Good everyone, and welcome to today's program. (Operator Instructions) Please note, this call maybe recorded. I'll be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Ms. Charlotte Rasche. Please go ahead.

Thank you. Good morning, ladies and gentlemen, and welcome to Prosperity Bancshares' First Quarter 2014 Earnings Conference Call. This call is being broadcast live over the Internet at www.prosperitybankusa.com and will be available for replay at the same location for the next few weeks. I'm Charlotte Rasche, Executive Vice President and General Counsel of Prosperity Bancshares. And here with me today is David Zalman, Chairman and Chief Executive Officer, H. E. Tim Timanus Jr., Vice Chairman, David Hollaway, Chief Financial Officer, Randy Hester, Chief Lending Officer and Mike Epps, Executive Vice President for Financial Operations and Administration. David Zalman will lead off with a review of the highlights for the recent quarter and an update on our merger and acquisition activity. He will be followed by David Hollaway, who will review some of our recent financial statistics. And Tim Timanus will discuss our lending activities, including asset quality. Finally, we will open the call for questions. During the call, interested parties may participate live by following the instructions that will be provided by our call moderator, John or you may e-mail questions to investor.relations@prosperitybankusa.com. I assume you have all received a copy of the earnings announcement we released earlier this morning. If not, please call Tracy Elkowitz at (281) 269-7221, and she will send a copy to you. Before we begin, let me make the usual disclaimers. Certain of the matters discussed in this presentation may constitute forward-looking statements for the purposes of the Federal Securities Laws, and as such, may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Prosperity Bancshares to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Additional information concerning factors that could cause actual results to be materially different than those in the forward-looking statements can be found in Prosperity Bancshares' filings with the Securities and Exchange Commission, including Forms 10-Q and 10-K and other reports and statements we have filed with the SEC. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. Now let me turn the call over to David Zalman.

Thank you Charlotte and good morning to everyone. I would like to welcome and thank everyone for listening to our first quarter 2014 earnings conference call. I'm honored and excited to share with everyone, the great results we had in the first quarter. We were again named the best bank in America by Forbes Magazine. In fact, we were recognized in both 2012 and 2014 as the Best Bank in America. I'm also pleased to announce Prosperity Bancshares inclusion into the 2013 Keefe Bruyette & Woods Honor Roll. To qualify for this honor, the company must maintain extraordinarily high, quantitative metrics for the last 10 years. Thirty-one banking institutions posted a 10-year record worthy of admission to this year's KBW Honor Roll. And just yesterday, we learned that Prosperity was rated in the top spot by SNL among 110 Eligible Commercial Banks with less than $15 billion in assets and at least 60 offices. SNL rank the companies based on six core financial metrics for the 2013 year. Some of our success this quarter include our quarterly earnings increased to $67,137 million in the first quarter compared to $49,305 million for the same period in the prior year, an increase of $17,832 million or 36.2%. Our diluted earnings per share were $1.01 for the first quarter of 2014 compared to $0.86 for the same period in the prior year, a 17.4% increase. Net income for the quarter includes the effects of one-time gains on the sale of assets of $3,310 million and a one-time merger expense of $731,000. Loans at March 31, 2014 were $7,752 billion an increase of $2,489 billion or 47.3% compared with $5,263 billion at March 31, 2013. Primarily due to the addition of Coppermark and First Victoria National Bank. Linked quarter loans decreased by $22 million…

Thank you, David. Net interest income for the three months ended March 31, 2014 was $143.7 million, compared to $108.1 million for the three months ended March 31, 2013, an increase of $35.6 million or 32.9%. The increase was primarily lead to a 25.1% increase in average interest-earning assets. The net interest margin on the tax equivalent basis was 3.62% for the three months ended March 31, 2014 compared to 3.42% for the same period in 2013 and 3.82% for the three months ended December 31, 2013. Excluding purchase accounting adjustments, the net interest margin on a tax equivalent basis decreased slightly on a linked quarter basis from 3.35% to 3.33% for the three months ended March 31, 2014. Noninterest income increased $5.2 million or 22% to $28.6 million for the three months ended March 31, 2014 compared to $23.4 million for the three months ended March 31, 2013. Noninterest income this quarter included $3.3 million gain on sale of assets and excluding these gains noninterest income was up $1.9 million or 8%. Noninterest expense for the three months ended March 31, 2014 was $71 million compared to $55.8 million for the three months ended March 31, 2013 an increase of $15.2 million or 27.4%. This increase was primarily due to additional noninterest expense was associated with the acquisitions of Coppermark and First Victoria National Bank. Additionally the current quarter included one-time pre-tax merger expenses $731,000 which were related to these acquisitions. The efficiency ratio was 42% for the three months ended March 31, 2014 compared to 42.4% for the same period last year and 40.2% for the three months ended December 31, 2013. The bond portfolio metrics of 3/31 showed a weighted average life of 4.3 years and effective duration of 3.9 and projected annual cash flows of approximately $1.6 billion. And with that, let me over the presentation to Tim Timanus with some detail on loans and asset quality. Tim?

Thank you, Mr. Holloway. Our nonperforming assets at the end of the first quarter 2014 totaled $18,696 million which is 24 basis points of loans and other real estate. Compared to $22,504 million, 29 basis points at the end of the fourth quarter 2013. This represents a decrease of 17% of a linked quarter basis from December 31, 2013. The March 31, 2014 nonperforming assets totaled consist of $11,233 million in loans; $91,000 in repossessed assets and $7,372 million in other real estate. As of today, $5,560 million of the March 31, 2014 nonperforming assets totaled are under contract for sale, but there can be no assurance that any of these contracts were closed. This represents 30% of the nonperforming assets at March 31, 2014 that were under contract for sale. Net charge offs for the three months ended March 31, 2014 were $786,000 compared to net charge offs of $496,000 for the three months ended December 31, 2013. $600,000 was added to the allowance for credit losses during the quarter ended March 31, 2014 compared to $7,865 million for the fourth quarter of 2013. The average monthly new loan production for the quarter ended March 31, 2014 was $223 million compared to $197 million for the quarter ended December 31, 2013. This average monthly new loan production for the first quarter of 2014 was a 13% increase on a linked quarter basis. Loans outstanding at March 31, 2014 were $7,753 billion compared to $7,775 billion at December 31, 2013. The March 31, 2014 loan total is made up of 43% fixed rate loans, 32% floating rate loans and 25% durable rate loans. Charlotte, I'll now turn it over to you to coordinate questions.

Thank you, Tim. At this time, we are prepared to answer your question. John, can you please assist us with questions?

Certainly. (Operator Instructions) and we will first go to Dave Rochester of Deutsche Bank. Please go ahead, your line is open. Dave Rochester – Deutsche Bank: Good morning, guys. Now let's see F&M deal closed, can you just update us on what we should expect for realized cost saves and accretion at this point, that we will see for through second quarter?

This is David Holloway. I think for short up, to be, I don't know how specific I can be but let me smooth answer it this way. On the cost saves perspective, you know what historically what we've done on these last transactions and as you have noted the numbers in our presentations. We project cost saves with anywhere between 20% to 30%, so I'll leave that to you to pick a specific number on that. Prior little heavier in the first quarter as we go out, but you have something to think about. On the accretion side again, I'll point you back to some of these recent acquisitions in terms of what would that fair value purchase accounting number be and again thinking that, at an end space. They're roughly $331.7 billion loans and again this is historically, we have not seen the final numbers on this. So this is just some of our projections, but you could probably assess again this is something you would want to look at, but somewhere between 2% to 3% discount. Dave Rochester – Deutsche Bank: Got you. Okay, that's helpful and then. I know that you guys weren't that excited about the SNC portfolio you are buying, have you sold any of that at this point or are you expecting to sometime this quarter?

This is David Zalman, Dave. Again all the deciding so far up until this until this month have been made by up and in bank I think, for the most part again I don't have the exact number but they did, there's some portions of the Shared National Credit in participations had been reduced over the last three months and again going forward. You're right, it probably won't be as active in that part of the business, as they were but having to giving the exact number will be hard, this time. I'm sure, there'll be some portion but that we will continue I'm sure. Dave Rochester – Deutsche Bank: Got you and then I know they were coming in with a lot of cash on the balance sheet. Was just wondering, if you guys had redeployed any of that and what you're buying at this point?

You know, I might not be clear on this but I didn't think that they did have a lot of $300 million you know so in security, so it wasn't. In our perspective that's not a whole lot of money compared to our total position and again, I think that we've been moving back with again a mixture of the 10-year and the 15-year loans backed securities about 50/50 with a 10-year with an average life of around four years and 15-year products, that has an average output, was not much rated, with not much life extension either one of them, those are the two products that we've buying usually about 50/50. Dave Rochester – Deutsche Bank: And then, what were the rates on those roughly or what you're seeing today?

I think most of the rates right now, we are looking on the 10-year product being about 1.8%. I think the 15-year is probably around 2.5%. Dave Rochester – Deutsche Bank: Perfect and then just one last one. Do you guys think, you've realized the full amount of expense saves at this point from First Victoria or do you still see opportunities to reduce expenses there?

Yes, again. I'll respond to that but I think we are pretty much there on the First Victoria aspect of it. Dave Rochester – Deutsche Bank: Okay, great. All right, thanks guys.

And we will take our next question from John Pancari with Evercore. Please go ahead. Rahul Patil – Evercore Partners Inc: Yes, hi this is Rahul Patil on behalf of John. Just question on the loan growth, I know you mentioned that the new loan production was actually up 13% in the quarter, but the end appeared loans declined slightly. I'm just trying to get a sense of how much run off are you still seeing in loans acquired from First Victoria or Coppermark?

Rahul, this is Tim Timanus. I'll try to answer that for you. During the first quarter of the year, we've had approximately $121 million pay off out of the portfolio of our few most recent acquisitions. Most of that, but there was a firm out from Coppermark also, those pay down represented a number of things from borrowers selling the assets secured the loans to refinancing at extremely low rates, that we were not comfortable matching. And then there were some assets, that were mixed with really didn't fit our model and we had agreement with the management of Coppermark and First Victoria to remove those assets, if and when we could in appropriate manner so, a lot of that pay down again came from those two facts. What we are seeing in the future is probably moderation of that. There will be obviously some additional pay offs within their portfolio, but I suspect and it's only a guess that's probably going to decrease over the next couple of quarters. Rahul Patil – Evercore Partners Inc: That's helpful and then just want to clarify on your loan growth guidance that you gave, the 7% to 8% in 2014 is that organic loan growth basically excluding the deals that were closed in 2013?

Yes, that is. Rahul Patil – Evercore Partners Inc: All right, that's it from me. Thank you.

And we will take our next question from Jennifer Demba with SunTrust Robinson and Humphrey. Please go ahead, your line is open. Jennifer H. Demba – SunTrust Robinson Humphrey, Inc: Thank you, good morning. Curious as to, what your outlook on the noninterest margin is over the next three or four quarters?

Yes, this is Dave Hollaway. I think for shorter, it probably hasn't changed much from at least the last quarter. We said last quarter, we failed that in of course. We thought that margin would stabilize find that core margin here. We saw it move couple of basis points, but I don't think dynamic is changed and there is couple variables here to kind of think about one; F&M is coming on, they have higher loan deposit ratio. So you know yields a little higher, so that one have somewhat of a positive effect on the margin, a little bit, but then still we step back on we still think the margin will be stable could be a few basis points over the next few quarters. I mean, few basis points down, few basis points up. The big variable on this, is the net loan growth. Obviously, the more net loan growth down the books, the more positive it would be for the margin. Jennifer H. Demba – SunTrust Robinson Humphrey, Inc: What about other reported margin.

I didn't hear that. Jennifer H. Demba – SunTrust Robinson Humphrey, Inc: What about other reported net interest margin, that kind of confession again?

Yes, I mean kind of look at a different way to reported margin includes two fair value discount increasing in, so kind of converted into nonworking, saw this past quarter roughly $13 million in accretion that's probably, you'll have to hang in there, so if it change a little bit, but we think that at least the last quarter we thought it was [1-9] to 12, but having run rate of about $13 million is not reasonable and fair value from F&M's not in that number. So you have to factor that in, but I think that's a good run rate, so that's a wrong way of saying that top end number should be pretty stable also. If we are running at that $13 million. Jennifer H. Demba – SunTrust Robinson Humphrey, Inc: Could you guys comment on, your pipeline in terms of acquisitions opportunities and David if you could talk about what you think, you might be comfortable announcing another transaction and the past results have any impacts there?

I guess there is three question there and Tim will probably on his own. Telling on my gut feelings and looking at the loans. January was an extremely good month for us. February and March we definitely saw some downturn in February and March. As far as the total number come again, I think that Tim is going to give you numbers that show our production is probably been higher than ever, but the total overall came down looking at the first part of April right here. And the numbers look extremely good and I think we are up year-to-date $40 million or $50 million right now already for the first month. So that looked extremely good and that's what gave us the confidence to say that, you know the 7% or 8% organic loan growth is we feel comfortable with that. Holloway, can you jump in before I answer the other one?

Well, I agree with everything he just said. I think the backdrop to all this is that, the economies in Texas and Oklahoma are very good and in fact, I read an article in the Houston paper front page this morning that said that Texas is now the, the State of Texas by itself, is now the largest producer of oil and gas, second to Saudi Arabia only. So Texas has moved literally into an international framework in that regard. And while that can obviously change over time. There doesn't appear to be anything on horizon to change it right away. If you look at 2013 for example, our average monthly new loan production for the full year of 2013 was $184 million per month, that peaked out in the third quarter $210 million, fourth quarter was a good, quarter all set $197 million, but once again this first quarter 2014 we had $224 million. So we feel very good about where we are right now and if you just look at the history in our production over the last year. Certainly over the last three quarters, it gets reason for optimism. So I think we have a very good chance of being at 8% on an organic basis, again to be sure.

With regard to the M&A, as I mentioned earlier. Our two primary goals this year were really close on the First Victoria National Bank deal and doing the operational integration and again. We couldn't be more pleased on that. The team from First Victoria's added lot to our group and again they're taking management roles. I just can't say enough, I couldn't be more pleased and I think that there are probably a lot of banks have gone negative on the loan side for extended year to year and a half. I think in their case, they may even try and around and start going positive sooner than some of the other banks. So that's really positive. Again we just closed on the F&M Banc deal this month and we are looking for the operational integration add in June and again just because you're doing the operational integration in June. It doesn't mean that you have all your back room stuff put together and all, that usually takes probably 30 days to 60 days there. So I think, if that goes good and everything operations. We just really want to make sure, that our operations and our back rooms and our IT and everything is up just now. We will be looking towards the end of the year again to do something, but again we are still completing, the F&M deal, we want to make sure that goes good and again that from the back room and the operationally for structure that it's all in place to. Jennifer H. Demba – SunTrust Robinson Humphrey, Inc: And David, what do you expecting to get some feedback your stress results with the regulators?

Yes, this is David Hollaway that's for two weeks because they're actually in, as we speak about doing our review. So we will be noted, to get some feedback here in the next few weeks actually. Jennifer H. Demba – SunTrust Robinson Humphrey, Inc: Okay. Thank you.

Thanks Jennifer.

Our next question from Jefferson Harralson at Keefe, Bruyette, & Woods. Please go ahead, your line is open. Jefferson Harralson – Keefe, Bruyette, & Woods, Inc: Thanks. I was going to ask about the size of the balance sheet which you're expecting this quarter looks like you guys may have bought some security this quarter, was that sort of pre-buying and advance of F&M purchase. I guess the last quarter, you had about $2.6 billion of assets to bring over $2.6 billion or should be closer to $2.3 billion or $2.2 billion or $2 billion?

Well, I think that's right. I mean because there is always some intercompany action going on here, but yes it's $2.6 billion is probably too high. I don't have the exact number, but I'd be more in the, I mean somebody can jump in here, but I'd be more in the range of $2.3 billion, $2.4 billion initially coming.

Yes, again I know our balance sheet grew this quarter but always remember our bank and this historically our deposits always increased in the last quarter of the year and they tend to increase the first quarter of the year. The second quarter and third quarter in our deposits net lower and they are so, two quarters we did real good and then two quarters we go down. So I think, what's happened this quarter historically is not. I think that's really the balance sheet going up. But Dave, can you disagree with that?

No, I agree but I mean I think $2.3 billion, $2.4 billion coming out of the box. Jefferson Harralson – Keefe, Bruyette, & Woods, Inc: Right and run off of F&M. it's a relatively large portfolio, should we expect higher run off at F&M versus what you had at other banks that you bought recently?

We don't have the exact number yet, but again having $300 million to $400 million in Shared National Credits in participation to begin with. You would expect it to be more than some of the other banks. Jefferson Harralson – Keefe, Bruyette, & Woods, Inc: Okay. Thanks guys. Thank you.

And we will take our next question from Ken Zerbe with Morgan Stanley. Please go ahead, your line is open. Ken Zerbe – Morgan Stanley: Thank you. Just on the provision expense was there anything unusual in, I guess the provision or the underlying credit trends that drove this, almost close to zero provision this quarter. I guess, I was just thinking with the organic growth, I would expect it to trend back higher knowing that you have obviously very low charge offs. Am I thinking about that wrong or any comments on provision? Thanks?

You're probably thinking like a banker we think, I would say, anyway I would think as your loan portfolio would grow. You'd normally, want to add to it unfortunately we have this strong methodology formula that kind of prohibits you to tell you what you can to back base on the formulas. We are lucky, we didn't have to take funds out of it. Based on the metrics that we had and put money back into it. You know, you're just looking at it too logically. Ken Zerbe – Morgan Stanley: I tend to do that, I guess.

Ken, I think we do have confidence in the methodology. As David says, you know those of those have been in the industry for the long-time here like we could probably work this on the back of the napkin, so to speak but having said that, we have to comply with accounting rules and regulatory rules and we all understand that and we do feel like, we have a good methodology. We feel like it's accurate. It's proving to be overtime and I think the asset quality speaks for itself. It's very, very good. The NDAs declined from the end of last year. So we believe that the provision is adequate and we have no reason to step at the methodology will not prove itself to be accurate going forward. Ken Zerbe – Morgan Stanley: All right, perfect. Thank you very much.

And we will take our next question from Brad Milsaps with Sandler O'Neill. Please go ahead. Your line is open. Brad J. Milsaps – Sandler O'Neill & Partners, L.P.: Good morning. You guys addressed most of my questions, but this is just a follow-up on Ken's question and the answer maybe the same, but was there something that drove the larger provision in the fourth quarter. It seemed credit kind of the same obviously got a little bit better linked quarter, but you're almost $8 million in the fourth. I mean, I guess secondly, I guess you reserve it 87 basis points. Probably best to look at that as a percentage of or excluding via acquired loan. Is that kind of how you guys think about as well as the coverage ratio?

I think, yes is the answer. I defer, there are numerous factors to go into the model. One of which does take into consideration loan growth. So when we acquire institutions, whether substantial loan portfolio that loan growth is by itself one of the factors that is taken into consideration, but once again there are multiple factors, many factors. So there were things that transpired during that quarter. Now for least, for which it was First Victoria joining us that having worked with the model indicated that provision was adequate. Those circumstances changed somewhat with the quarter that we just finished. It's really quarter-by-quarter calculation and you have to look at the dynamics during each quarter on its own.

I think I pointed out to that, a lot of the growth in the loans came from First Victoria National Bank, Coppermark and acquisitions in the past and again as you know, we are making a number before the accretion of the loans that pay monthly, but then you're also making this other number of loans that you think can go back. So you have a provision, you know the three category they will those totaled provision for all (indiscernible). $42 million. I think if you really want to get a true estimate, I think of what, what your loan provision is as you got $42 million plus the other $60 million or so that we have in provision. I think that really does give you a lot better perspective on what's in provision and just the number that's really just laying out there and blatant really. Brad J. Milsaps – Sandler O'Neill & Partners, L.P.: Okay, great. Thank you.

And we will take our next question from Jon Arfstrom with RBC Capital Markets. Please go ahead, your line is open. Jon G. Arfstrom – RBC Capital Markets, LLC: Thanks, good morning. I thought you forgotten about me, way back in the queue. Just Tim, a question for you. You talked a little bit about energy and Texas. Give us an idea of how the energy activity and lending has gone in West Texas for you since the acquisition?

Well the answer is, it is going extremely well and that's a function at having with knowledgeable people who have joined us that understand that type of lending and how to work through it and that also includes Oklahoma because we have some very capable people that joined us through top of our in that regard. We are going to receive some on the F&M side also. The market is just good, just as a example I guess David Zalman after (indiscernible) not too long ago and it's an amazing part of the world. I mean you fly over the Permian Basin and it's just one oil and gas well after another, as far as the eye can see. And at first we all know that commodities can be variable in their price, they can fluctuate, but we feel very good about where we are all right now. We've tried to be very careful with all the credit, we've tried to held decent margin into our collateral positions and we always look at the cash flow of the borrower. So there is nothing on the Horizon there's disturbing about it right now, back to the contrary. I think, we're (indiscernible) about it.

I would say, Jon. As Tim said, he and I flew out there and we looked out there through window there's a well there with 20 acres. I mean, unless you saw and you were out there, you just couldn't believe it. The businesses are good, they're doing fantastic. One of our questions, one out there is to say. Okay, what's going to make this different and then the [80]. Dave said it was and I thought the explanations that gave were realistic but we couldn't be more pleased with our operations, we have with our people adding West Texas. Jon G. Arfstrom – RBC Capital Markets, LLC: And David does it, I mean I know you're pretty risk averse guy, but do you have limits in place and do you monitor that exposure in concentration?

We do, I don't have the exact numbers. With this [merill] here, here let's see, they -- I don't have the exact numbers. We have in the oil and gas industry.

You know I can give you a little color to that. If you just look at our total Permian Basin loans, right not all of that your loans on production or even to sort of this companies. Just the loans within those banking centers. It's about 3.5% of our total loan portfolio. So if you add other areas to the Permian Basin. It's not over 5%, I don't believe, I don't have a hard number but I don't believe it's over 5% of our total loan portfolio and that's a number that we are comfortable today. Jon G. Arfstrom – RBC Capital Markets, LLC: Okay. Maybe for you David Zalman and Tim just there's been a little discussion on this SNC portfolio at F&M. as you become a larger bank, just what kind of comfort or appetite do you have for the larger loan opportunities that are out there in Texas?

As referring to Shared National Credits, there's still a lot of loans. Jon G. Arfstrom – RBC Capital Markets, LLC: I would say overall larger loans in general and then you could touch on Shared National Credits as well, but I'm more interested in just larger comfort for you with larger loans.

Well it's probably not by design that you want to reduce, that loan from that end. We don't see loans and unless they're over $3.5 million. I would have to say that loans because of our size are just naturally getting larger. We are seeing larger and larger credits. Again I don't know that, we are making huge, huge credits. But overall, you'd have to say because of our size loans are getting bigger and we have to adapt to that. That was comparing to the Shared National Credit. It will take us sometime, if we ever get used to Shared National Credit as much, that won't mean that won't deal them, but again they would have to be major companies with good, good transparent that we could really rely on and something like that. It won't be to all non-top types of Shared National Credit.

I would add that, I guess on a historical basis. We have done a few. We all know that there not then many, but we have done a few and the ones that we have done it few and the ones that we've done have, exactly the 100% of them, then to credits that we had in the bank anyway. They may have been Shared National Credit but we had a relationship and several of these cases with the owner. Our owners of the business, so it wasn't totally on (indiscernible) in another words.

I think a lot of it Jon see, is the pricing issues. The pricing that was up realistic and some cases where it's worth the risk. You know we maybe in more favor but again when you're pricing some of these saying that LIBOR plus 1.5. We can almost buy security and be about the same there, not have it risk. So I mean, if those things changed and improved we maybe more open to. Jon G. Arfstrom – RBC Capital Markets, LLC: Okay and then just a quick one for Dave Hollaway excluding the F&M piece, the service chargers and NSF. You expect typically second quarter seasonal bumps in those categories or is there anything unusual this quarter?

No, I think we should it was seasonality. So we see it snap back and also just to make sure we adjust for as one-time gains in the first quarter that obviously you can't count on this being next couple of quarters. Jon G. Arfstrom – RBC Capital Markets, LLC: Okay. All right. Thanks for the help.

Our next questions from Mikhail Goberman with Portales Partners. Please go ahead, your line is open. Mikhail Goberman – Portales Partners, LLC: Good morning, gentlemen. Most of my question have been answered but I'm sorry but this is kind beating a dead horse, but back to the reserves issue for a moment. I see that your allowances 1.18% on total loans excluding acquired loans. Is there a sort of I guess a floor, that you can potentially get that ratio down to sort of normalized area, that you won't go lower that?

I don't know about – you guys understand.

I certainly understand there your question and why you're asking, but I think the technical answer is no. I mean the calculation, is what it is and there is really no way to impose, with the accounting profession with considering our position forward. So I don't think that approaching it that way is actually feasible under today's accounting rules. Mikhail Goberman – Portales Partners, LLC: And there is no, as from a regulatory standpoint. There is no pressure from regulators or anything like that to keep a certain normalized allowance ratio?

That varies overtime and I guess it varies with the regulators that you're talking to at that point of time, but right now I would say that's not the case. But once again, if you talked to regulators that have been to business a long time just like some of us have, we all have [mental] floors and we all have a 409 that we maybe don't think we should be below, but that's not how you can operate anymore. You have to document and define where you are with an accepting methodology and once again that methodology does not allow for that kind of floor, so to speak. Mikhail Goberman – Portales Partners, LLC: Got you, that's helpful and if I could just one more circling back to the $3.3 million or so of one-time non-core the gain on sale in the fee income. As you guys fold F&M into your mix and start thinking about further acquisitions. Is there a potential for sort of more volatility in the line item as you figure out what businesses you may want to chop off and that sort of thing.

It's David Hollaway. I'd take that, hard to say because this all comes down to, the target that they ultimately get and what they have. I mean, past few deals it just been fortuitous. I guess in some regards using first week is the example where, I think we're setting, I won't get this number right, but I think we had like 14 locations that were duplicated and they were right next to each other in lot of cases, in this particular instance and lot of cases. We like the First Victoria location better than our own and that's what you would see in terms of sales of assets. They might be giving you a bar locations in those cases. So that's certainly could happen going forward, but until we saw the actual transaction, hard to say. Mikhail Goberman – Portales Partners, LLC: Okay, thank you very much gentlemen.

We will take our next question from Matt Olney with Stephens. Please go ahead. Your line is open. Matt Olney – Stephens Inc: Good morning, guys. I want to go back to the discussion on purchase accounting of $13.5 million of the loan accretion in the first quarter. Do you have a breakout of how much of that is credit impaired versus non credit impaired.

Absolutely. Actually, you can see that on our press release if you moved on page for everybody else and if you're looking at Page 12 at the bottom. You can actually figure that out within. The answer is about $10 million what with the, what we call the 91 about $3 million with the credit impaired in this past quarter, but you can see that on Page 12 at the bottom. Matt Olney – Stephens Inc: Okay and then David, I believe your commentary few minutes ago was that $13 million of accretion in the next few quarters is not unreasonable, did I hear that correctly and is that outlook include F&M?

Still part of answer. Yes, that's exactly what we are commenting on. We said and this kind of gets into the esoteric levels but again let's kind build our way back there. You know, we kind of contemplate $9 million to $12 million from the 91, but you're always going to have some of that from the all three, so that's how we say that $13 million on the look for it's probably okay and then along with that. You don't have to build something in F&M on top of that $13 million. Matt Olney – Stephens Inc: Got it. All right. Thanks guys.

(Operator Instructions) We will take our next question from Gary Tenner with D.A. Davidson. Please go ahead, your line is open. Gary P. Tenner – D.A. Davidson & Co: Thanks, good morning. I had a question on the brokerage business, it looks like you've had really rapid success in kind of building that, out across the franchise with the additional last next year. Can you talk about whether that's exceeded your expectations and what your view is going forward?

Your question Gary, the brokerage meeting our expectations. Again First Victoria brought a lot to the table. They actually did more brokerage than what we did, we were a lot bigger bank, but they did more brokerage than we did. With First Victoria, Russell Marshall, actually he became Chairman of that brokerage area and again. We mean from a company called LPL to [Satara] and so we are in that process right now, but I think, I would say it's probably too early to tell. You were right on the bills, my gut feeling is the momentum looks good and I think going forward. It will also pass a lot of our thoughts on what it would be and that I can tell right now.

Again, this is David Hollaway. I'll just add to that, just simply because I have been kind of back and forth with them over here. I would agree with that, I think of all the lines that Dave just said we have in different things going in, they've definitely move to the front of the pack in terms of getting their feet on the ground moving forward. So I know, they want to me to give them kudos there so I'm sure they're listening.

They're definitely at their trails and tribulation. I'll thank them.

They have a major challenge because their biggest challenge is to introduce this bank-wide. Across 250 locations, but so far so good. They have jumped at the (indiscernible).

I will say, that we were excited in what they were doing. Gary P. Tenner – D.A. Davidson & Co: Yes, I mean it certainly it seems as though. It's probably exceeded the pace that you would have expected it, has it been really focused in expanding it through Texas initially and then Oklahoma follows or is it really across all franchise right now?

And to this, we are not across all the franchise, but I think now this is a huge, huge company for them. I say huge company that's a big deal to get through the whole franchise and I think that's just going to take them six months to a year to probably to get through that Mike, do you have a (indiscernible).

I think, that I'll take a year.

A year to get it really fully and well out there to everybody, really. Gary P. Tenner – D.A. Davidson & Co: Okay, thanks for the color.

And it appears, we have no further questions at this time.

Thank you. John. We appreciate everyone taking their time to participate in our call today. We appreciate the support that we get for our company and we will continue to work on building shareholder value. Thank you very much.

And this does conclude today's program and you may disconnect at any time.