants’ single shareholder will receive cash in a fixed amount totaling $50 million for all of the shares. Merchants is a 55 year old institution, has a very stable customer base and their CEO, Tom Mallini has been in charge for over 30 years and most of his staff and team had been with him for a long period as well. They are the largest community bank in Gainesville MSA and it provides us a really attractive entry into that market. The metrics on the deal were good. Page 5 of the presentation that Dennis mentioned to you, you can see that our Price to Tangible Book was 131% and price to 2014 earnings was about 16 times. We’ve been wanting to get into the Gainesville market for some time. And the opportunity to partner with this quality of an institution at these levels is pretty exciting to us. Secondly, we’ve agreed to purchase 18 branches from Bank of America in South Georgia and North Florida. These branches are highly profitable that have significant levels of non-interest income and good management levels of non-interest expense. The branches have about $810 million of total deposits and with our premium at 3%, we expect the purchase price to be about $24 million. Lastly, we commenced an effort to raise $100 million in the private placement net to bolster our capital ratios and raise funds needed to close the Merchants deal with cash. The private placement was very well received oversubscribed at a level that allowed us to upsize it to $120 million. And as a result, we issued 5.3 million shares of ABCB stock at an offering price of $22.50 that represented a discount for last month’s closing price of about 1% and a discount for the 10-day moving average of about 4.50%. Let me make a few comments about the deals collectively and further illustrate why we believe this opportunity is so meaningful. First, the two banks bring $1.2 billion in total deposits with a weighted average cost of 15 basis points; roughly half of the deposits at little to no sensitivity in interest rates, which will be a significant once rates begin to rise. Average core deposit premium on both deals is just over 3%, which is effectively priced considering the concentration of deposits costing pretty close to zero. We believe our operating efficiency will be greatly enhanced by the market share resulted from these deals, even in Gainesville, which is a $3.5 billion really competitive market. Our acquisition will put us at top or will - the only banks they had was being the super-regional banks. The risk profile of these deals is significantly better than other deals we looked at recently. The majority of the success that we anticipate hinges on really two things, the ability to retain deposits and to deploy the excess liquidity into loans over the period of time we got modeled. And we don’t take those challenges lightly, but those two things are at the core of what we do really well. And from a regulatory perspective, we think the deals are advantageous as well, with the risk profile is very low. It’s minimized by a relatively small amount of earning assets in loans and very low levels of non-performing assets. The additional capital from the private placement will have regulatory capital levels at closing virtually unchanged from the strong levels we reported from standalone at the end of 2014. From a closing timeline perspective, the M&S deal has only a single shareholder, so the proxy gathering process and any other legal challenges or issues should not be an issue at all on that deal. And now, Dennis, I will ask you to go over some of the metrics of the deal, if you will and discuss some of these factors that we’ve made.

All right, thank you, Ed. I’ll start on page 5 of the presentation with the terms of the M&S deals, like Ed said, we’ve agreed to pay $50 million in all cash to this single shareholder. Ed mentioned the price to book in earnings, but our implied core deposit intangible on this deal is 3.7%. On the next slide we provide some summary information about M&S. There are 13 branch bank in and around Gainesville, Florida. They have a small presence in Ocala with three branches. They’re on lower margin in the 3.33% range, really reflects that the fact that they maintained the low 60% loan to deposit ratio. We believe that’s a good incremental earnings opportunity for Ameris Bank. As far as the rationale for the deal, we believe a larger Florida franchise is valuable to Ameris, and not to repeat Ed, but being able to be meaningful in a good market like Gainesville is important too. The customer lists and market visibility we will be gaining in these markets position us well to benefit from the bank that we did pretty well in commercial banking efforts, treasury sales, even mortgage and SBA. Ed mentioned it is a $3.5 billion market. Merchant hasn’t looked really upstream at larger commercial deals, that’s something we will be able to bring to the market. This deal on standalone basis is progressively more accretive to earnings as we achieved the normalized loan to deposit ratio in the next couple of years. On the branch purchase, we are paying 3% premium on acquired deposits which total about $810 million. There are about $5 million of loan coming with the deal but essentially it’s just a lot of liquidity for us to deploy. One Page 12, we show our pro forma deposit mix being mostly unchanged relative to where it was finishing the year, and slightly less in CD and slightly more in non-interest bearing demand. The rationale for this deal, we think is pretty obvious. It provides a leveled base of low cost tangent for our future growth and a mostly non-rate sensitive portfolio. The branches are mostly in markets, where Ameris Bank is already a recognized name where we can benefit from an improvement in the market share. This deal will easily beat our IRR hurdles and it provides meaningful accretion as well to EPS in a progressive manner like M&S does. Ed mentioned the private placement so I will that and go over the assumptions and the financial impact that you see on Slide 16. With the bank deal, we are assuming 33% cost savings or about $3.3 million per year. About two-thirds of that relates to compensation savings that we’ve already identified, but there are some additional amounts related to data processing, contract savings, some credit quality expense, professional fee, obvious corporate expenses. Credit mark is about 4% and OREO mark is about 23%, or $1 million. On the branch purchase, we are assuming a 10% run-off in deposits this year and then just normal growth for these markets in the out years of our assumption. The real power of this deal and honestly the M&S deal for that matter comes from us being able to transition the excess liquidity into a normalized earning asset mix over the coming years. As we transition into that mix, we are assuming loan yields - an incremental loan yield of 4% and an investment yield of 2% on the incremental business. Honestly, I believe we can do better than 4%, particularly since that number doesn’t include any loan fee income we will be generating on the new volumes. Altogether, these two acquisitions and capital raise are more than 15% accretive to 2016 earnings, while being slightly accretive to tangible book value right out of gate. Last slide before I turn it back to Ed, before our conclusion, and just to reinforce one of his earlier comments, I’ll reference the pro forma balance sheet and capital ratios on Page 17, these transactions together increased our total assets about $5.5 billion with 500 million in total equity. Our TCE ratios at closing are estimated to be around 7.25%, which we are comfortable with given the pretty liquid balance sheet we’ll have. And our regulatory capital ratios, we believe remain very healthy. With that, I will turn it back to Ed for conclusion.

Thank you, Dennis. I will conclude on Slide 18 by just reiterating why these deals are so appealing to us. First, the strategy to be successful here is as simple as we are paying the deposit customers and growing loans. We will make some minor tweaks to improve our loan growth rate and are confident in our bankers and our folks that are currently keeping with growing deposit levels. The deals reflected on EPS without sacrificing any tangible book value and closing the balance sheet with such stronger regulatory total capital ratios and liquidity that standalone at the end of 2014. I think, I’ll stop here and turn it back over to the operator and see if there’s any questions.

We will now begin the question-and-answer session. [Operator Instructions] We have a question from Brady Gailey from KBW. Please go ahead.

Hey, good morning, guys.

Good morning.

Let’s say, if you look at the end of 2014, I think you all had - yield accretion left at around $30 million. How much do you think is added to that bucket with these transactions and how should we think about the life on - when you all will realize that earnings, is it basically in the next two or three years-ish?

Brady, as we move forward I think the - we’re gaining more and more comfort on credit and with the 4% mark on this. I mean the mark is only about $9 million. So the amount of that, that we transition into accretable over time, I think it’s going to be small. So I think going forward we’re not going to be as unreasonably conservative, let me say that way. So I don’t think we’d be building accretable yields to be amortizing in over time. We ended a year with about $46 million accretable yield left on from Coastal and Prosperity. We got about another looking probably almost $4 million from covered loans. So we got about $30 million accretable yield left. In the fourth quarter we had about $4.2 million, which was obviously more than what is scheduled. And we’ve been saying, we’d get here in 12 quarters. That’s a normal accretion quarter is still going to be somewhere around $2 million, $2.5 million range, so on that basis I’d tell you still we’ve got 10 to 12 quarters of that in the future.

Okay. That’s helpful. And then, when you look at the deposit deal, so it postfrom [ph] often looks like around $730 million of new funding or cash that will hit the balance sheet. I guess, on day one, are you all planning on investing all that in the loan book and then over time you’ll transition that into loan. Is that the plan?

Well, Brady, I’ll answer the first part and I’ll let Dennis answer the second part. The plan is not to have 10% run-off. I think the challenge for us is, like I said, is to keep all of our customers and all of our employees, and that’s what we’re going to - that’s what we’re going to try to execute. If you look at some of the other deals not around the country, you’ve seen some that have been more than 10%. But we think - I mean, we modeled 10% because we think that’s where we can execute and the markets are generally more rural in nature and markets that we’re familiar. So I think that’s the most important assumption and so you want to complete for the...

Yes, when we first started looking, the bond yields were much higher than where they are at now. And that - if we still got 170, 180 tenure, and when we closed it, I don’t think we’ll be taking it all to the market. So we - I think that was part of the reason I made the comment about I think we can do better than 4% on the loan yield. Right now, we may struggle to get 2% and that will be indicative of something really us - taking us little more duration in the investment portfolio then we won’t. So right out of gate, I think we’d be a little more conservative. We are - right now, we are more aggressively chasing loans, and I think this is an important point and it maybe a little far to what you’re asking. But we did 10% loan growth is last year. Without these deals we think we’d be at the same level. For 2015, 10%, 12% is what Ed and I have been saying. With this deal we’re going back and we sort of recalibrated, what kind of deals did we lose this year, because we were maybe a little too prudential on loan prioritizing for larger deals. And just doing that with our bankers we came up with $100 million of loan deals but we didn’t book because we just wouldn’t compete or negotiate on price. And we’re going to be a little more intentional on that, and we’re going do our best to retain all the discipline we have on the smaller deals that [Technical Difficulty] larger deals. And so the model had to go a little faster than 10%, for this coming year we move that to about 14.5%.

Okay. And then finally a kind of bigger picture question here. You all will be $5.5 billion, when all the dust settles from these two, I mean, maybe in your value you’re closer to $6 billion. And in the next couple of years you could be kind of coming up on that $10 billion on asset mark. But when you look at it, you all have been very acquisitive over the last three, or four, or five years. Will that acquisitive nature continue as you start to get closer to $10 billion than $5 billion?

Brady, the answer is yes. I think when you look at our history and what we’ve been able to accomplish, in a way it’s been a significant part of that. I don’t see that changing as we look forward. I think we’d probably be taking this year to assimilate, integrate these, but I’d tell you towards the end of the year will be talking and thinking and looking beyond that. And as far as the $10 billion dollar mark, that’s not a mark that we’re afraid of. I mean, clearly really there are some things that you have to do to prepare for going over there. And there are some significant costs associated with that. So as you get near it, this is clearly got to be a really good financial situation to be able to - to get over that benchmark, but it’s just another mark in the sand.

Okay. Great, thanks, guys, and congrats on the good news that we finished. I know it looked like a great set of transactions.

Thank you.

And our next question is from Jennifer Demba from SunTrust Robinson Humphrey. Please go ahead.

Thank you. Brady really covered the questions I had, but let me ask a follow-up, Dennis, on what you commented on for your loan growth assumptions for 2015 on an organic basis. You said, you’re going to be more price competitive on larger deals. Can you just talk to us about what kind of deals size-wise you see more growth from this year? Can you give us some color on that?

All right. Just this past year and I mean, later in the year that we moved our lending limit our in-house limit to $15 million, prior to that, a year-ago that number was $5 million. So we really got on our bankers focus and really for most of this year focused on deals under $5 million. Now, we do have, say, 10 or 12 lenders that we trust implicitly to look for larger deals. And what we’ve done is sort of commissioned them to get out and look for deals in the $5 million to $15 million range. Larger deal in our banking in for still, what, for $25 million and that’s a hospital with - it’s a hospital authority so it’s essentially a municipality. When we get below that it drops off really quick. So we don’t to leave anybody on call the idea that we’re going to be competing in the $30 million, $40 million range, we’re not. And the large loan it’s going to be something that we do but it’s not going to be what we lead with. Legal lending limit is about $100 million and we’re - again we’re way below that with what we’re thinking. Does that help?

It helps a lot. Thank you very much.

All right.

And our next question is from Christopher Marinac from FIG Partners. Please go ahead, sir.

Thanks, good morning. Ed and Dennis, can you talk a little bit about your expenses going forward from two angles; A, obviously your expense numbers relative to the balance sheet, probably come down as you integrate these transactions; but also B, I’m curious, is there kind of any infrastructure spend as you may have to do as you jump into this next size range of the company?

Yes, and obviously I’ll just say, to anybody that’s on the call that for this our last couple of years, operating expenses and efficiency ratios are getting us, I mean, Ed and I talk about that all time, if you talk our bankers they would tell you that, they probably hear that more than they hear conversations about production. And so we are focused on it. For the year, we had - I’ve to get to the fourth quarter, but for the third quarter when you exclude the credit costs, we exclude the credit costs and merger costs to sort of look at what does it cost to operate, and were about $61 million. In the fourth quarter kicked up to $63.5 million and that includes some of the non-recurring items I mentioned. We - your question about incremental spending, you kind of go to Brady’s question about not being afraid to be bigger. We have done a lot of soul-searching and investigating and we have hired the right consultant to come in and tell us, how we need to restructure credit administration, and how we need to restructure HR and training and IT. And just last year - specifically about your question, last year we did that on IT. That culminated in the fourth quarter that was some of the consulting costs that I was talking about earlier but coming out of that, we realized we needed to add another $1 million dollars of investment, annual investment. And most of that’s in people and more professionals and better professionals than what we were currently maintaining the company with. So we said about that we - in the fourth quarter we probably hire 70% to 80% of that. Now, we are very close to renegotiating our contract with our core provider. We’re two years early before the contract expires. I think we’ll get all of that saving back and be better. I think - I tell Ed, I think some of the traction that we have not got on operating expense is just stems from the fact that, three or four years ago we were $2 billion, we’ve grown to $5 billion and we’re having to constantly ramp-up IT, constantly ramp-up risk management credit administration. And where we are making progress and we’re getting closer. These deals will definitely help us do that, the branch deal especially. But I want you be here on the call and now it’s something that we’re intently focused on as we have been.

Great. That’s helpful. And I guess this is my follow-up without getting too specific answer that is really just the last couple of deals you done that helped Ameris get to the next level of ROA and ROE, and I’m just curious, big picture, do these two types of action certainly kind of puts you up like another notch or do these sort of keep you at that level, but just simply did in more or bigger platform.

We did take this up another notch on ROA for sure. Most of it, I mean, the branches, especially for the branches, and the branch deal have more non-interest income than they did non-interest expense. That’s something we don’t have that maybe, but two or three of our 72 branches. So that, I mean, that’s meaningful. Now, it’s definitely, we believe these are definitely accretive to ROA. I mean, now, if you go out, it may take you a year or two to get to that point where we get the earning asset mix right, but now over the periods that we modeled, we’ve shown stronger ROA.

Great. Thank you for the perspective here. I appreciate it.

[Operator Instructions] Our next question is from Peyton Green from Sterne, Agee. Please go ahead.

Yes. Good morning, I just wondered Dennis or Ed, if you could comment maybe on the nature of the non-interest income that you get from the Bank of America branches. I mean, obviously they’re much bigger organization. Then you all are with non-interest income just normal checking related type non-interest income, were there other speed [ph] services maybe that you all don’t offer that would be something you have to build in or won’t be able to duplicate?

Peyton, that’s a good question. We - about 40% of their non-interest income is get the charge related - debit income-related. We did not…

It’s debit related, but as you know, they’re related to bond-urban [ph] so intuitively you think…

We would be collecting…

We have an opportunity to do better than that…

To pick up more, there you go. And then the remainder of it is what you referenced it, check charges, it’s in assets, obviously. It’s service charge oriented. Our model we do show, you combine all that, even more debt revenues. We have modeled lower levels of non-interest income just because and I don’t say this with any prejudice but our service charge routines are less of prices than Bank of America’s. And so we have modeled lower levels of non-interest income, despite that we think we’ll be collecting more debit income.

Peyton, I would add to that when we look at their accounts and compare it to ours they are going to be very, very similar in features. So the customers that are not paying the service charge there, the vast majority will not be paying the service charge to Ameris Bank. But again that’s another point to speak in this of sort of the accounts. They’re just - our accounts are very, very similar.

Okay. And then, with regard to the expense load of the branches, how much is it day-one and then it seemed like there are five or six branches that, I mean, would overlap, would be very redundant, what’s your thought on that?

That’s exactly right, and that’s part of the allure of this transaction for us, is that our market share of those branches you mentioned will - in a number of instances will double. So it really enhances our existing footprint.

Yes, and as far as consolidation opportunity, we - there are six branches of the 18 that we’re buying that we sort have slated for looking at. Now, honestly all six of those are Ameris Bank branches. The Bank of America branch is in all of those markets is superior to the Ameris Bank branch, at least in location or space or accessibility. So that’s going to help, that we are actually closing our branches. The total expense load, Peyton, I don’t mind telling you is $11 million. Right now, we’re spending about $9.2 million or so. We ramped that up little for admin, some data processing costs. We’re negotiating hard with our provider. Ours are still higher than theirs but we - that and a few other things we’ve included.

So the branches that you have, that would be redundant that don’t match, but they aren’t the level there, so you mean they owned by Bank of America, so it should be pretty easy or are they subject to leases? I guess, I am just trying to understand how long it operates with redundancy?

They’re alone.

Okay. That’s it. All right, and then second unrelated question, looking at provision year-over-year roughly it was 21 basis points of the loan HFI growth. I’m just wondering, Dennis, as you look in the 2015 and 2016, I mean, what do you think a more normal level on provision expense should be relative to the growth and then loans?

Probably, just knowing what we’re putting on the books probably what 80 or 70 basis points. I mean, we’ve not been very successful growing residential construction. That will come on with probably in the $125 million range. We’ve been very successful with growing some of in the lines of business, whether it’s municipal or mortgage, mortgage warehouse. And those come on with much lower levels of loan loss reserve. I think to the extent, I’ll go to what I was saying earlier, to the extent that we are going to get the larger levels of loan growth. And that’s probably our bankers are mostly centered on CRE sales. You’re probably looking at I’d say 80 basis points, probably weighted-average 80 basis points, I think, it varies in the 100 to 110 range. And then I think with all the other lines of business it probably brings it down to say 80, 90 basis point.

Okay. And then the credit related expense, what was a big number in the fourth quarter, I guess continues to be a big number just in general relative to the amount of OREO that you have. I mean, still you have a lot of OREO. What’s that timeline for purging the OREO a little more quickly? I think it’s turned around.

Getting ready for this call, I spend about an hour with Jon Edwards yesterday and we looked at it. If you look at the top three or four deals that are purchased, non-covered, when you look at the top three or four deals, non-performing loans and OREO for Ameris legacy, all of them are in some stages, have been close to being resolved. And they’re not - so I spend it, because I am looking at the same line as you are, but I got to believe we’re closed. I mean Ed and I have been telling investors especially related to the private placement bet, our normalized credit expenses should be somewhere inside of $3 million, $3.5 million range a quarter. And that’s just looking at - looking down getting real granular with OREO, real granular with non-performing loans, what is it going to take to move this, what kind of inbound phone calls we’ll be getting. We think it maybe $12 million, $13 million, $14 million for this coming year. That’s part of one why we’re still confident with where the - confident with what the 2015 forecast would be. I mean we had $6 million of great cost in the fourth quarter. And that’s clearly higher than what we believed necessary.

Okay. And then, last question, I mean the margin going forward based on the accretable yield, you would expect it to come down into the $450 million range, and is that fair?

Yes, yes, it is.

Okay.

I think the margins - I mentioned briefly, that we’re taking another look at deposit costs. I think this quarter we could probably get another 6 basis points of deposit costs out. I know the model for the Bank of America deal shows, we’re going to increase their costs from 13 to 36. That’s what we’ve modeled. I mean, honestly I think with the rate movement where they are, we’ve taken another swipe at ours. I think we’re going to try to get ours close to theirs. So there may be some margin pick-up from that. We did that extensively because where rates were going we were afraid there are may be some more refinance activity out of our loan portfolio, and just want to be the benefit. But I think we can maintain the margins in the $415 million to $420 million range.

Okay. Great, thank you for taking my questions. Congratulations on the announcements.

All right. Thank you.

And ladies and gentlemen, this will conclude our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

We don’t have any closing remarks. If you have any questions or comments feel free to call us or email. Thank you for your participation. And have a good day.

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