United Community Banks, Inc.
Q1 2017 Earnings Call Transcript

Published: 26 Apr 2017

[Operator:]

Good morning and welcome to United Community Banks First Quarter Earnings Call. Hosting our call today our Chairman and Chief Executive Officer, Jimmy Tallent; President and Chief Operating Officer, Lynn Harton; Chief Financial Officer, Jefferson Harralson; Chief Credit Officer, Rob Edwards; and Rex Schuette, Finance. United's presentation today includes references to operating earnings, pretax, pre-credit earnings and other non-GAAP financial information. For these non-GAAP financial measures, United has provided a reconciliation to the corresponding GAAP financial measure in the financial highlights section of the earnings release as well as at the end of the investor presentation. Both are included on the website at ucbi.com. Copies of the first quarter's earnings release and investor presentation were filed this morning on Form 8-K with the SEC; and a replay of this call will be available in the Investor Relations section of the company's web site at ucbi.com. Please be aware that during this call, forward-looking statements may be made by representatives of United. Any forward-looking statements should be considered in light of risks and uncertainties described on page 4 of the company's 2016 Form 10-K, as well as other information provided by the company in its filings with the SEC and included on its web site. And at this time, I will turn the call over to Jimmy Tallent.

[Jimmy Tallent:]

Good morning and thank you for joining our first quarter earnings call. Much has happened at United Community Banks since our last call. I will begin by introducing you to the newest member of our executive management team, although most of you will need no introduction. I am thrilled to have Jefferson Harralson join our team as our new CFO. Jefferson joined United on April the 17th, and is with us on the call this morning. He has a very broad background in finance, he understands banking, he understands community banking. His strengths, his weaknesses, and his best practices. We have known him for over 20 years, and he is a perfect cultural fit for United. In addition, last week, we announced the acquisition of Horry County State Bank. At December 31, 2016, it had $376 million in assets, including $215 million in loans. $313 million in deposits and operates eight branches in and around Myrtle Beach. The acquisition fits well with our two-step coastal South Carolina expansion strategy. We began with a team of experienced lenders in Charleston. Then in July of 2016, we acquired Tidelands Bank with branches in the Charleston area, Hilton Head and Myrtle Beach. Now comes Horry County Bank to strengthen this coastal presence, primarily in and around Myrtle Beach, which incidentally is the second fastest growing metropolitan area in the United States, according to the U.S. census bureau. The MSA has grown in population by 19% since 2010, to 450,000 and is expected to grow another 9% over the next five years. I am very excited about expanding our presence in this very attractive part of our footprint. This all stock acquisition will result in the recovery of Horry's deferred tax asset and related tax benefits, totaling approximately $11 million. Reflecting this recovery, the pro forma price to tangible book multiple is approximately 140%. The transaction is expected to be neutral to tangible book and 2% or $0.03 per share accretive to our fully diluted earnings per share in 2018. We started 2017 with a solid forward performance. Net income was $23.5 million or $0.33 per diluted share. Included in those results were pre-tax, merger related and branch closure charges, totaling $2.1 million or $0.02 per share. Also included, was a non-cash tax charge of $3.4 million or $0.05 per share, which had no impact on tangible book value per share, or total equity. I will talk more about that in a moment. Excluding the merger related and other charges, net operating income was $28.2 million or $0.39 per diluted share, representing an 18% increase over the first quarter of 2016. Our return on assets on an operating basis was 1.07%, up seven basis points from a year ago. Our operating return on tangible common equity was up 1.2% from last year to 12.1%. And all of our capital ratios remained strong. Lynn will go into further depth of our performance in just a minute. But first, I want to comment on the non-operating charges that we carved out of our operating performance measures. In addition to charges that were merger related, we had $831,000 related to five branches that we consolidated during the quarter. We also had the $3.4 million non-cash tax charge that I had mentioned earlier. The branch closure charge includes, severance, building, and equipment write-downs and a lease cancellation charge. Because branch closures occur infrequently and rarely have significant charges associated with them, we have carved them out of our presentation of operating performance measures. The non-cash tax charge dates back to the time we had the full valuation allowance on our deferred tax asset. When we reversed the valuation allowance in 2013, the accounting rules allowed us to only adjust other comprehensive income for the current year tax effect. The balance [ph] that remain lodged in OCI, is referred to in accounting terms as disproportionate tax effects lodged in OCI. During the first quarter, these interest rate swaps matured or terminated, requiring us to clear the related non-cash tax charge. I will point out that the adjustment had no impact on equity, and therefore does not have any impact on tangible book value. Also I want to note, that we have no remaining interest rate swaps with disproportionate tax effects, so this is a onetime non-cash charge, that will not occur again. Now I will ask Lynn to share the details of the first quarter.

[Lynn Harton:]

Thanks Jimmy. As you can see on page 8 of the investor presentation, pre-tax, pre-credit earnings were $44.9 million, down $1.1 million from the fourth quarter, and up $6.5 million from a year ago. Please note that our year-over-year variances were also impacted by the Tidelands acquisition. One driver of the improvement in our net interest revenue was an increase in our margin. As outlined on page 8 of the investor deck, we reported an 11 basis point increase in the margin, primarily due to the impact of rising short term interest rates. Approximately three basis points of the first quarter margin expansion, resulted from realized discounts on asset-backed securities that were called at par. Deposit pricing was relatively flat with the fourth quarter, and at this point, we have not experienced significant pressure to raise deposit rates. Turning to slide 10, our first quarter loan production reflected a seasonal decline from the record level achieved in the fourth quarter, but it was up 9% from the first quarter of 2016. We funded $615 million in new loans in the first quarter compared with $562 million a year ago. Approximately $423 million was produced by our community banks. Atlanta and South Carolina led this production, similar to the fourth quarter. Our specialized lending areas produced $151 million in loans. Our average loans balances increased by $90 million, at an annualized rate of 5%, and our period in balances grew at an annualized rate of 4%. This is a slower rate of growth than we have been experiencing, due in part to several large pay-outs [ph] from customers selling their businesses and accelerating permanent market take outs, due to expected increases in long term rates. Judging from the optimism that our clients are expressing to us, we continue to be positive on maintaining solid loan growth momentum. Turning to credit quality on slide 14, our trends remain very favorable. Net charge-offs were 10 basis points for the first quarter, up slightly from nine basis points in the fourth quarter, but down from 14 basis points a year ago. Non-performing assets to total assets was 23 basis points, down from 28 at year end and a year ago. Our provision for loan losses was $800,000 for the quarter. Following several quarters of negative provisions and no provision in the fourth quarter. This does not reflect any belief in weakening credit performance in the future, in fact, we continue to provide less than current charge-offs due to strong underlying credit metrics and expectations. Fee revenue details are outlined on page 8. Fee revenue totaled $22.1 million in the first quarter, 19% higher than the same period a year ago. Mortgage fees were up $1.1 million from a year ago. Our pipeline remained strong, with rate locks increasing after the Fed's last meeting. In the first quarter, we closed $151 million in loans, compared with $146 million in the first quarter of 2016. 62% of that was for home purchases. Turning to our SBA business, gains from sales of SBA loans totaled $2 million in the first quarter, compared with $1.2 million a year ago. We closed $21 million in SBA loan commitments in the first quarter, funded $25 million in balances and sold $23 million in guaranteed loans. We also continue to manage expenses effectively. Total expenses, including merger related and branch closure charges were $62.8 million, up $1.5 million from the fourth quarter. Excluding merger and branch closure charges, operating expenses were $60.8 million, up $592,000 from the fourth quarter. Most of the linked quarter increase in expenses was in salary costs. This is primarily due to starting over with FICA taxes at the beginning of each year. The other expense category was down $397,000 due to lower lending support cost and internet banking charges. As outlined on slide 16, our operating efficiency ratio was 57.3% in the first quarter. That compares with 59.1% a year ago, and with 56.6% in the fourth quarter. The fourth quarter operating efficiency ratio was our lowest in a decade, and the first quarter's was our second lowest. We feel very good about the first quarter number, especially given this restart of FICA taxes and the lower day count. Income tax expense for the first quarter was $18.4 million. Remember, this includes a $3.4 million non-cash charge mentioned earlier. This compares with $17.6 million in the fourth quarter and $13.6 million a year ago. Excluding the charge, our effective tax rate for the first quarter was 35.9%. Going forward, we will have some volatility in our effective tax rate from quarter-to-quarter, but we expect our effective tax rate to average approximately 37% for the remainder of 2017. On pages 35 and 36, we have included a reconciliation of operating expenses to GAAP expenses. And with that, I'd like to turn the call back over to Jimmy for closing comments.

[Jimmy Tallent:]

Thank you, Lynn. As I mentioned at the start of this call, much has happened in the first quarter, and I could not be more pleased with the results. Net interest revenue was up 11% year-over-year, and fee revenue w 19%. Combined, total revenue was up 13%, compared to 10% in operating expenses. This 3% positive operating leverage drove earnings per share growth to 18%. So once again, our bankers delivered an outstanding performance. Looking forward, excluding the three basis point increase from call bond gains, we believe we could hold our margin. First quarter loan production reflected a seasonal decline from the fourth quarter, but was up 9% from a year ago. Higher than expected paydowns kept the production from achieving our first quarter growth targets. But, we do not expect that to be ongoing. We have a healthy loan pipeline, and expect loan growth in the upper single digits. Fee revenue showed the expected seasonal dip in the first quarter, but is up significantly from a year ago. Mortgage fees were up 35% from a year ago, and gains from SBA loan sales were up 58%. We expect the positive momentum in these two businesses to continue. Operating expenses were up slightly from the fourth quarter, but we were able to hold out our efficiency ratio, as Lynn mentioned. We expect the ratio to move back down to the 56% range, as we continue to emphasize operating efficiency. I am excited about our transaction with Horry County State Bank, which we expect to close in the third quarter. Not only are they in the market that we want to expand in, they are a solid cultural fit, with the same customer service emphasis that United is known for. In conclusion, I want to recognize Rex, who has served as our CFO for more than 16 years. This will be the last earnings report, of which Rex is responsible. Though he has graciously agreed to continue for a period of time, for transition. We wish him all the best, and sincerely thank him for his outstanding and distinguished service to United Community Banks. Now, we will be glad to answer any questions.

[Operator:]

[Operator Instructions]. Our first question comes from Catherine Mealor with KBW. Your line is open.

[Catherine Mealor:]

Thanks. Good morning.

[Jimmy Tallent:]

Hi Catherine. Good morning.

[Catherine Mealor:]

Hey, so I think that I have requested every CFO in the Southeast, I am going to save my really complicated margin question for Jefferson, once Rex retires later this year. [Indiscernible] congrats to you all and Jefferson, I can tell you from experience, he is going to be a great addition to the team. So congrats to you all.

[Jimmy Tallent:]

Thank you, Catherine.

[Catherine Mealor:]

So my first question is on the Horry County deal, and I am just -- I know it's small, these are little numbers. But if I back into your $0.03 accretion number, then I am getting about $6.5 million incremental net income from the sale, which is a really high ROA versus what that bank has historically earned. So can you walk us through a little bit of where that accretion is coming from? If they are accretable yielding that, or maybe some bigger assumptions for growth that we should be factoring in? Thanks.

[Jimmy Tallent:]

Sure Catherine. Let me take a stab at it, and some of the others may want to add to that. First, we expect to have call saves in that 35% range or maybe a little bit beyond that. In our model, we put in, what we believe to be a conservative loan growth of $25 million or so. Keep in mind, that Horry did not have very much, if any, mortgage revenue and certainly SBA, so all of that will be additive. The other thing too that is not a financial observation, but it happens each time. We saw it with Tidelands, that we think the addition to Horry within our coastal footprint will be very attractive to other bankers, that will complement the bankers that's there, that we believe will help to even accelerate growth far beyond what we modeled.

[Catherine Mealor:]

Got it. Okay. And then accretable yield? Any information for that or not?

[Rex Schuette:]

Yeah Catherine on accretable yield, we will pick up net, about $1 million is what we are expecting in the first year. So that's a part you wouldn't have necessarily from your numbers in purchase accounting. And again, as Jimmy indicated, we are picking up a little more in the mortgage revenue, as he indicated. We will see that come, because we really do not have a mortgage operation there.

[Catherine Mealor:]

Okay, got it. And then on the -- back on the tax rate, you gave the guidance for 37%, which is helpful. But for just thinking about this quarter, was there any stock option tax related benefits that you had this quarter, that drove, even if we back out the $3.4 million, the tax rate was a little bit lower this quarter.

[Rex Schuette:]

Right. It was a little bit lower. Almost a percent lower than our guidance out there, and it's about $0.5 million that did relate to vesting RSUs that did come through this quarter.

[Catherine Mealor:]

Okay, great. I will jump back in the queue. Thank you.

[Operator:]

Thank you. Our next question is from Michael Rose with Raymond James. Your line is open.

[Michael Rose:]

Hey. Good morning guys. How are you?

[Jimmy Tallent:]

Hey Michael.

[Michael Rose:]

Hey, just wanted to touch on credit. Things look great at this point, but clearly we are hearing some issues in the healthcare space in retail, and auto, which you guys don't really have a ton of exposure. But if you can kind of just update us on how you are feeling about those sectors? Any sort of trends by market? Any color there would be helpful. Thanks.

[Rob Edwards:]

Michael, this is Rob. We continue to feel good about -- certainly, the retail that we have and we do have some indirect auto. I will start with the auto, it's performing stable, and as we expect, it's a very clean high FICO type of portfolio that we purchase. On the retail side, I think the conversation is accurate and that it talks about the different sectors of retail. A lot of ours, probably almost 40% of ours is local, smaller dollar, under $2 million transactions, local relationships. And then, we do have about $68 million recent originations on anchored retail type centers. So not a lot of exposure there. And then on the healthcare, you may recall, we sold our healthcare book back in the fourth quarter of 2015. We did keep a couple -- kept one relationship, and have originated a relationship since then. So we have got about $30 million, probably between three relationships that remain on the books. So a very small portfolio that we maintained and feel good about.

[Michael Rose:]

Hey Rob, thanks. That's great color. Maybe just this one follow-up for Jimmy, I think you guys have talked about keeping the ROA relatively steady this year. Obviously, the acquisition should help that a little bit. But any change in your outlook, given a little bit slower loan growth and pay-offs this quarter, and how should we think about your longer term targets? Thanks.

[Jimmy Tallent:]

Thank you for the question Michael. Our ROA, as we have previously stated, we believe will be comparable to 2016. Yes, the loan growth may not have hit the bottom line net growth to the portfolio, but we still are pretty confident with the production and what we see in the plan. We do believe, we will benefit, like others with some margin expansion, as we saw in the first quarter. But certainly, the 110 ROA, Q4 of 2016, we were very proud of that, and certainly continue to have our eyes focused, not only getting to that level, but as we continue to move beyond that.

[Michael Rose:]

Okay. Thanks for taking my questions.

[Operator:]

Thank you. Our next question comes from Jennifer Demba with SunTrust. Your line is open.

[Jennifer Demba:]

Thank you. Good morning.

[Jimmy Tallent:]

Good morning.

[Jennifer Demba:]

Question on M&A, Jimmy. So with the pending acquisition, are you going to take a break till that's fully integrated? How do you feel about pace of acquisitions in future quarters, and can you kind of tell us about the level of discussion activity right now, versus maybe, three to six months ago?

[Jimmy Tallent:]

So the first part of that, Jennifer, is that this is a acquisition that we feel very comfortable and very low risk. We have done a lot of these, certainly in this size range. We certainly don't believe this would put us on the sidelines at all. We will continue to look for other opportunities. Volume wise, there has been lots of, again, chatter, communication, inbound, outbound calls. I wouldn't say that there is any less than six months ago, might even say, that might be a little more than that. But really, our strategy on the M&A has not changed at all, that we stated years ago. As far as geography, size wise, what an acquisition may look like. Maybe a tuck-in, in markets that we are in that we don't have the amount of number of branches and those kind of things. And I think the Horry County Bank is a perfect example of getting a much broader base there, in a growing market. But also to new markets entirely, that's in our strategic plan. The best example I could give you today would be, Tidelands there in Charleston. So we will be -- continue to be disciplined, be strategic, be low risk, immediately accretive to earnings, any dilution on tangible book would be earned back in three years. And we feel really good about a lot of the conversations that we continue to have.

[Jennifer Demba:]

Separate topic, Rex, on your tax rate this quarter, was there any impact to your tax rate from the accounting change regarding stock awards? We have seen that a lot from other banks this quarter?

[Rex Schuette:]

Jennifer, yes. Catherine raised a similar question, and the impact really relates around divesting of RSUs or options coming in that have a different price than what they originally book better expense at. So we did have vesting in the first quarter, that had a benefit of about $0.5 million in taxes, reducing taxes in the quarter. That won't happen every quarter, so it's a little volatile. So we might see a little more in Q3, but not at the level we had in Q1.

[Jennifer Demba:]

Okay, thank you. Sorry I missed that.

[Rex Schuette:]

No, it's fine.

[Operator:]

Thank you. Our next question comes from Tyler Stafford with Stephens. Your line is open.

[Tyler Stafford:]

Hey. Good morning guys.

[Jimmy Tallent:]

Hey Tyler. Good morning.

[Tyler Stafford:]

My first question is just around SBA. And Jimmy, I was just curious, if there was anything outside of seasonality that you could point you, that drove the lower production this quarter? And then as I think about production expectations for 2017, should we be looking at a production number that's kind of in line with 2016? Maybe a little slightly above 2016 production levels?

[Jimmy Tallent:]

Tyler, Lynn will answer that.

[Lynn Harton:]

Good morning Tyler. Yeah, the first quarter is always seasonally slow on SBA. So I wouldn't look at anything other than that, and we would be looking actually for a pretty good increase, reasonable increase over the 2016 levels.

[Tyler Stafford:]

Okay, great. The five branches that you mentioned that you closed during the quarter, do you have an expense save number that we could kind of think about for how much you could pick up there from an expense standpoint?

[Lynn Harton:]

Sure Tyler. We have about 20 staff reduction relating to that. Of that, there was about eight that we moved into open position. So a net 12 save on staffing. On an annualized basis, it would be about $1.6 million in total on an annualized basis, that will come out, starting in Q2.

[Tyler Stafford:]

Okay, great. All right. And then you also mentioned in the release, a gradual increase in the provisioning. With the expected growth that you guys should see, that should translate this slight decline in the reserve ratio. Do you have a floor that you'd allow the reserve to get, or how should we think about the magnitude of remaining credit leverage?

[Rob Edwards:]

So Tyler, this is Rob. The short answer is no, we do not have a floor. Certainly, we track where we are in relationship to our peer group on that ratio, and we could see it continue to come down. It's a very modest change from where we are today, as we have it budgeted.

[Tyler Stafford:]

Okay. And last one for me, and I apologize if I missed this, but do you have the amount of accretion that you -- discount accretion that you recognize this quarter?

[Lynn Harton:]

Sure Tyler. We have $1.6 million this quarter, and that would compared to about $1.3 million last quarter. So it's about a $300,000 increase this quarter, with additional loan paydowns, and would be about one to two basis points of margin.

[Tyler Stafford:]

Okay, very good. And maybe just one more if I could sneak it in? Does the expected Durban impact the $9 million, and in the uptick, the $800,000 to $900,000 of deposit insurance that you just expect to see later this year. Any change to those original numbers or they are still good?

[Lynn Harton:]

Yeah, no. Those are still good. That will start again, as you noted in Q3. So 2.25 to 2.5 on interchange and probably $700,000 or $800,000 a quarter on FDIC right now is what we are expecting.

[Tyler Stafford:]

Okay, very good. Thanks guys.

[Jimmy Tallent:]

A earlier question about our ROA. All of those charges are embedded in that similar ROA in 2017 that we saw in 2016.

[Tyler Stafford:]

Thanks for clearing that out Jimmy.

[Operator:]

Thank you. Our next question is from Christopher Marinac with FIG Partners. Your line is open.

[Christopher Marinac:]

Thanks, good morning guys. Just wanted to follow-up I guess on a couple of questions. The loan to deposit ratio near 80%, should we expect that to get a little stronger as the next couple of quarters come out, or is that something that has less focus at this point?

[Jimmy Tallent:]

I think, we can possibly see that get a little stronger Chris. Right now its 80%, that has moved up from the mid 70s over the last four or five quarters. Certainly would like to see it more closer to 85%. But we did believe that has a possibility of continuing to increase.

[Christopher Marinac:]

Okay. And then with a mix of loans, turning assets also rise at the same time, just so your securities and [indiscernible] come down?

[Jimmy Tallent:]

Well, that will be a function of deposit costs and so forth. But you know logically, I guess the simple answer would be yes.

[Christopher Marinac:]

Got it. And then Jimmy, as a follow-up on M&A, what is your thought about the risk of a larger deal? Just to look at the opposite side of what you did with Horry County and then the relative risk of a bigger deal compared to the most recent one?

[Jimmy Tallent:]

Well, you know, Chris, any of the acquisitions that we do, we have to have a strong degree of trust and confidence in the management of that bank. In most cases, we have known the bankers for a decade, so it's not like we are partnering up with someone that we don't know. I don't have a real bias against a bank, $2 billion, $2.5 billion range. It's really making sure that, number one, that its strategic. Number two, it is clearly accretive to earnings. It has a very little dilution -- our bank on any tangible book dilution. But at the end of the day, it needs to strengthen the long term earnings capacity of the company, also needs to be very strategic in our franchise, because I believe we have a very unique franchise in the four states that we operate in today. So, we put all of those ingredients into the pot. But we do not have a bias against doing an acquisition in the $2 billion range.

[Christopher Marinac:]

Okay, great. That's helpful. And then just one final question, do you have any new systems on investments this year, or any envisioned for next year? Just wanted to get an update on kind of where they stand?

[Lynn Harton:]

This is Lynn. We have just kind of normal ongoing investments, putting in a new teller system as an example. We are doing some back office improvements in our processing. But no dramatic, just normal ongoing investments.

[Christopher Marinac:]

Okay. Very good guys. Good luck Rex and welcome Jefferson.

[Rex Schuette:]

Thanks Chris.

[Jimmy Tallent:]

Thank you, Chris.

[Operator:]

Thank you. Our next question is from Nancy Bush with NAB Research. Your line is open.

[Nancy Bush:]

Good morning gentlemen.

[Jimmy Tallent:]

Good morning.

[Nancy Bush:]

Jimmy, I have got a question for you first. You have sort of -- you and I have periodically talked about mergers being those of financial transactions versus growth markets? And I would think Horry would fit into the growth market category. But would you just kind of update us on -- particularly with the likelihood that we are going to start getting rate increases and that liquidity is going to become a bit more dear. Could you just talk about that sort of balance, of financial transactions versus growth markets?

[Jimmy Tallent:]

Sure Nancy, and great question. And if you look at the acquisitions that we do and have historically done; one of the biggest focuses that we always have and we want to ensure is, they have real depositors with a real solid core customer or deposit base. And we think that's really -- that alone with the people that are involved in running the bank, when you acquire a bank, that's what you get. The customer base as well as the bankers. I think, given our balance sheet today, we are 80% loan-to-deposit, yes we'd like that to move north, but that might be a little bit of an advantage, as we see and really better understand the deposit rate movement. I think everyone has a view on that, but I am not sure anybody has for certain, how deposit rates will behave, and I think that's a positive. But as we continue to look and probably do other acquisitions over time, that core deposit base is really critical, and if that's absent, then that will not be an acquisition.

[Nancy Bush:]

Okay. So you are saying, you could do financial transactions, but given your loan to deposit ratio right now, it's not really an imperative? Am I hearing that right, or --

[Jimmy Tallent:]

Well, true. If I am understanding the question, Nancy, there will be markets where -- that we want to expand in, that I would call more as a fill-in market, like Horry County.

[Nancy Bush:]

Right.

[Jimmy Tallent:]

They could be a market, that strategically we want to be in, because of the growth opportunities that we are not in today. And certainly, if they had a much higher loan to deposit ratio, that would be a welcome addition. So we'd look at all these different components, as we are doing the acquisition -- our own acquisition front.

[Nancy Bush:]

Okay. Well you kind of segued into my second question, which was the deposit beta question. And can you just give us your thoughts right now? I understand that those may change, as the environment changes. But just sort of your thoughts about what your deposit data ranges are likely to be and how they happen?

[Jimmy Tallent:]

Sure Nancy. In our modeling Nancy, I think most banks will have beta assumptions out there as we do too, and they will vary. Obviously, with the last rate increase in December, none of us had increases in our deposits, [indiscernible] we are up maybe two basis points in money market in our account over the last 12 months. So our model assumption is probably that we are more conservative. They are ranging probably from 60% to70% betas that we have in. Assuming that the next increase, we are going to need to move up. We will tend to hold, as everybody is holding, so I think there is some opportunity that we will see a little bit with the last rate increase coming this quarter. But again, it's uncertain, what we are going to do on deposits. We do have a small CD special going on right now, and we will see how that works out also. But basically, holding at rates where they are at today.

[Nancy Bush:]

Everybody has been saying pretty much that, it's flat to no increase on the consumer side, but that they are doing specials on the corporate side. That the corporate cash people have awakened and then said, we'd like to get some of these increases. Are you seeing that? Have you had to do anything sort of opportunistic with your corporate customers?

[Lynn Harton:]

Hey Nancy, this is Lynn. We have seen a little bit of that on the higher balance money market accounts. For example, we have selectively increased those. Again, I wouldn't characterize it as widespread, but selective at this point.

[Nancy Bush:]

Okay. All right. Thank you.

[Operator:]

Thank you. I am showing no further questions at this time. I would like to turn the conference back over to Jimmy Tallent, for any closing remarks.

[Jimmy Tallent:]

Thank you, operator, and thank all of you for being on the call today. We certainly are grateful for your interest and participation in United Community Banks. If you have follow-up questions, please don't hesitate to call any of us, we will be glad to address those. And also too, once again would like to just thank our United Community Bank family for their continued hard work and best in the customer service of all banks. You do a great job, and thank all of you for those on the call. Thanks again. Have a great day.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may now disconnect. Everyone, have a great day.