Good day, everyone and welcome to today’s earnings conference call. [Operator Instructions] Please note this call is being recorded. At this time, I would like to turn the conference over to Mr. Peter Benoist. Please go ahead..

[Technical Difficulty] and I wanted to take this opportunity to thank all of you for your interest and your support. It’s been a real honor and a privilege to serve as your CEO for the last 8 years. Having said that, I have the utmost confidence that Jim Lally and his team will continue to deliver outstanding shareholder value for our investors.

I will remain a consultant to the board and the management team through the end of this year, and it’s with great pride that I turn this call over to Jim Lally.

Jim?.

Thank you, Peter and good afternoon everyone and thank you for taking time to join us for our first quarter earnings call. I am joined this afternoon by Keene Turner, CFO of our company and Scott Goodman, President of Enterprise Bank and Trust.

We have continued our webcast format for this earnings call and refer you to our corporate website for a copy of the accompanying presentation, which will be the subject of the call. The presentation and earnings release were furnished on SEC Form 8-K yesterday.

Please refer to Slide 2 of the presentation entitled Forward-Looking Statements and our most recent 10-K and 10-Q for reasons why actual results may vary from any forward-looking statements we make today.

Before we get into the numbers for the quarter, I want to recognize Peter for his exceptional leadership over the last 9 years and wish him all the best in his retirement. The first quarter has been a historical one for the company as we closed on the largest acquisition in the company’s history.

The current integration of JCB has kept us very busy during the quarter, but despite this, we remain focused on sustaining our core growth trends and our longer term strategic objectives. Our financial scorecard is presented on Slide 4. The company’s strong performance has continued into 2017.

Core EPS improved by 26% compared to the first quarter of 2016. Continued strong loan growth and expansion of our net interest margin has driven year-over-year growth and net interest income dollars by 27% when compared to the same period in 2016. These results are a product of steady loan and deposit growth throughout the year.

Our relationship-oriented approach continues to serve us well as seen through our rigorous defense of our net interest margin. Compared to the first quarter of 2016, we saw net interest margin grow by 9 basis points to 3.63%. Credit remains very solid.

Both non-performers and classified assets improved from year end 2016 and overall credit statistics compared favorably to our peer group. Even with the additional expenses related to JCB, we continue to show the ability to positively leverage our fixed expense base as our efficiency ratio improved by 1% compared to a year ago.

However, it did increase compared to the linked quarter due to the acquisition expenses but would expect to see improvement of this ratio by the end of the year. Finally, we are very proud of our continued ability to fund our loan growth with core deposits. Our focus in this area coupled with our relationship approach is the key to this success.

Overall deposit growth, inclusive of the JCB acquisition, grew by 38% compared to one year ago. As impressive, we were able to grow our deposits on an organic basis by 11% over the same time period.

I would now like to turn over to Scott Goodman, who will provide more color as it relates to our loan and deposit growth as well as providing more insight to our achievements within our markets..

Thanks, Jim. Loan growth continues on a healthy pace as outlined on Slide #5. The growth in Q1 is a combination of acquired as well as ongoing organic activity. The JCB portfolio added $678 million in new loans, pushing the 1 year growth rate to 36%.

Net of the acquired loans, organic sales channels also continued to produce strong results at a 12% rate over this same period. Focusing on C&I lending, Slide #6 illustrates our ongoing double-digit pace.

TCM growth of 15% includes the addition of $79 million in C&I loans from JCB to the portfolio, while organic regional and specialty businesses remain steady, also contributing to the growth in an annualized rate of roughly 10%. Acquired and organic activities produced growth across all sectors of the portfolio in Q1.

And Slide #6 and #7 breaks this down both by loan type and by market. Specialized lending growth was led by a seasonally strong quarter for enterprise value lending.

Our existing private equity sponsors have been able to execute on some attractive investments recently and our efforts to expand the sponsor base in new markets like Dallas and Boston are providing new relationship opportunities.

While market pressures stemming from higher purchase multiples are creating a challenge, our private equity partners generally remain disciplined as they develop alternative sources to serve those new opportunities.

Most also have a positive outlook for the lower middle-market M&A and continue to successfully raise additional capital, consistent with historic investment parameters. Life insurance premium finance also posted growth, consistent with seasonally light first quarter expectations.

We are seeing some pricing pressures in this business, particularly from a couple of large regional banks. We are remaining disciplined and protecting margin at this point based on our relationships with existing advisory firms and our strong reputation in the specialty.

We have seen the larger banks come in and out of this sector in the past and expect our value proposition of consistent execution and consultancy with the advisory firms to keep us competitive. In Kansas City, we posted strong growth in the quarter with a net increase of $23 million or 22% annualized.

Results were a combination of the growth across multiple sectors, including C&I, CRE and consumer. The Kansas City Metro area and the urban core, in particular continues its steady growth and expansion and we are benefiting from new investors entering the market for industrial, commercial and residential projects.

We have also been able to leverage our tax credit expertise to win new relationships for institutions and C&I businesses expanding within the region. Furthermore, our growth in this market has enabled us to attract talented and experienced bankers to our team. Most recently, we have added two such bankers from larger competitors since year end.

Both are relationships managers with 10 plus years of experience, handling large client portfolios in the middle market, C&I and CRE spaces. In Arizona, we grew by $10 million or annualized rate of 18% in the quarter.

As I mentioned last call, we transitioned several experienced bankers from our Kansas City region into Arizona recently to complement several other new local bankers that we had added to the platform here. We look to capitalize on developing opportunities and growth in this market and the expanded team has gained momentum quickly.

Growth in the quarter resulted from several new CRE projects and a large new C&I relationship that was moved from a regional competitor. In St. Louis, the team has been highly focused on the integration of JCB. And the addition of the JCB bankers and clients transforms our St. Louis portfolio to $2.2 billion.

A large majority of the JC book is commercial real estate, which fits comfortably within the sector makeup of our existing portfolio. From a personnel standpoint, we have been able to integrate their commercial bankers into our existing teams and retain all key JCB branch personnel.

Our approach has been to minimize client disruption and maintain their relationships that were in place with JCB client-facing associates. From an organic perspective, during the quarter, St. Louis continues to originate solid new C&I loan opportunities, complemented by select CRE projects with targeted investors.

Organic growth in the quarter was quelled by some large CRE payoffs resulting from various events, including project completions on SBA 504 loans, some property sales and several competitive rate decisions.

Looking forward and given competitive pressures in CRE lending, continued momentum for us in specialty and C&I origination pipelines provides flexibility for us to expand the CRE book thoughtfully and strategically. Deposit growth is profiled on Slide #9.

It shows the impact of the JCB acquisition pushing total deposits above the $4 billion mark and vaulting us into the #4 position in the St. Louis market overall. The additional acquired deposits of $774 million have been complementary to our legacy portfolio.

The JCB branches have expanded our distribution into southern and western portions of the region while retaining an attractive deposit mix at roughly 26% non-interest-bearing accounts. Organic deposits were also up for the quarter, consistent with seasonal growth expectations and show an increase of over 11% from the same period last year.

Our strategic focus on developing a sales process to emphasize deposit production has enabled us to maintain this double-digit growth pace required to support our lending activity. Success has been the result of both focused initiatives and incorporating deposit production into our sales culture in general.

We have positioned dedicated leadership into roles which emphasize deposit growth, including our newly appointed Director of Deposits, regional consumer sales managers and several new commercial deposit RMs.

Much of our emphasis in the sales process moving forward will also be centered around initiatives that can help drive both the growth and cost effective profile of our funding base. Now, I would like to turn the call over to Keene Turner for a review of our financial performance..

Thank you, Scott. First quarter results continue to be strong and reflective of both our organic execution and recent acquisition efforts. Slide 10 reconciles $0.56 of reported earnings per share to $0.59 of core earnings per share.

As you can see, non-core acquired asset contribution was relatively straightforward this quarter at $0.03 per share and we also recorded $0.06 per share of merger expenses for JCB.

The merger-related items were comparable to fourth quarter and the notably higher acceleration activity from Q4 in the non-core acquired book drove the decrease in reported EPS. Nonetheless, we are off to an excellent start for 2017 with a strong first quarter.

Core EPS was equal to our typically seasonally strongest quarter at $0.59 per share and the return on average assets of 1.17% is a positive to start the year. Additionally, we closed JCB early in the year and it was sooner than we had previously indicated.

Turning to Slide 11, we will walk through the changes in our core earnings per share from the linked fourth quarter. Obviously, the income statement was affected by the results from JCB since February 10.

On this slide, we attempt to isolate those results on EPS and characterize the underlying fundamental performance, which was encouraging, in my view, to start the year. Those trends obviously bode well for our results for the quarters to come.

High level, we estimate that from an EPS perspective, JCB added about $0.01 per share when you reflect the share issuance and some finance cost assumptions. On top of that, there was a $0.06 per share income tax benefit from the implementation of the new accounting standard for share-based awards.

We believe this item is core and we expect this to continue principally in the first quarter of future periods. We posted a slightly higher provision for loan losses at $0.02 per share and expenses and non-interest income were impacted by seasonality by $0.03 and $0.05 respectively.

Net interest income, however, expanded $0.03 per share in the linked quarter, and I’ll walk through that more in detail on Slide 12. Core net interest income increased to $37.6 million for the first quarter.

Of that increase, we estimate the legacy Enterprise earnings grew by approximately $1 million due to the impact of growth as well as strong net interest margin performance. Our balance sheet and margin were both positively impacted by several interest rate factors.

First, the interest rate increase in December positively impacted our loan yields, which expanded 21 basis points sequentially. Additionally, we have repurchased a significant portion of the JCB investment portfolio in the fourth quarter and early in the first.

So, we had a full quarter with some higher investment rates in typical agency mortgage-backed paper that we buy at the 2.7% to 2.8% range and that drove up the overall yield in the investment portfolio.

Further, the seasonally high liquidity we had at year end began to be deployed by customers and we leverage the sub-debt offering that occurred early in Q4. We reported that those items decreased the Q4 net interest margin by 3 and 7 basis points, respectively.

For the rest of our funding, interest rates on wholesale and other variable rate borrowings increase, but we have seen our core deposit rates remain relatively stable. We are always managing them closely in order to defend and protect funding levels and to support our growth.

Thus, the linked quarter increase was only 2 basis points and only 5 basis points from the prior year. With all that said, core net interest margin increased 19 basis points in the linked quarter to 3.63%. Again, the largest driver of the improvement was the underlying rate impact for legacy Enterprise.

JCB’s historical margin was slightly lower, but purchase accounting impacts blended that back and provided some aid to the first quarter market. To reaffirm what we are expecting going forward, we have targeted 2017 portfolio loan growth at or above 10%. We are right around 7% in the first quarter. So, we feel good about our progress thus far.

We are managing the balance sheet to remain modestly asset sensitive. About $2.2 billion or 56% of the portfolio remains variable rate, of which approximately two-thirds will experience some sort of re-pricing in the near-term. That composition was affected by the portfolio from JCB that came on and drove that down just slightly.

We have also yet to experience much of the impact from the March interest rate increase. So we are optimistic that we will again have some sequential core net interest margin expansion. That said, our focus is on net interest income growth in dollars and not just from full quarter impact of JCB.

On Slide 13, credit trends continue to support our profitability. We experienced modest net recoveries in the quarter, with $56 million of portfolio loan growth. The $1.5 million provision in the quarter actually increased compared to the coverage on the allowance for loan losses to total loans by 3 basis points to 1.23%.

This increased coverage was largely driven by provisioning on one non-performing loan we have been discussing for the last couple of quarters. Worth noting the mark on JCB’s loan portfolio was 3.5% and pro forma coverage on allowance to portfolio loans would then be 1.65%.

Our posture is to continue to provide for credit losses that maybe inherent in the portfolio. However, our credit performance over a prolonged period of time makes that increasingly challenging. Nonetheless, coverage of non-performing loans increased to 283% at March 31. On Slide 14, non-interest income for the quarter was $7 million.

Seasonality and tax credits drove the decline from the fourth quarter, which is our strongest sales quarter. The growth in underlying fee businesses combined with $700,000 contributed from JCB, principally in deposit service charges, mitigated that seasonal decline.

Overall, fee income results are solid out of the gate as demonstrated in slot fees and card services businesses. I’ll try to take you briefly through expenses on Slide 15. These expenses already exclude merger-related items of $1.7 million for the quarter.

High level roll forward for this quarter was $21.1 million in Q4 of expenses plus $0.8 million of seasonal payroll taxes for first quarter gets you to $22 million. Add to that the JCB expenses for half the quarter of approximately $3 million. Thus, we reported $25 million of operating expenses in the first quarter.

The efficiency ratio increased to 56%, but we are still down 1% from the prior year even with JCB, which is a positive in my view.

First quarter results include only a modest amount of run-rate cost savings from JCB as we have been running both core systems, among other things, since closing and we have almost a full second quarter until systems conversion in late May.

Thus, we expect the absolute level of expenses to increase in Q2, including the remaining merger-related charges. After that, during the third and by the fourth quarter, we expect the efficiency ratio to improve as the cost savings are realized in the second half of 2017.

We will also have a full quarter of JCB revenues and we expect our current quarter results to drive continued revenue expansion. So high-level efficiency ratio we are forecasting the current level is a reasonable estimate for next quarter with potential for modest improvement due to revenue expansion.

Moving forward in dollars, JCB’s full quarter expenses are around $6 million combined with our current level that’s $28 million total. The synergies are estimated at $2 million per quarter fully phased-in. As we continue to invest in the business, we will have some core expense growth gradually throughout 2017.

I expect expenses by the fourth quarter to be relatively clean, assuming there are no material changes to plans or strategies as it relates to our core business or JCB. The resulting range for the year is $25 million to $28 million on a quarterly basis with the highest level for the second quarter.

We continue to pursue and build core profits and returns over time. We will deploy some additional run-rate expenses throughout the year, but we expect to achieve revenue gains in the near and intermediate term that will continue to leverage the expense base as we have demonstrated consistently over the past years.

Slide 16 illustrates the gradual steps in improvement we have made from focusing on key drivers of profitability and executing our strategy and plan, to improve each of them cumulatively. It’s worth noting that our core ROAA of 1.17% for the first quarter of 2017 has steadily increased over this period.

We are highly focused on driving profitable growth and our achievement of results will continue to expand both earnings and value for our shareholders as we further position EFSC for the future.

To start the year, we are encouraged by the positive results of our legacy company fundamentals, the early results from the JCB acquisition and those yet to come from our newly expanded organization. Thank you for your interest in our company and for joining us today. And at this time, we will open the line for questions..

[Operator Instructions] We will take our first question from Jeff Rulis. Please go ahead..

Thanks. Good afternoon..

Hi, Jeff. Good afternoon..

Circling back on the expenses just on the pre-tax cost saves, I think you put it at about $8 million annually.

I guess, how much of that, if any, has been achieved at this point?.

Jeff, it’s very little at this point. So, we expect most of that is yet to come and really Q3, we expect to see that phase-out and there may still be a little bit to go get in Q4 in terms of what we were planning. So still a lot of that is yet to come given we are running duplicative systems with duplicative people, by and large..

But the thought is that you secure the cost saves by Q4, that run-rate will be all-in with a little bit of potential a little higher in Q4 but by year....

Yes. I expect what you will see in Q4 will be a good indication of what the fundamental run-rate of the combined companies is..

Got it. And then on the merger cost, I think you pegged it at $10 million and I think initially, it was 30% prior to close and 70% after.

Is that kind of holding true?.

Yes. I think we have got $4 million to $6 million something like that left is what’s on the top of the head. So that fits in with where we are at this time and most of those again will be next quarter as we have the one-time charges for systems principally..

Got it.

And then just switching gears to the fee income side saw a modest contribution from JCB, I guess more expansion to come on that platform and maybe just the outlook for fee income in general?.

Yes. So, JCB’s fee run-rate was about $1.5 million. So, we effectively got half a quarter there. I think you are seeing some good momentum in the wealth business in particular. We are getting new clients and able to retain the ones that we had.

And then I think we are positioned in terms of cross-selling a treasury management and other portions of the platform card into the Eagle portfolio we will say as soon as we have conversion.

So, that’s really a second half item, but I think we are feeling good about where we are today both in the legacy Enterprise book and the run-rates from what came over from JCB being level and represents the focus of their teams and our teams since announcement and through close..

Got it. Okay, thanks. I will step back..

Thanks, Jeff..

We will take our next question from Mike Perito. Please go ahead..

Hey, good afternoon, guys..

Hi, Mike..

And I guess, Peter, one last time, congratulations on retirement..

Hey, thanks, Mike..

Couple of quick questions. So just to clarify, Keene, on the expenses, not to beat a dead horse here, but so the $25 million to $28 million range, it sounds like you expect to be at the higher end next quarter.

Now is that range inclusive of the $4 million to $6 million merger charges that you could incur?.

No, Mike sorry, so we are core…..

That’s just between?.

Yes, so that’s the core. The $4 million to $6 million is really outside and that’s kind of the one-time. So right now, we are at the 25 basically, so that’s Q1. And then 28 is where we are looking broad-brush strokes for next quarter and then it improves from there.

So you have got the cost savings coming out and then you probably got Enterprise, legacy or investment in the business combined growth what you have seen historically in terms of the investments we are able to make when we pull people on to the platform and continue to expand in pursuit of revenues.

So just linking that back trending wise, last year, we invested I think $0.16 and $0.08 run-rate and drove $0.50 of core revenues. So, we – magnitude maybe different this year, but that’s how we think about the business and that’s how we build our plan.

Sometimes the timing of that is a little bit to be determined, and I expect it will be a little bit more second half weighted given we are focused on the acquisition currently..

Okay, that makes sense. Thanks for the clarification. And then maybe a question for Scott, what are you seeing – I mean, it seemed like your deposit cost held in really strongly, but I guess, what are you seeing in the various markets from competitors? And what are the expectations on the deposit side? We had another rate increase in March.

I mean, consensus’ estimates still kind of factoring at least one or two more this year.

What are your updated thoughts on the deposit funding side?.

Yes. Certainly from a competitive standpoint, we are seeing deposit pricing creeping more into the markets, where you may see 3 or 4 banks that are kind of outliers on some rates, maybe now you see 8 or 10 in the market. So, I think it’s certainly getting more emphasis.

I think our position there has been again to incorporate it into everything we do everyday and because it’s part of our C&I calling, we are going after relationships. We are not chasing hot money, are going after lumps of special product, which keeps our cost lower.

That said, we are focused on expanding deposits in a similar fashion as we have expanded loans with some of the specialty niches and that’s really the emphasis in getting some leadership into a position to elevate the deposit culture, how we see it, report on it, think about it and sent for it as well as potentially some other special calling focuses, whether it’s by industry, niche or product..

Okay, that’s helpful. And then maybe one last one for me for Jim on the JCB acquisition, obviously, my guess is there are some similarities, but also some differences culturally with the JCB team just given kind of the business model and approach and just curious how that side of it’s tracking thus far in the St.

Louis market and how the two teams are kind of meshing together?.

We look at it two ways. We look at it from the front end of the retail business, consumer business, which we have been in with them since essentially the announcement. So that culture has gone very well.

And Scott mentioned in his comments the client-facing personnel there hasn’t changed hardly at all, so that certainly has helped from a soft landing from a client perspective. On the commercial side if there was any change, it was just for them really was our process, which we have integrated very well.

As we looked at our team makeup, we have assimilated all Eagle partners within teams and Enterprise such as there is no islands created. So we have created this buddy system to make sure that it’s a soft landing for them as well. But from an underwriting perspective, it’s been – the cultures have been very much aligned.

So, that’s not been a problem at all in terms of the understanding of how we go to market, how they went to market because it’s very similar..

Okay.

And just one follow-up on that, I guess both my last two questions a follow-up for, do you guys have a sense of what your deposit mix is in terms of more like retail consumer versus commercial?.

I don’t have that offhand. We were 80% commercial. Running the math on it most of Eagle will be what we would consider to be retail. So, that’s probably down 20%..

Yes, they are probably more 20-80 where we are 80-20 so however the math works out..

Alright, so probably in the range of one-third retail, two-thirds commercial at this point?.

And maybe just to add to that given what we are talking about, I mean, the Eagle balance sheet and deposit levels and loan levels has been really stable and steady since acquisition and even since announcement.

So we are pleased there in terms of what their teams have done and what our teams have done in working with them to make sure that the value of that franchise and early on those results are really there. So, that’s been a huge positive for us as well..

Okay, great. Thanks guys for taking my questions. I appreciate it..

Thanks Mike..

We will take our next question from Andrew Liesch. Please go ahead..

Hey, guys. Congratulations, Peter, on your retirement. Just want to pass on my congrats..

Great. Thank you, Andrew..

Just one follow-up question for me on M&A, just – it sounds like this JCB deal has gone pretty smoothly for you guys.

Just curious what is your appetite for more deals? And then are there any regions you are prioritizing or any business lines specifically that you would like to add?.

So, we are continuing to be encouraged by this deal, I think the value that we continue to get out it has been the customized approach in terms of really understanding what was important to Eagle, what their culture was and the way that we are bringing that together.

That being said, we are constantly evaluating options and looking down the road from a longer term.

I don’t know that you would necessarily see from a deal flow perspective that we would rapidly follow on with a bunch of deals, because I think what we have really learned in this process for ourselves is the value is in really preserving and growing what Eagle had.

And also we were fortunate enough to find something that was extremely unique in terms of the culture, but it really fit well with ours. But that being said, it’s got to be accretive to earnings, talent and really our strategy and principally when we look for something, it’s really expanded the deposit capabilities and customer service.

So that’s where we start, and obviously, we would like to be expansive in our existing markets, Kansas City, more in St. Louis, Arizona as that opportunity comes around, but we are open minded about what we look at and we are also thoughtful about what it means to be in a new market and look at that even more cautiously..

Okay, thanks..

Thanks Andrew..

[Operator Instructions] We will take our next question from Brian Martin. Please go ahead..

Hey guys..

Hey Brian..

So I just wanted to find out on the going back to the margins for just one minute, I think Keene, you said maybe there were loans [ph] that were going to re-price here in the short-term and then you have the March benefit that would kick in as well, I mean can you just talk a little bit about how you guys are thinking about second quarter for the margin and as it relates to both those items and the impact it has?.

Yes. So I would say as I think the first quarter margin performance was even beyond our expectations, I think we had a lot of positives on the asset side and the funding side, particularly into the deposit. We don’t necessarily expect that same dynamic.

So I think we are thinking margins sequentially is up, but it’s probably more like 5 basis points than the magnitude of what we saw in the first quarter here and you are probably going to start to see a little bit more creep on the funding side.

We think that for a number of reasons, maybe not necessarily the absolute deposit trends, we typically get a little bit seasonally tighter in terms of loan to deposit as we go through the middle of the summer and so just the reliance on wholesale funding would cause a little bit of a challenge for us.

And then we typically build liquidity back in later in the year to round out the asset growth we get throughout the year.

And that’s been our cycle for like the last 3 years and so with the wholesale costs now being pretty significantly above where the deposit costs are, we wouldn’t have quite as much sequential expansion next quarter, but there is still more to come on the loans side and that bodes well for both Q2, Q3, Q4, however long we can keep managing the funding side..

Yes. Okay. So the kind of 5 basis point range is more realistic assuming the funding costs and then we will see how that dynamic changes over time. So okay, that’s helpful.

And then just the other part when you talk about, I guess just the C&I growth then just kind of your optimism on the loan growth this year, I mean I guess are there any – is it fair to say that it still seems like a good chunk of it is focusing more on the specialty product, it seem like two of those were seems like weaker this quarter, so I guess just kind of curiously and you are certainly off to a nice start for the year, but any areas you are more encouraged by either whether it be geographically or a segment that you feel comfortable with the loan growth numbers so far?.

Brian, I would say that what we see certainly on the specialty side is consistent, which has been pretty nice growth. I think the partners we deal with on the UBL side are optimistic and we have expanded our base of partners.

We are working with there, so we don’t – that is a seasonal business somewhat towards the end of the year and the first quarter, but I see that being consistent. Life insurance, as I said, there is a little bit of margin pressure there, but the pipeline remains consistent. So I think we are consistently optimistic on the specialty businesses.

I think as we have brought new talent on the platform both in Kansas City and Arizona, I feel good about our ability to compete there.

I think on the C&I side and using some of the specialty tools like the tax credit products we have has allowed us to kind of stay out of the fray from some of the CRE competition that we see that competes both on price and on structure. So it’s tough. I mean it’s consistently tough. So don’t get me wrong.

It’s not easy, but I feel good about our team and our ability to execute the way we have going forward..

Okay.

And have you guys seen a pickup or slowdown in payoffs or has that been pretty consistent?.

We saw some CRE payoffs. I think we are seeing some of the large banks, the product that we have seen out there that hit us in the first quarter was really some of the larger banks that have 10-year money, but we see them with buckets of 10-year money that kind of keep coming out of the market.

So while it hit us a little bit in the first quarter, I can’t say that I am worried about it long-term. So no, I don’t see anything other than just normal payoffs on CRE when we do construction financing or SBA 504s or products like that, so..

Okay.

And the list out that there are the two folks you guys hired, what markets where they in and maybe you said Kansas City for one, I didn’t even catch that?.

So the two I mentioned were in Kansas City. As you recall, we took two of our seasoned Kansas City bankers and transitioned them out there to Arizona. So in filling their spots, we brought on some seasoned 10-plus year bankers from larger competitors in Kansas City, yes..

Got it, okay, alright. That’s all I had and I guess just great job Peter and congrats and good luck in retirement..

Thanks a lot Brian..

We will take our next question from Peyton Green..

Yes. Good afternoon.

I just wondered if you maybe could comment, but I don’t know it’s only a month into it, but post the March move, have you seen any change in competitive behavior that maybe has or are you seeing credit spreads tighten and absorbing some of that market rate move?.

Can you repeat Peyton, the question is have we seen competition increase?.

Yes.

I mean is competitive pressure reducing the credit spread that you are able to charge by cost, any of the products relative to the market rate movement?.

Sure. Relative to pricing from competition, certainly I think again on that longer term fixed rate product, if you just look at it on a spread basis, it’s very tight. We are seeing even 4% 10-year money from some of the big banks. So again, those are that tends to be buckets. I think from the smaller banks, it’s a little hit and miss.

They tend to be coupon pricers rather than spread pricers and so when you look at it on a spread basis, it’s probably not consistent with our expectations and that’s where we have tried to back away and really rely upon the premium risk based pricing that we get in some of the niche areas, certainly UBL, for example.

On C&I, I think we are holding spreads there. We are pricing on a relationship basis. So we will get aggressive for a good credit, where we can get a broader relationship with deposits and fee based products. So – but yes, I think I feel good that we are still able to compete on that basis with the competition that we see out there..

Peyton I will add to that what we do often is we take the maturity list that’s 18 months into the future and take a look at those credits that we can get ahead of it. So it’s not a competitive bid process at a maturity that we are out there were those clients ahead of time and working on what a solution would be prior to that maturity date..

Okay.

So beyond both 10-year commercial real estate money and the life insurance premium finance business, everything else is still fairly consistent, you are able to maintain solid spreads, is that fair?.

That’s fair..

Okay, alright. Peter congratulations on doing a fabulous job for the shareholders..

Thanks Peyton. I appreciate it..

We will take a follow-up question from Mike Perito. Please go ahead..

Hey. Thanks guys.

Keene, just a quick follow-up on the margin and I apologize if you mentioned this already, but I know you talked about how the March rate should benefit the core NIM, I think the rough range to that was 5 bps, but the JCB deal, if I remember correctly was a little bit dilutive to the margin, it sounded like it was close to lower than where it was when the deal was announced and that was only the half quarter impact, so I guess how do you incorporate kind of – but if we incorporate both those pieces and enough to kind of offset one another or just the 5 basis points already taken into consideration some additional drag from the JCB deal?.

That already includes it. Mike, it’s a good memory and a good question. When we announced the deal, the margins were relatively similar. Ours just bounced a little bit more as it early in the year as we got the benefit of the interest rate increase, but we did the purchase accounting a little bit helped mitigate that impact from JCB.

So – but the guidance I gave is reflective of what we have already reported and done and so that there is no additional headwind, that 5 is inclusive of that solution, so to speak, from the margins..

Okay, great. Thanks..

Thank you..

At this time, we have no further questions..

Well, thank you everybody for your interest in our company. Look forward to talking to you next quarter, if not sooner..

This does conclude our presentation for the day. Thank you so much for participating. You may disconnect at anytime..