Good day and welcome to the First Merchants Corporation First Quarter 2019 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Michael Rechin, President and Chief Executive Officer. Please go ahead..

Thank you, Alison. Welcome to our earnings conference call and webcast for the first quarter ending March 31, 2019. Joining me today are Mark Hardwick, our Chief Operating Officer and Chief Financial Officer, along with John Martin, our Chief Credit Officer.

First Merchants released our earnings in a press release this morning at approximately 8:00 AM Eastern Time, and our presentation speaks that the material from that release. The directions that point to the webcast were also contained at the back end of the release.

And my comments is going to begin on Page 4, a slide titled First Quarter 2019 Highlights. So, the Company reported earnings of $38.8 million of net income, a 5.8% increase over the first quarter of 2018, translates to earnings per share of $0.78, a 5.4% increase over the first quarter of 2018.

Our balance sheet grew with total assets of $10.2 billion, 7.8% over the first quarter of 2018, and we had organic loan and deposit growth of 5.7% and 9.8% respectively over last year's first quarter. So, four strong measures of earnings and growth on a year-over-year basis.

Our revenue in the first quarter of 2019, net interest income and non-interest income were a little soft in comparison with the fourth quarter 2018, and in a couple of moments Mark will provide some specific insight into the lower net interest margin we reported and the non-interest income flatness. Bottom of Page 4 before we go there.

The quarter's operating ratios, and the operating ratios continue to reflect really high performance banking company and a strong start for our 2019. So, at this point, I'm going to hand it over to Mark..

Thanks Mike. My comments will begin on Slide 6. Our total assets on line seven increased by $738 million or 7.8% since the first quarter of 2018, and now totaled $10.2 billion. Loans on line two increased by $397 million or 5.7% during the 12-month period, and investments on line one increased by $319 million or 20.7%.

The composition of our $7.3 billion loan portfolio on Slide 7 continues to be two-thirds variable rate based and continues to produce strong loan yields. The loan portfolio yield for the first quarter of 2019 totaled 5.3%.

When normalized for fair value accretion, our yield in the loan portfolio totaled 5.17% versus 5.19% last quarter and 4.68% in the first quarter of 2018.

On Slide 8, our $1.9 billion bond portfolio continues to be high performing, yields totaled four-point - I'm sorry, 3.49% for the quarter and gains in the portfolio now total $26.1 million, a $34 million positive swing since year end.

Now, on Slide 9, total deposits reached just over $8 billion and increased $720 million or 9.8% over the same period last year. The increase was the result of growth of $589 million in non-maturity deposits on line one and $238 million of growth in time deposits on line two.

The increases in deposits allowed us to add nearly $400 million to investments during the past 12 months, while paying down $163 million of borrowings on line four, as stated in the press release. The loan-to-deposit ratio now totals 90.7%, reflecting a stronger liquidity position than in recent periods including 94.2% from a year ago.

As I previously mentioned, the mix of our deposits on Slide 10 is a strength of our Company. First quarter 2019 deposit cost totaled 120 basis points. Our deposit beta since Q1 of 2017, which includes seven increases over nine quarters, is 47%.

All regulatory capital ratios on Slide 11 are above the regulatory definition of well-capitalized and our internal targets. The capital generation resulting from our strong financial performance provides us with maximum capital management flexibility.

The corporation's net interest margin on Slide 12 declined 8 basis points from the same period last year and 20 basis points from the fourth quarter of 2018. Of the linked quarter decline, 8 basis points resulted from less fair value accretion income, 6 basis points came from two fewer interest earning calendar days in Q1 versus Q4.

And additionally we had 5 basis points as the result of interest expense associated with strong deposit growth early in the first quarter, while investment income from these funds lagged due to trade settlements.

We expect 5 basis points from the bond portfolio and 3 basis points from the additional calendar day to be fully reflected in our second quarter net interest margin and net interest income.

Fair value accretion is more difficult to predict as pay offs from purchase credit impaired loans can elevate accretion income as it did in the fourth quarter of 2018 where accretion totaled $1.7 million. Accretion for the first quarter of 2019 was only $580,000.

On Slide 13, non-interest income totaled $18.7 million for the quarter and $847,000 - $848,000 decrease from the first quarter of 2018.

Of the decline, gains from the sale of mortgage loans on line four accounted for $526,000 as approximately one-half of the quarter's loan production in the mortgage portfolio was added to the balance sheet versus being sold into the secondary market.

And traditionally we would sell about 30% and - I'm sorry, put 70%, 30% on the balance sheet and sell 70%. On Slide 14, non-interest expense totaled $56.6 million, up from the first quarter of 2018 total of $53.7 million.

Of the $2.9 million increase, salary and benefits accounted for $802,000, other real estate and foreclosure expense accounted for $763,000 and other outside data processing accounted for $720,000.

Now, on Slide 15, earnings per share increased by $0.04 or 5.4% over the first quarter of 2018, and our efficiency ratio on line 10 remains in the low-50%s. On Slide 16, you can see our trends in tangible book value totaling just over $20 per share. So we are trading at less than two times book value.

Our current PE and book value multiples are a consideration as we contemplate buyback levels post-closing of Monroe Bank & Trust. You should also anticipate the dividend increase announcement as part of our Annual Shareholder Meeting on May 9.

On Slide 17, we continue to be pleased that our compound annual growth rate of tangible book value per share is nearly 10%. Thanks for your attention. And now John Martin will discuss our loan portfolio composition and related asset quality trends..

All right. Thanks, Mark, and good afternoon. I'll begin my walk through the deck on the Slide 19 with changes in the loan portfolio, review asset quality and the asset quality roll forward cover the allowance and provisioning and then close with some summary remarks in the portfolio.

Turning then to Slide 19, the loan portfolio grew in the first quarter 1% to 4% annualized with both commercial and industrial and owner occupied commercial real estate lending up for the quarter a combined $51 million on line one and two. This represents a combined 8.4% annualized growth rate for both categories.

Construction loans were mostly flat down $4 million on line three while CRE non-owner occupied was up $23 million on line four.

The C&I and investment real estate lending games were somewhat offset by a modest decline in ag production and ag lending on lines five and six, which declined a combined $17 million as we have continued to face a more challenged ag lending environment.

Finding out the - finishing out the portfolio changes slide, consumer and mortgage lending on lines nine and 11 grew - of nine through 11 grew a combined $26 million with robust consumer lending activity.

We continue to grow the portfolio in a balanced way and construction concentrations continued to hover at around 50% of risk-based capital with the investment real estate concentration hovering at around 220% of risk-based capital.

These levels continue to give us the flexibility and give us concentration room for real estate growth as opportunities arise. Turning then to asset quality on Slide 20. Asset quality remains healthy. On line one, non-accrual loans increased $1.9 million. We had an ag relationship go to non-accrual this quarter which totaled roughly $3.5 million.

Now we continue to work with the borrower and plan to have the relationship resolved over the next couple of quarters. Now that aside, other real estate loans, renegotiated loans, and 90-day delinquent loans all decreased in the quarter by a total of $2.5 million, offsetting the increase which left total NPAs and 90-days delinquent down $600,000.

Turning to Slide 21, which reconciles the migration of non-performing assets. We started the quarter in the far right column titled Q1 2019 with $31.3 million in NPAs and 90-day delinquencies.

We added $5.2 million of non-accrual loans in the quarter, resolved $1.2 million of the same on line three with only $200,000 of new ORE on line four and $1.9 million of gross charge-offs on line five.

This netted to a $1.9 million increase in non-accruals as I just mentioned on line 6 then dropping down to other real estate changes on line 7 through 8 which offset each other with $300,000 of ORE writedowns which are included in the ORE and in credit related expenses Mark made reference to in his comments.

The net effect was a slight decrease in ORE of $300,000, then finishing out to the slide 90 days delinquencies and renegotiated loans both declined in the quarter by $1.8 million and $400,000 respectively leading to the overall change in NPAs and 90 plus days delinquent for the quarter of $600,000, another healthy quarter for credit.

Then moving to Slide 22, which highlights the AOOO and fair value summary.

For the quarter, provision expense offset charge-offs on lines two and three by $300,000 this resulting in an increase in the ending allowance, despite the increases the non-accruals the last couple of quarters AOOO coverage remains healthy at 290% on line five with allowance coverage remaining at 1.11% of loans.

Then, summarizing on Slide 23, we're off to a good start for the year with a 4% annualized growth rate. C&I loans increased in the quarter growing 3.6% and 15.1% year-over-year.

Mike will give additional activity color, but the pipeline continues to remain - continues to expand with strength in C&I lending, and we continue to see balanced growth, as I mentioned earlier, across the portfolio.

Asset quality remains healthy as I mentioned a minute ago with provision expense covering charge-offs with some increase for portfolio growth. And finally, the allowance coverage is unchanged with a 1.11% coverage of total loans and one 1.24% coverage of non-purchase loans. Thanks for your attention, and I'll turn the call back over to Mike Rechin..

Yes, thank you, John. I'm going to cover the points on Slide 25, and then open up the call for questions. And so, on 25, a couple of thoughts under looking-forward caption.

And the first one would be managing our market presence core banking business as Job one for the company, execute against our plan, we've got several tactics that we really like that are directed toward an ongoing build of market share all over the company and in all lines of business.

And so that's where we put the majority of our attention and that would include the second bullet point on the page that speaks to optimizing our retail and commercial deposit strategy, it's a mix and volume related effort.

We clearly have deposit price sensitivity and yet we know the value of funding for a company that's been able to grow 6% to 8%, 9% organically over the last several years. I would expect our loan and deposit growth rates to move probably closer together as they usually have in the past, which produces a really profitable liquidity deployment.

Really we're quite pleased with our success in deposit gathering and understand the levers available within our markets and within our client segments. Next bullet point down, leverage balance sheet muscle, I just - it's some of the flexibility that Mark Hardwick covered earlier.

We like the fact that in the press release we cited healthy expanding local economies in our markets. We like a flexible balance sheet to get after it with playing offence and yet we're aware of this stage of the recovery.

You might have heard some of that in John's comments about diverse loan portfolio, and so we're aware of the status of the recovery. And so, we look to utilize the flexibility of our balance sheet that provided in the liquidity we have, the asset quality, the allowance levels and the capital levels.

Next bullet point is market disruptions can equal opportunity, and so typically when you hear about disruptions in the financial services, you're talking about non-banks. I think we're in connection with what that means to us and we watch for those impacts.

But in this connotation, we feel like some of the disruptions mean opportunity for First Merchants. And so, in our geography, you've seen several announcements around Wells Fargo thinning their retail banking presence in Fort Wayne area in particular as it relates to opportunity for us. The closing of Fifth Third and MB means opportunity for us.

KeyBanc rethinking their retail configuration, the announcement in very recent closing of a Horizon and Salin transaction.

And even from two years ago, the main source for financial combination provides opportunity for our Company in talent additions, adding depth in some of our most traditional businesses, retail, commercial, wealth, adds opportunity in gathering clients and earning retail households, allows us to look at filling in capability in other businesses of our syndications as one, as we distribute the credit that we originate.

So, we continue to feel like the change in the environment presents opportunity to our Company. And then the last bullet point in tandem with some of the comments in the release, excited about the Monroe acquisition. So we would expect a second quarter closing and a third quarter integration. All of our plans in that light remain intact.

We've got significant integration planning taking place right now, people, product, technology, culture intended to produce a strong entrance for us into Monroe's marketplace.

So, at this point, Allison, ready to take questions should there be any in the queue?.

[Operator Instructions] Our first question today will come from Damon DelMonte of KBW. Please go ahead..

So, first question just wondering if you could give a little color on the direction of the core margin? I know Mark you talked to a couple of points of the 5 basis points drag from the illiquidity kind of getting added back to that 377 level and then pick up a day on the calendar count here, that's another 3 basis points.

But outside of that, as you look at the obvious potential here of the Fed pausing and future rate hikes, how do you see the margin shaping up?.

Yes. I appreciate you highlighting those couple of items because - we absolutely expect those to return and even some fair value accretion this is probably the low - it is the lowest level we've had in about six quarters.

So, anticipating a little bit of add-back from the purchase credit impaired activity even though we clearly don't control when that occurs. And I would say, with the L-Curve where it is and maybe a little more biased to falling rates and rising rates if we have a bias.

I think deposit - management of our interest expense through our deposits is when Mike talks about organic growth is job one that's probably right behind it. So we're actively managing all of the different categories from retail deposits all the way up through the commercial and into our institutional money, and there's some pressure.

So, I think we'll have to continue to manage that as we move forward. But we have those core items that we expect to increase, should get the lift back in our yield on earning assets both in the bond portfolio and the loan portfolio in the second quarter. And we're doing our best to make sure that we're outrunning the interest expense pressure..

And then, with regards to your outlook for expenses, could you give a little update on that? And kind of help us frame out the potential impact of MBT's coming on at some point during the second quarter?.

Yes, we think the current level is a good level for the second quarter as well, when we were trying to look at extraordinary items really nothing to report from that standpoint. So, we think our current levels are good going forward.

And then, all of the numbers that you have in your that everyone has in their models are still intact as it relates to one-time charges. When the transaction closes in the second quarter, we'll have all of those one-time items. And then, we'll observe their organization into ours with a third quarter integration.

After the integration occurs, it's usually integration plus about 30 days is when we really get back to the new operating level. And so that we'd expect to be back to normal operating levels by the fourth quarter..

And then, lastly, Mike, as you kind of look in your crystal ball and look at your pipelines, you're still comfortable with your previous guidance on loan growth?.

Yes, we really are, a little bit soft on an annualized basis in the first quarter at 4% relative to what you might remembering where we've talked about a middle high single digit number 5%, 6%, 7%, 8%.

I still feel like that's what's available to us, and that comes quantitatively from our pipeline tracking, and this would be First Merchants stand-alone no commentary around Monroe is added into this. But on an organic basis, our mortgage business is up. Our consumer lending business is up.

Off of the commercial banking geographies, not all of the commercial banking geographies are up but our specialty structure group is up. So, all in, we're close to - we were $470 million in aggregate, and so pleased with that. That should not only help the loan side, it will help some of the fee businesses as well. So we feel good about that.

That is kind of the pipeline we've talked about, Damon, previously on kind of where First Merchants is issued a commitment to move forward. Equally encouraging to me is what Mike Stewart tracks, which is in kind of an earlier pipeline of activity, which is the highest it's been in five quarters.

And so while the committed pipeline is encouraging and consistent with the level of growth that I just referenced kind of 6%, 7%, 8% on an annualized basis, the earlier one which is probably last firm speaks to a real high level of activity in the Midwestern marketplace..

The next question will come from Nathan Race of Piper Jaffray. Please go ahead..

A question for John to start off, just maybe kind of think about the trajectory of credit cost and provisioning going forward, just curious kind of what you're seeing in terms of criticized classified migration in the quarter and assuming you kind of get back up to that high single-digit loan growth trajectory.

Just how we should think about the provision line of the following two quarters?.

Yes. The first question you ask was about the criticizing the classified the trajectory.

If you see it on the bottom and we've - I've actually spelled it out in the bottom of slide 20, we can kind of see the what happened in the quarter and we had a good quarter in terms of the classified assets, but I don't see anything that is going to push that at a real high rate going forward.

So, I'd imagine it be at this level somewhere going forward at least in the foreseeable future. In terms of the provisioning expense, say $2 million, maybe $2.5 million is probably not a bad number on the high side..

And just looking to - if you look historically, we've been able to maintain our allowance levels at a pretty constant pace around 110 or 111, and so you kind of anticipate that on a go-forward basis..

Appreciate that and then perhaps this thing about expenses going back to the earlier question, after you guys get MBTS converted in the third quarter, any sense or can you update us in terms of how the kind of core operating expense should kind of project by 4Q '19?.

Yes, well, we have all of our plans, and I would say we're - when we look at budgeting and everything else, we feel very confident that we feel that we can maintain the levels we're at on a core basis.

And we're continuing to invest where we need to and divest where we need to, to make sure that we're kind of redeploying our expense levels into the right places. So, I think it's the core run rate. If anything, a really modest increase, maybe 1% or 2% on a go-forward basis and then we're absorbing the cost of MBT post cost savings.

And if those are the numbers you'll be looking for, I could provide those to you, but I think you already have that captured in all the modeling. That's helpful.

And then, just in terms of the tax rate going forward, It's kind of 17%, still kind of a right approximation to use going forward?.

Yes, we've said between 16.5% and 17%, I don't think it's more than that..

The next question will come from Daniel Tamayo of Raymond James. Please go ahead..

Doing well, thanks. First time on the call, nice to be here. So just kind of drilling down a little bit more on the NIM, it's - there was a about a 14 basis point decline in the commercial loan yields.

It looks like can you break out what was due to the decline and accretion there? Do you have that number for you in terms of what was organic fuel?.

Yes, I do. Maybe just turn to this page real quickly. The decline in the loan yields. So if we were - we reported $530 million and 13 basis points of that yield was related to fair value accretion. And last quarter, we reported $541 million and 22 basis points of fair value accretion was part of it.

So, it's a 9 basis point impact, negative impact, and from Q4 to Q1 related to fair value accretion..

Okay, thank you, that's helpful. So, still a little bit of lot of compression there. Is there - was there anything unusual on the commercial loan side? I guess I was expecting to see a little bit of expansion given the move in the final rate hike in December..

Yes..

Yes, and then going forward anything that would provide any stability there or do we expect that to kind of trend with Fed funds rates going forward or LIBOR?.

Yes, we've had a three year trend of fourth quarter to first quarter declines in our yield on our loans. And it's really because of the number of days. I mean I hate to get into that level of detail, but we lose the fourth quarter with a 92-day quarter. This was 90 days.

And because we're so heavily commercially oriented and commercial loans accrue on a daily basis, not kind of just 30 over 360. We lost - we get hit by $1.4 million from the fourth quarter to the first quarter, and then we gain a day of that back in the second quarter so we have a $700,000 lift.

And in the third quarter and fourth quarter as we get the full $1.4 million back each quarter. And so if you look at our trends historically you see that same decline that occurred last year and then we had a nice pick up again in the second quarter and even all the way back so that happened from 2017 to 2018 and even 2016 to 2017.

And so now we're still optimistic about those loan yields and the fact that it's two thirds variable and when a rate move happens that we see it come through the income statement..

I appreciate all the detail. And then, on the other side of the equation what the deposits, is there still pressure on the non-interest-bearing, which we saw coming down again in the on average basis in the first quarter. The rest of the quarter especially in a period end basis very strong positive growth.

It's definitely above what we were looking for here.

But still seeing that mix shift, so how are you seeing and what are you expecting in terms of continued shift in the deposit base?.

This is Mike, Mark might be - I see I'm looking at a page. I know that if you listen to the woman that runs our Consumer Banking business, she sees a continued shift for our clients to interest bearing products but staying within the bank.

And so we keep an eye on that we're trying to design them around their preferences and understand the competition. I feel like and it was in your question that we had you know really kind of a large organic deposit growth quarter.

And if that were to continue and if that were to continue to be sizably larger than our organic loan growth, we'd probably even get sharper with our pricing around the growth in that. So, I think it's a dynamic category, but we like the fact that people want to do business with us on that side of the balance sheet.

And it's - we really look at it quite closely on a market by market, product by product basis. But, yeah, I think that going back to your earlier question, our customers opting for interest-bearing products out of non-interest-bearing, yeah, I think that's the case..

Our next question will come from Terry McEvoy of Stephens. Please go ahead..

A question for you. I know the fair value accretion is difficult to predict on a quarterly basis. And just to maybe establish kind of a baseline, you know the scheduled accretion looks like for the second quarter..

Yes. The numbers are very difficult to this quarter, and we did have about $500,000 - we get back, I think it was $500,000 of purchase credit impaired. This in the first quarter compared to 1.7 last quarter. So just the schedule to amortization would have been - so 1.8..

1.8, okay. And then, Mike, I love how specific you were when talking about the market disruption and how that could help you. I guess the flip side is others may say the same thing about Monroe and southeast Michigan. So my question is how are you prepared for that not to happen.

Has there been any disruption so far and do you feel like you've got the key people locked in place?.

Well, that's a great observation on your part. We would absolutely be a target for people that had like strategies to take advantage of that. I feel like we do the best job in our history of protecting the franchises joining us is pretty strong.

And so, some of the protocol we've used in terms of locking people up, it's more of a cultural lock than it is anything contractual because good and talented employees can do what they like.

We try to identify really early what their role would be, where their management team would be, and in this case like any of our recent acquisitions, even a like sized one like IAB, we look for local market leadership that came from that franchise. And so, Doug Chaffin, the CEO of the Bank going to be leading the effort there.

He's got some really strong senior management team that are doing a deep dive into the way we run the Company. And quite frankly, they're quite similar. And so that's kind of our best defense for that is to empower the bankers with information and let them tell our story and be augmented by some of our team when necessary.

But no, the observation is a good one..

The next question will come from Brian Martin of FIG Partners. Please go ahead..

Maybe one for marker next to me was from Mike just the committed pipeline. Mike, you talked about earlier being I think it was all-in around just under $500 million.

Can you give some indication of where that was last quarter or kind of year-over-year just what are the benchmarks there on that?.

Yes. That's a good question because when I mentioned $470 million it sounds really sizable when you consider that our entire loan portfolio grew by about $75 million in the quarter. And so what is included in that number is all of our renewals.

And so, we track kind of what I would call new originations and renewal, but quite frankly at a renewal the client has the opportunity to either stay with you and grow or go someplace else.

So we treat them similarly as those opportunities go into the pipeline and so the specific point of your question the $475 million pipeline I just referenced would have been $50 million lower than it was a quarter ago. And so, your pull-through of that number is really the critical measure when you see how much your balance sheet actually grows.

But I would also tell you that it's larger than it had been at this point last year, and we had a really sizable second quarter loan growth. So, it is a correlation which I think is at the heart of your question isn't perfect for the magnitude of a committed pipeline versus how much your balance sheet actually grows.

In addition to which the pipeline would have unused commitments in it. So, if you have a pipeline and say, that would include a $20 million line of credit, the usage on that line of credit is really difficult for us to predict..

Okay. No, that's helpful. I appreciate....

Yes..

And just how are the payoffs this quarter? I mean I don't - if you guys have commented, maybe I missed that, but just, how were - how they track relative to where they have been?.

I don't have that quantitative with me in front of me, although I get that question a lot particularly when it relates to people asking about non-banks taking exposure of ours away, and I don't think we have an extraordinary payoff quarter.

John, do you have any specific item on that?.

Yes, I don't. The only reference I think we've talked about in the past was some utilization numbers. But we don't really track to your point, churn if you will within the portfolio, what's paid off and what's added..

Just the last one or two for me, where it just the - Mark, maybe just gone back to the margin for a minute. If you add back kind of the whatever 8 basis points or so you talked about earlier, you kind of get to a low-380s type of number.

Just as you think prospectively for 2Q and you kind of think about the fed on pause and in the yield curve worth of that.

I guess is your expectation that you can kind of hold that margin if that low-380 and I guess referencing our core basis, is that how we should be thinking about it? And then secondly just the second part of it just the impact that remind me that the impact that Monroe has as you go into the third quarter?.

Our plan this year is to hold the margin at its current levels. I mean, it should recover as we just mentioned from first of second, but then hold the levels. Where we think there's very little upside, and so it will be about protecting the downside risk.

And then, Monroe really feeds in quite well to the margin numbers, and we've communicated a couple of quarters in a row. We think that they'll fit nicely and shouldn't put pressure on the margin and it's really because of some of the strategies we had in our bond portfolio. So, I know they're releasing earnings as well.

And they sold their bond portfolio last quarter and it was so that we could reinvest, so they could reinvest at higher yields. I think they were earning somewhere around $210 million, $215 million, and we feel like they have the ability to reinvest in the mid-3s..

And when you say - go ahead..

Well, I was just - if you just put the two companies together as they stand, it would pressure margin. But because we're reinvesting differently in the bond portfolio, we think it's very look alike to us..

And just when you reference holding the margin kind of stable, I guess are you referring more to that GAAP margin? Are you looking at that core margin kind of the - when it bounces back to as you think about second quarter?.

Yes, definitely. I mean we don't really know how to forecast exactly what happens with fair value accretion. And....

And then just the other one was, the deposit growth and of course you guys referenced it being particularly strong.

I mean, I guess, is there something driving that whether the specials that you guys were doing, was there some remixing in there, anything that was unusual that you guys would call out?.

Yes. Well, I mean, we won't call out customers specifically but we had a number of large opportunities that we were working on and cultivating last year and to be sure that we didn't cross $10 billion, we were sort of - we really didn't want to cross $10 billion at 12/31.

So we were planning to acquire these customers, that was our hope that it would occur in the first quarter and it has. And so, the growth is more in the first quarter than what I would anticipate for the remainder of the year in some of those categories, but we were very pleased by the new relationships we were able to add to our balance sheet..

I think - this is Mike, Brian. The other complementary thought is that all throughout 2018, we were adding resource and effort around kind of an up-market institutional deposit-oriented calling effort, and it's paid off. And I think, as Mark has covered in the last couple of calls, is at a different volume level, which is attractive.

It's also at a higher price level, which we digest as we need the funding. And so, I like the relationship orientation of that, and it served us well. And the other part of your question was, do we run specials? Yes.

What I would call the traditional consumer bank effort, definitely looks at specials at a retail product level on a market-by-market basis based on specific competition. And the recent pullback in yields, especially in the bond portfolio, have caused us to reevaluate those specials accordingly..

Ladies and gentlemen, this will conclude our question and answer session. At this time, I'd like to turn the conference back over to Michael Rechin for any closing remarks..

Allison, I don't have any other than appreciation for the participation and the listening in on the call. We look forward to talking to you in 90 days to talk about our second quarter results..

Thank you, sir. The conference has now concluded. We thank everyone for attending today's presentation, and you may now disconnect your lines..