Good morning. My name is Dennis, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Union Bankshares' First Quarter Earnings Conference Call. [Operator Instructions] Thank you. I will now turn the conference over to Mr. Bill Cimino, Vice President of Investor Relations. Please go ahead, sir.

Thank you, Dennis, and good morning, everyone. I have Union Bankshares' President and CEO, John Asbury, and Executive Vice President and CFO, Rob Gorman with me today. We also have other members of our executive management team with us for the question-and-answer period. Please note that today's earnings release is available to download on our Investor website, investors.bankatunion.com. During the call today, we will comment on our financial performance using both GAAP metrics and non-GAAP operating metrics. Operating metrics exclude the after-tax merger-related expenses for the Xenith acquisition, as well as excludes the fourth quarter charge related to the revaluation of the company's differed tax assets resulting from the Tax Cuts and Jobs Act of 2017. Important information about non-GAAP operating metrics, including a reconciliation to comparable GAAP measures, is included in our earnings release for the first quarter of 2018. Before I turn the call over to John, I would like to remind you and everyone on today's call that we will make forward-looking statements, which are not statements of historical fact and are subject to risks and uncertainties. There can be no assurance that actual performance will not differ materially from any future results expressed or implied by these forward-looking statements. Please refer to our earnings release for the first quarter of 2018 and our other SEC filings for further discussion of the Company's risk factors, and other important information regarding our forward-looking statements including factors that could cause actual results to differ. At the end of the call, we will take questions from the research analyst community. And now I'll turn the call over to John Asbury.

Thank you, Bill, and thanks all for joining us today. Before I get into the first quarter, I’d like to provide an update on the Xenith merger. The integration work is progressing well and importantly I'm pleased to report that we’ve not experienced any unexpected turnover to date. Our team is energized and off to a great start since the merger closed on January 1. We are on track and well-prepared for core system conversion over Memorial Day weekend. I'm confident at our integration playbook and I want to thank our teammates for all the hard work they've put in to make the transition as seamless as possible for our customers. Turning to the earnings report, Union is off to a strong start to the year as demonstrated by our financial results with solid loan and deposit growth and meaningful improvements to our profitability metrics on an operating basis even before realizing the full impact of the Xenith merger cost saves. I believe our first quarter performance sets the pace for the year ahead and signals the underlying strength and earnings potential of this uniquely valuable franchise, Virginia's regional bank. Rob will provide more financial details in his section so I'll only speak to some key achievements during the quarter keeping in mind that the comparison to prior periods is impacted by the Xenith acquisition. For the first quarter on an operating basis, Union earned $38.9 million or $0.59 a share. I'm pleased to report that our first quarter profitability metrics improved meaningfully during the quarter when compared to last year's fourth quarter. We’re on track to meet our top tier financial performance targets in the fourth quarter once the Xenith related cost savings are fully realized. Operating return on assets improved by 21 basis points to 1.21%. Operating return…

Thanks, John, and good morning, everyone. Thank you for joining us today. I’d now like to take a few minutes to provide you with some details of Union’s financial results for the first quarter. However, before we get started, I’d like to share some data points as it relate to the Xenith acquisition, it should also be kept in mind as we review the quarter’s financial results. The fair value of assets acquired equaled $3.249 billion and the fair value of liabilities assumed equaled $2.868 billion. Total goodwill arising from the transaction equaled $420 million. Gross loans acquired equaled $2.507 billion with a fair value of $2.459 billion. The loan mark came in at approximately 2% or $51 million. Total deposits assumed equaled $2.546 billion with a fair value of $2.550 billion. Core deposit and intangibles acquired totaled $38.5 million. Since this is our first quarter with consolidated numbers including Xenith, I don’t think it would be meaningful to discuss the year-over-year or linked-quarter trends, although I will make references to trends in areas that make sense to do so. Well, we will have a more robust linked-quarter discussion for the second quarter call. Please also note that for the most part, my commentary relates to Union’s financial results on an operating basis which excludes $22 million in after-tax merger-related cost in the first quarter of 2018, and also exclude $1.4 million in after-tax merger-related cost and $6.3 million in non-recurring tax expenses related to the Tax Act in the fourth quarter 2017 results. For clarity, I will specify which metrics are reported in operating in my commentary. In the first quarter, reported net income was $16.6 million, and earnings per share were $0.25. On an operating basis, consolidated net earnings for the quarter were $38.9 million or $0.59 per…

Thanks Rob and Dennis. We are ready for our first caller please.

Your first question is from the line of Austin Nicholas with Stephens Incorporated. Please go ahead.

Maybe just dig into the NIM a little bit. As you look out through the next couple of quarters, could you maybe give us an idea of how you're thinking about the margin maybe ex accretion as well as you know reported with accretion?

As you know in our release, we do provide a schedule that shows what the expectations are for accretion income are. So you see that, that is expected to decline a bit over the next few quarters and into next year. But we do expect on a reported basis to see some expansion in the margin probably in the three basis point to four basis point range, primarily because as we've noted we've seen some increase in the short-term interest rates and that's been very positive on our earning asset yields, primarily on the loan book, which on a verbal rate book, which is about 48% you know re-price as quickly. So that's a positive going forward. We do expect a couple for the remainder of this year, we’re expecting two more moves by the Fed, one in June and one in late in the year. So the June move will help us as well on the earning assets side. We've also seen as you probably noted is our deposit betas are pretty low. We haven't had a move - moved the deposit rates very much at all. I think we've been in the 15% to 20% range depending on the type of deposit that we're talking about. So that should go well. We don't see that that's going to increase materially going forward. So we get some expansion on the earning asset yield. Some increase in the cost of funds, but we should see some expansion in the next quarter -- in the next couple of quarters.

And I guess that 3 to 4 NIM expansion is that kind of between now and the end of the year, is how you're thinking about that or I assume that's not per quarter?

It's actually - I would say we probably will see that coming in the second quarter and the third quarter.

And then, I guess maybe just on -- I think maybe, John, it’s maybe a question for you, the branch like business model that you referenced in North Carolina, I know you’ve mentioned by putting out a press release on that, but is there any additional color you can give us on the strategy there?

We've been saying for a while now is, we think about our expansion opportunities in North Carolina. We think based on the landscape, this is going to be more what I'll call an organic filled out as opposed to an M&A strategy. We will never say never, but it’s difficult to envision as making any sort of move in North Carolina that would create density anywhere near what we see in Virginia. As you know, that market has been pretty picked over from an M&A standpoint. What we have now with the acquisition of Xenith is, we do have a physical presence in Raleigh. Union has maintained an LPO in Charlotte since probably, either perhaps two years ago, little less than that which has performed well. And I'm going to ask John Stallings, our President to sort of summarize where we go from here with the build out at Carolina.

One of the things I point you is a comment to John has made on prior calls and with you I know as it relates to the talent out there and Union being a place, where we’re finding opportunities to explore conversations and a lot of interest in teaming up. In the case that John alluded to in his earlier comments, we’re able to get a leader career relationship management in commercial banking space to commit to join us just a few days ago. We’ve not put a press release out, but it’s really exciting. I spent 15 years in that market probably [indiscernible] and competed with this individual. And John Asbury actually worked with them in a prior role as well and the fact that we could win that degree of leadership head-to-head with some other competitors was another indication that there’s a right opportunity for us to expand, especially C&I in that space. We’re seeing a lot of excitement, as it relates to what we can do with our not for profit space, municipalities, business banking, and then the traditional C&I opportunities as well.

And so the initial focus will be Charlotte, where we have added some additional resources, recently, Raleigh as John Stallings mentioned, no current plans for bring this further, but we’re exploring that. And then, we’re also aided by the fact that the person who will lead the overall expansion effort used to run commercial banking for North Carolina based bank and he is very familiar with that market. I’ve lived in North Carolina for many, many times and done business there for a long time. John Stallings was down there for a very long time and we’re really familiar with that market, so we’ll go about it selectively.

Thanks, Austin. Dennis, we’re ready for our next caller please.

Your next question is from the line of William Wallace with Raymond James. Please go ahead.

Maybe just kind of following up on the North Carolina commentary. So if I understand your prepared remarks, replacing the Roanoke business leader with the new hire and that business leader is now going to run in North Carolina expansion for you guys?

Yes.

He is going to move to - he or she is going to move to Raleigh?

No.

So out of Roanoke?

Yes. He will lead the overall effort. So what we'll have will be regional heads based in North Carolina. And our leader will effectively organize the overall strategy from there.

And what bank did he run commercial banking for if you can say, is there especially if they're gone on the new bridge?

Yes.

So you've hired a leader in Raleigh, is there - should we expect there to be a buildup of a team there?

Wall, it’s John again. Definitely. We have slowly the one of the key benefits of this particular person is his ability to attract talent. And as I mentioned I think the Union story, the new Union story is really a compelling one, saw that it caused him to choose us and he’s really very prepared to help win some more boots on the ground.

And don't forget both Union and Xenith independently had resources, commercial banking resources in Raleigh. They weren't that large, but clearly what happens now is now we have a legal branch and we have more scale and quite candidly a better story. Union has seven branches in North Carolina, but the retail branches are really other than Raleigh or more in the eastern part of the state. We'll focus the commercial effort at this point on Raleigh, Charlotte and will contemplate Greensboro, High Point, the Triad.

And then maybe segueing into - I've got a lot of questions around expenses you've closed in an Wealth Management acquisition and announced another one, you're building up lending teams in North Carolina. And then, you've got all the cost saves coming from Xenith. So, maybe if Rob, if maybe the best way to position this is, if we kind of look at your anticipated hires, you've got Encino coming in, you got cost saves coming out with Xenith. If we're to look at our fourth quarter models, what should we be thinking about is, is the right expense base with the investments that are coming or half come minus the cost saves?

Well, in terms of answering that question, I think you can expect the run rate of between $73 million and $74 million in the fourth quarter, that’ll be inclusive obviously of cost savings. So the good and then some additional expenses related to the Wealth acquisitions we made and some new hires. We don't expect a huge increase related to the new hires, because we're -- there's opportunities to look at across our organization. Our lending teams in general and they may be incremental hiring, but I wouldn't expect a wholesale hiring.

And I would say this is John Asbury again, aligning resources with our opportunity is the right way to think about this.

And then, as you consider new hires and their contribution to the model, what's your expectation for how long, A, C&I lender can get up to speed and at least be net neutral to the bottom-line?

Well, John again. What I would say is that, it's all about the prospecting and the degree which they can connect with their existing centers of influence and former clients and non-client prospects, they called one in their past and I think the people we’re talking to can get off to a pretty quick start. And some of the recent hires we've made we've seen that absolutely, so to pen down a particular date might be hard, but certainly we can see some return on net investment within six months to eight months, John?

Yes, I think that’s very reasonable. Well, to be very clear, we’re not talking about some massive buildout. We're not going down there to hire 20 people. So this will be phased and that will be done very, very, very planfully and with each step we'll make sure it's working as expected. So this is nothing that's a dramatic, new market expansion. But at the same time, we do have the opportunity within our overall expenditures, which we had planned forward and to make these adds. We’ve been signaling this for a while, this shouldn't surprise you.

It doesn't. I'm just trying to put it all together and just make sure that conceptually I understand it, so definitely not surprised. Okay, so, I wanted to talk about the loan growth and the deposit growth. So you reiterated your high single-digit loan growth. You also said that you anticipate loans to deposits to remain just over 100% over the near term. I calculated roughly almost 3% loan growth on an organic basis, which would suggest that you're already seeing runoff on the Xenith portfolio if you're still reiterating high-single-digit growth or you expect the growth rates to slow. So two questions, is one as are you pushing -- are you transitioning the loan mix that was acquired with Xenith, and are you seeing some of the maybe commercial real estate customers or whatever customers that you've targeted leaving the balance sheet? And two, if your loan growth ends up exceeding your expectations, would you put it on your balance sheet even if your deposit growth is not hitting your expectations? In other words, would you take that loan-to-deposit ratio up? And if so to where?

Okay. Let's - we got a couple of…

Lot of questions there. Sorry.

We'll have to get with you. I don't understand your math Wally. So let me reiterate what I said. Let's assume that Xenith and Union had merged as of December 31. On a pro forma basis, had we been one on December 31 to the end of March, we grew loans annualized 9%. Does that make sense?

The way I did it was I took the $2.459 billion fair value mark out of the first quarter numbers and then grew it based on the 12/31 numbers. I guess that includes some growth within Xenith’s footprint, but regardless, the question is still the same as what if your loan growth exceeds your targets and you're struggling to grow deposits in line with loans?

So let me - well, let me come back to that. I wouldn’t say we're struggling to grow deposits. We've grown deposits on a compound annualized growth rate of 9 - core deposits of 9.5% at Union for the last two years. We grew deposits - core deposits 9% last year. We grew core deposits 6% annualized in Q1 on a pro forma basis and what is traditionally the seasonally slowest quarter of the year. So we don’t forget about our ability to grow deposits. The issue is that we are able to grow lending faster than deposits. But before I conduct, I just want to close out Wally, we’re not seeing any material unplanned runoff for a loss of anything? The Xenith integration is going well. The Xenith, go back and look at what happened in Q4. Xenith accelerated their lending growth in Q4 as did we and that it continued nicely in Q1, so all is well. There's no, there's no big remix, there's no big purposeful rundown of anything that’s material. So we're feeling really good about the combined performance of the organization, so that's good. We would reiterate based on everything we know now, we expect to see organic loan growth in the high single-digits for the year, and we're feeling confident, pipelines were good, we have no reason at this point to believe that will be the case. Now, your question is, what if loan growth accelerated from here? How high would you, would you less your loan to deposit ratio go? And so, Rob, I'll look to you, but as we talk about this, we have the capacity to go up if needed.

So I would - it's not our choice to do so, but we would increase our loan growth, the loan growth comes in, we would probably go up to 105 loan-to-deposit ratio, knowing that we'll be able to bring that down over a period of time and that's the thing we have to keep in mind as the engine of deposit gathering from the commercial side is going to continue to improve over time. So it could run through a relatively short period of time at those levels. I don't expect that will happen, but…

We could let it rise some, but realistically want to get it down. John, you want to…

One thing just to add to what Rob just said, one of the really telling statistics is the mix of our pipeline. John mentioned this in his prepared comments, but you look back Wally, the ratio CRE to non-CRE, then the C&I and real estate and our pipeline was 70/30 and a year later, it’s 50/50. And the point is that with the focus on C&I, non-CRE, in the loan side, CRE growth opportunities, we get more opportunities to pitch deposits fee economic treasury and payments. And the new thing is that without getting into too many details, the pipeline is actually bigger than it was a year ago with that mix, you can really tell our prospecting efforts and the non-CRE side, it really picked up. So, Wally, again it’s a very fair question. We think about it every single day but we don’t feel constrained on lending growth right now, but I would reaffirm what do we think is going to happen. We think we’re going to grow lending 9% - pardon me, high-single-digit annualized, and we think we have the ability to match that in terms of core deposit growth over the course of the year, we can’t promise that. But we’re not talking about a big delta. If, for example, we were saying we’re going to grow lending 20% which we’re not going to do, yes, that would be a different conversation.

Thanks for the commentary there, gentlemen. I’ll step out and let somebody ask.

And again, come back to us, we’ll look at your math on the loan growth…

It’s just which quarter you take it out of, that’s all.

Thanks, Wally. And, Dennis, we’re ready for our next caller please.

Your next question is from the line of Joe Gladue with Merion Capital Group. Please go ahead.

I just wanted to, I guess get a little bit more color on the some of the asset quality figures. Looking at the increases in the non-performing loans, I guess, it was concentrated in, I guess, C&I and the residential and I guess, more - looking at the residential increase fairly decent percentage, and I’m just wondering if that was just one or two large loans migrating to non-accrual, or if that was a broader base or larger number of loans?

I know it’s admittedly difficult to compare quarter to quarter because what you’re looking at is you’re looking at Union’s standalone Q4 and then you're looking Union combined with Xenith in Q1, so pretty much everything you see in terms of increases from the problem assets standpoint have to do with the addition of Xenith. So it's not very, very profitable. We would say most of the problem on activity that we saw during Q1 was in fact consumer-related, fairly granular, if not one or two big things. And I think it's important probably best to focus on proportions versus absolute dollars like charge-offs for example or annualized 5 basis points. That will give you I think the best way to look at it. And clearly it will become easier once we get to Q2, because then you've got a clean shot of new Union Q1 versus new Union Q2. Would you add anything Rob?

I think that's the way to look at, I think the past due ratio is about 42 basis points in the last quarter, on a standalone basis was about 39 basis points. So we're hovering in that 40 basis point range. So it's not really a big increase at all. But from your comments, John, you are right on in terms of the granularity of from the past views and the consumer related.

Well, of course, normally I guess these - with the acquisition, these things come on, when they’re fair valued, they don't come on as non-performers, so I guess I'm still a little bit confused by that answer.

Certainly the Xenith, the performing work would be counted in our non-accrual loans going forward, so not necessarily impacted by the mark.

And I guess just that the - I imagine the early stage delinquency is all related to the Xenith acquisitions that was fairly broad based across categories, is that correct?

And one thing that I will point out is, if you look at seasonal patterns, you always see that mortgage payments in particular, you tend to see more slow pay in Q1 on a seasonal basis, but we would say in terms of what we’re seeing from a asset quality standpoint, any of the issues that we experienced in Q1 are pretty granular, there are no - there's no real lumpy thing in there.

Thank you, Joe. Dennis, we’re ready for our next caller, please.

Your next question is from the line of Laurie Hunsicker with Compass Point. Please go ahead.

I just wanted to follow-up to Wally’s question on loan growth. So just simply put is, is worth thinking here your loans are $12.1 billion. Is it conceivable you could hit $13 billion by the end of this year?

Certainly, it’s possible, Laurie, in terms of the growth that we’re seeing high single-digits, it could be a little higher than that, you could see that happening.

And then, just as we're going to the income statement, in your other, other category with the non-interest income, it looks like you had $1.4 million related to the sale of interest in a payment-related company. Was that legacy Xenith or rather was that legacy Union or was that Xenith?

That was legacy Union. Back in 2014, we made an investment in a payment-related company. We had about a 23% ownership in that. That recently was bought by a venture capital group and as part of that sale, we recorded a gain associated with that, that interest.

So the company was sold.

Right. It wasn’t just our component was- sold to venture capital group that could make larger investments in that space.

Okay. And was there - yes.

One thing I was going to add to your earlier question about loan growth, one of the things that's really been I think exciting for us is the geographic diversity of that growth, all of our markets, but for one are up some significantly, I think that bodes well in terms of opportunities to get the most out of this year.

And then again just staying on the income statement here, just looking your OREO was up substantially this quarter $1.5 million, is that line - and I realize it's jumping because of the tax payments that come into Q1 for you, but if we've dropped that down to like a $500 million or so run rate or should we be thinking about that more elevated how should we think about that line?

Of course the addition I’ve seen that is the number one thing you're looking at. It’s certainly absolute dollar increase.

Laurie, you definitely could bring it down substantially $400,000 and $500,000 a quarter is probably appropriate.

And then just - a just more macro, John, can you talk about obviously you're still in the final phases here of Xenith digestions, so congratulations on that. But can you talk about in terms of whole bank M&A, how your thoughts around North Carolina could potentially proceed and what would be an asset size target bank that would get you a excited about it assuming the financial metrics were right?

Sure. Fair question, Laurie. So I always begin and answered to a question like this, let me begin by saying the highest priority for Union is the organic performance of the bank and at this point, I would say organic performance includes a successful integration of Xenith. And so we convert systems over Memorial Day weekend, we need to see that go well, we think it will, we have no reason to believe otherwise. Overall, big picture I will say, Xenith has gone as well as are probably better than we would have expected. Thanks to those good folks over there in the leadership. So with that behind us, we could begin to think again about inorganic opportunities. And as we assess the landscape, this is not a forever conclusion, but our current thinking on North Carolina is, as we've thought about it and as we've done some planning, we just don't see a lot down there that seems to make sense. Now, your specific question is how low would you go? It's very difficult to imagine why it would make sense for Union to go below, I'm going to say lot, $1 billion. If we were to do another acquisition, just look at the step up and value, look at the step up and performance of Union on a financial basis that resulted from the combination with Xenith, you're seeing early evidence of that, now it's very real. You're seeing us extract costs and provide more operating leverage, and frankly, just more value creation. So it's a lot of work to do one of these and if things go as well as I expect them to go, we will likely declare we do in fact have a core competency and integrating a whole bank acquisition. And so, we would…

And what is the largest you go in terms of assets?

I think the sweet spot is probably in the size of what’s in the [indiscernible] $2.5 billion to $3 billion…

$3 billion is probably perfect. We don't really have any literally contemplated frankly anything that would be substantially north of that, which doesn't mean that we wouldn’t. But we think we see opportunities that are somewhere in that in north of $1 billion and below $3.5 billion to $4 billion. We think it’s demonstrated. We think Xenith will be a proof point that we're well able to do that. We're not in any hurry, Laurie, to just for the record and we don't feel the need to do anything. Unlike before where we were facing the 10-day at our asset threshold at $13 billion is that is no longer an issue. And we don't see any compelling reason while we have to do anything from an M&A standpoint, but we think we could to create value and to further improve the value and performance of our franchise. We like density. We like the compactness of this franchise. We don't apologize for the scarcity value that it creates, because we think that also translates into market power. And we think that there’s nothing else quite like it and we think you can’t replicate our franchise. So we would like to continue to increase density and to you know create what I would like to call a fortress of that franchise in this part of the country.

And last question just on Xenith, I realized that a lot of the cost saves still have yet to bleed through. Can you just share with us in the first quarter whether it’s dollar or percentage how much of Xenith cost saves actually were baked into that number?

Laurie, it’s about 40% of the run rate would have come through in the first quarter. So, you’ll see that you know continue to go up in the second quarter and by the end of the third quarter it will be at a 100%.

So, basically you had about $2.8 million then come through in the first quarter?

Yes, that’s about right.

Thanks, Laurie. Dennis, we’re ready for our next caller please.

Your next question is from the line of Bryce Rowe with Baird. Please go ahead.

John, just wanted to I guess follow up on one of the comments you made in your prepared remarks around the branch franchise and continuing to evaluate it from kind of an efficiency perspective. Is that a kind of a continuous look or are you in the process of kind of undergoing an evaluation that will end at some point here in the near future?

It’s both. I would say that you know we will always be thinking about the appropriateness of the branch franchise, the branch network. Given that we have now closed the Xenith acquisition, you know that certainly gives us the opportunity to step back and relook at everything. And quite candidly, you know we’ve had some changes as you know in the leadership structure of the retail bank which always creates a fresh set of eyes as well. Nothing is off the table at Union Bank So we look at everything and I would say that, yeah, there has been - yes, there has been a sort of a discrete effort to take a fresh look at the branch network appropriateness. And at the same time, that's just a part of our kind of continuous budgetary process and strategic planning.

Just a reminder, we've got three branches that will close as part of the over Memorial Day weekend as part of the core systems integration. Those are already baked into the cost sales for this year. But we are going to close three over the system's conversion.

There's nothing dramatic coming to be clear, but at the same time, we do believe that there are opportunities to improve efficiency. The trend is clearly toward fewer smaller branches over time. But the crown jewel of the Union Bank franchise is this wonderful deposit base - core deposit base that we have. And we wouldn't have that were it not for a robust branch network. So we have to strike the balance.

And then, Rob, just wanted to clarify your answer I guess to Austin's question about the margin and the margin guidance you talked about 3 basis points to 4 basis points, is that 3 basis points to 4 basis points per quarter for second quarter and third quarter or across the next two quarters?

It'll be across the next couple of quarters is our estimate, right now. Now our current forecast also was considering a flat a curve. Of course, recently we've seen some steepness in the curve. So could improve from there if we get some steepening of the curve, but that's our current outlook.

Thanks, Bryce. And Dennis, we're ready for our last caller please.

Today's final question will come from the line of Blair Brantley with Brean Capital. Please go ahead.

Could you state your updated thoughts on the mortgage business and what's the planning on…

Updated thoughts on the mortgage business are that we continue to seek opportunities to improve the financial performance of our mortgage business.

You plan on sticking with it for now?

We are looking at opportunities to improve the financial performance of the business, and we do think it's important that Union be able to offer a residential mortgage product to its customer base. It is not an area that we're looking to do a big expansion in, perhaps to anticipate that question.

And then, just real quick. I want to get a view on loan pricing trends and kind of the competition out there and maybe give some detail, what you're seeing in terms of spreads on some of your five-year and seven-year type product versus the variable rate products out there?

Actually, John Stallings, maybe I'll give you to comment on this one. I would say that we just did a market by market review or region by region review of competitor behavior, market behavior. I don't see anything going on that strikes me as especially different, how would you assess.

I think that’s correct, I think [indiscernible] held up the issues are always with the better credit opportunities like it's a lot hotter and more competitive, but overall, we've been able to preserve spreads, and but at the same time, the competition is pretty tight with better deals.

But that’s not really that different. I know one of the questions we get a lot is, are we seeing banks, it can teed away the benefit of tax savings, it’s hard to say that’s true. Again, it’s always being competitive, it remains competitive. I wouldn’t say that we’ve seen any sort of plunge by any means and spreads.

One thing I want to add to that is, it just seems like there is continued sort of positive mood among our commercial banking clients in terms of maybe interpretation of a stable economy to some degree a rising rate environment, and maybe a bullishness on moving along projects it might settle on for a while.

Only I can add, and government contracting was noted as one area particularly seems…

I was just up in Northern Virginia with our team there and I think we had something like a 100 clients show up to an event that we held and a large number were, in fact, having a contract and I was surprised at how bullish they were in terms of their growth outlook, and that was interesting we’re getting similar reports out of the Hampton Roads area, which has a material amount of contractors, more military shipbuilding related admittedly, but it seems like the mood is actually pretty good. Rob, from your chair in terms of spreads do you see anything that feels all that different?

No, not really. We look at it every month in Telco and haven’t really seen any deterioration at this point, just adding to John’s comments on that.

Thank you, Blair. And thanks everyone for dialing in today. As a reminder, a replay of this call will be available on our investor website investors.bankatunion.com. Thanks, and have a good day.

Ladies and gentlemen, this does conclude today’s conference call. Thank you for your participation. You may now disconnect.