Good day, ladies and gentlemen, and thank you for standing by. Welcome to the First Merchants Corporation Second Quarter Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speakers' presentation, there will be a Q&A session. To ask a question during the session, you will need to press star one one on your telephone keypad. Again, that is star one one. Before we begin, management would like to remind you that today's call contains forward-looking statements with respect to the future performance and financial condition of First Merchants Corporation that involve risk and uncertainties. Further information is contained within the press release, which we encourage you to review. Additionally, management may refer to non-GAAP measures, which are intended to supplement but not substitute for the most directly comparable GAAP measures. The press release available on the website contains financial and other quantitative information to be discussed today, as well as a reconciliation of GAAP to non-GAAP measures. At this time, I would like to turn the conference over to Mr. Mark Hardwick, CEO. Thank you. Sir, please begin. Good morning, and welcome to the First Merchants second quarter 2022 conference call. Howard, thank you for the introduction and for covering the forward-looking statement on page 2. We released our earnings today at approximately 8 A.M. Eastern. Hopefully, you have the slide presentation, but if you don't, you can access those slides by following the link on the second page of our earnings release. On page 3, you will see today's presenters and our bios, to include President Mike Stewart, Chief Credit Officer John Martin, and Chief Financial Officer Michele Kawiecki. Page 4 is a snapshot of the First Merchants geographic footprint and some relevant financial highlights for your review. Given the close of Level One Bancorp on April 1 to start off our second quarter, we have updated the banking center map and included our new asset totals of nearly $18 billion. We also continue to receive meaningful awards for customer service, leadership, and performance from publications like Forbes, Newsweek, S&P, and Comparably, and we've updated a few of those for you at the bottom of the slide. Now if you would turn to slide 5. Reported earnings per share for the quarter totaled $0.63 compared to linked Q1 2022 total of $0.91. When adjusted for PPP income and Level One acquisition expenses, our Q2 2022 earnings per share totaled $1.01, an increase of 13 cents per share or 15% over the linked Q1 2022's adjusted total of 88 cents. Growth in loans of 20% and margin improvements of 22 basis points account for most of our EPS improvements linked-quarter-over-quarter, and that 22 basis points is when adjusted for fair value and also PPP, which Michele will cover in a few moments. Our system integration of Level One is scheduled for the third quarter, and the teams are working diligently to ensure a successful conversion. We also continue to streamline the branch network as evidenced by 3 additional consolidations in Q2 of 2022 and another announced 2 consolidations planned for the third quarter of this year. The year-to-date earnings per share story is similar to our quarterly results with similar PPP and M&A-related adjustments required to see our core performance. When adjusted, our year-to-date 2022 earnings per share total of $0.89 and that's 13% better than our 2021 results of $1.67. The ratios on page 5 are not adjusted for one-time expenses, but they are they obviously have a negative impact based on the consolidation rules that we had to apply to Level One. Michele will highlight a few adjusted ratios like pre-tax, pre-provision earnings and the efficiency ratio later in the materials. Mike Stewart will now provide color on our lines of business and Level One before Michele and John review our financial data and credit statistics. Thank you, Mark, and good morning to all. As you look at the next two slides, I'll provide an update on our line of business results and their contributions within the quarter. Since our business strategy remains unchanged, I want to focus on page seven, titled Business Highlights. The top of the page offers a breakdown of the core loan growth by our business units. It was another solid quarter of active engagement with our clients and prospects that delivered an annualized growth rate of more than 20%, excluding the PPP loans and the day one balances of Level One. The growth rate was nearly 14% for the first six months of 2022. The commercial segment remains the growth engine for the bank's balance sheet, with loans now exceeding $8.9 billion within this segment. We added $1.1 billion of Level One commercial loans as of April 1, and the First Merchants team generated $360 million of organic loan growth this year. Within the commercial line of business, the commercial industrial segment, C&I, is the largest component of the total balances along with the year-to-date and second quarter growth. John Martin has metrics he will review later that highlights the C&I growth exceeding $150 million during the second quarter. Like I've mentioned before, our commercial team has remained engaged in winning new clients. Taking market share, along with providing additional senior debt and treasury services to our clients across all the geographic markets you see represented on the map. Within those geographies, businesses continue to expand plant equipment to meet growing demand. These customers have effectively managed their income statements, and while inflationary pressures are present, price increases and expense management practices have kept margin and coverage ratios stable. Their balance sheets have also remained strong when looking at working capital, line of credit availability, and their leverage profile. Line of credit utilization rates remain constant from the first quarter at roughly 45%. Our revolver commitments have increased during this period of time due to the inflationary pressure pushing up values of working capital assets. Working capital cycles are not necessarily slower than prior periods as supply chain issues have not been further constrained. Succession planning events within the ownership of middle market companies continue to be a driver for our sponsor finance team or through ESOP transactions. We have maintained a consistent and disciplined approach towards underwriting within this segment. The growth comes from current relationships and from the extended geographic reach we added through the investment of new bankers in 2021. The investment real estate footings have been choppy the past 4 quarters but grew 3% in the current quarter. That growth was attributed to new production and the construction loan advances primarily within the multifamily asset class. Based on the historically low cap rates and liquidity in the secondary market, our real estate clients continue to take advantage of monetizing projects for liquidity and taking projects to the secondary market. We expect the investment real estate balances to remain choppy the balance of the year. Our underwriting approach has not changed, remain consistent with the primary asset classes that we focus on, which is multifamily, industrial, warehouse, student housing and self-storage. Overall, businesses have deployed their PPP liquidity, therefore commercial deposit balances have reduced, as noted on the bottom chart, an annualized reduction of 5%. Post-close of the Level One acquisition, we did reduce their depository pricing structure to align with ours. At the end of June, the aggregate commercial loan pipeline remains consistent from the prior quarter. The C&I pipeline has strengthened and the IRE pipeline softened. Moving on to the consumer segment. The nearly 7% annualized loan growth was a nice reversal from prior quarters after adjusting for the Level One closing. The quarterly increases can be attributed to our HELOC and small business products. Both segments experienced increasing application volumes. Utilization rates remain consistent and our underwriting approach has remained unchanged. At the end of June, the consumer loan pipeline remained strong, up over 15% from a year ago. Deposit balances declined for the quarter within the consumer segment, as shown on the bottom of the page. We did bring the Level One depository pricing in line with the rest of First Merchants, and most of the decline in the quarter was attributed to this strategic decision. The rest of the consumer network experienced the regular seasonal depository fluctuations post-tax season, therefore about a 2% decline. The consumer team continued to gain new accounts through both in-branch and digital online activities. Our investment last year in a digital account opening process hit a high point last month with over 15% of new consumer DDAs being opened through the new digital channel. Let's move on to the growth in the mortgage portfolio. With the close of Level One, our on-balance sheet mortgages have exceeded $1.5 billion and grew organically in the quarter by $225 million. The driver of this increase comes from continued strength in purchase volumes, with more of our clients choosing our on-balance sheet variable rate pricing options. Given alternative returns within the investment portfolio, the mortgage asset class offers better risk return. Our underwriting standards remain unchanged, prime borrowers. With the increase in 15- and 30-year fixed rates, our clients have chosen our short term or variable rate mortgage solutions. Michele will review the non-interest income detail where mortgage gain on sales remain muted as refinancing volumes have stayed at historical levels, low levels. The pipeline for our mortgage team ended the quarter flat when adjusting for the Level One team. Purchase and rehab volumes are nearly 60% of the current pipeline, up from 30% a year ago, reinforcing the macro slowdown in refinancing volumes. Overall, the economic and business climate across our markets is stable. We continue to see the resiliency in management teams of the companies we serve. Like I stated last quarter, they have solid business plans, they have solid balance sheets, and they are well-positioned to effectively navigate inflationary pressures, supply chain and labor issues. Our team remains responsive and ready to support our clients' needs. Coupled with the current economic environment, we should continue to achieve our high single-digit loan growth objectives into the third quarter. A few comments about our new Level One teammates and the markets they serve across Southeast Michigan and Grand Rapids. I've continued to spend time in their markets with their teams and with their clients, and I remain impressed and optimistic that their strong growth culture and demonstrated track record of winning will continue. As a reminder from last call, Terry Cable has moved to Farmington Hills to lead Michigan's region and build on the synergies between Level One and our existing Mid-Michigan franchise in Monroe. Greg Warnock, who led Level One's commercial banking effort, will continue his leadership role as region president of that geography and work directly with Terry. The commercial team is now preparing for the August integration date that Mark referenced earlier. As of July first, the mortgage business has been fully integrated and now operating under a common platform. Tim McKay, who was named president of the mortgage line of business, along with Brad Wise, Deborah Rynearson, Michele Kawiecki, and Dan Evans, did a terrific job of leading the integration effort and the mortgage team now operates under the First Merchants banner. The consumer team is deep into their training regimens in preparation for the August integration. Rene Molino will continue as the market leader of the 17 banking centers. Her team will get the support of over 60 First Merchants consumer banking professionals who will be on-site within the banking centers for up to 2 weeks in support of the change event. The collective organizations, we have a lot of work to do between now and integration. That said, we have made steady progress and our project status is green. I will now turn the call over to Michele, who will provide the complete review of the quarter results, and John Martin can share the soundness of our portfolio. Michele? Thanks, Mike. My comments will begin on slide 8, covering second quarter results. You can see our balance sheet growth on lines 1 through 5. Total loans on line 2, which Mike covered in detail in his remarks, increased over $2 billion during the quarter, with Level One contributing $1.6 billion through the acquisition, coupled with organic loan growth of $468 million. This was offset by PPP loan forgiveness of $59 million. Deposits increased $1.7 billion during the quarter, which included $1.9 billion from the Level One acquisition, reflecting a decline in deposit balances of $266 million. Investments on line 3 increased $140 million due to the Level One acquisition. Liquidity management has normalized, and we were able to use excess liquidity to fund loan growth this quarter. This was reflected in our loan to deposit ratio, which was 78.3% this quarter, compared to 74.9% in the prior year. Mark covered earnings per share for the quarter, which was reduced by CECL day one provision, which you can see on line 12 of $16.8 million, and the elevated level of non-interest expense on line 14, which included $12.5 million of acquisition costs. Our stated efficiency ratio was 58.45%, but was a low 50.75% excluding the acquisition cost, reflecting strong operating leverage. Like many of our peers, we experienced further decline in the tangible common equity ratio, which you see on line 6, along with the tangible book value per share on line 26 due to changes in the unrealized gains/losses on available-for-sale securities. These metrics were also impacted by the cash consideration of $79 million used in the acquisition of Level One. On slide nine that shows our year-to-date financial results. Mark covered operating earnings per share which was an increase of 13%, which excluded PPP fee income, which totaled $19 million in the year-to-date 2021 results, and $2.8 million in year-to-date 2022 results. It also excluded the total merger cost of $12.5 million I just mentioned. Pre-tax, pre-provision earnings totaled $128.2 million year to date, an increase of $3.9 million over prior year. PTPP return on assets was 1.54%, and PTPP return on equity was 13.10%. Slide ten shows highlights of our investment portfolio. On the bottom right, you can see we had a net unrealized loss on the mark-to-market of the available for sale securities portfolio of $246.1 million, compared to last quarter's loss of $101.3 million. As of today, this loss is recovered by $50 million, reflecting its temporary nature. The top right graph shows the trend in the portfolio yield. The yield on the portfolio increased 8 basis points during the quarter, and the portfolio contributed $27.6 million in income. Effective duration is currently at 6.4 years. As a reminder, we tend to take a bit more duration in our investment portfolio than peers because much of our loan portfolio is variable. Slide 11 highlights our loan portfolio. In the bottom left corner, you will see the stated second quarter loan yield increased 36 basis points to 4.09% from last quarter's yield of 3.73%. Excluding the impact of PPP loans and fair value accretion, loan yield was 3.96%. Yield on new and renewed loans increased significantly from 3.22% last quarter to 3.87% this quarter, an increase of 65 basis points. On the bottom right, you will see $7.4 billion of loans, where 65% of our portfolio are variable rate, with 44% of the portfolio repricing in one month and 53% of our portfolio repricing in three months. We grew out of most all of our loan floors with the Fed's 50 basis point increase in May, so the asset sensitivity of our balance sheet created a meaningful increase in net interest income this quarter and will continue to do so given the forward curve. Slide 12 shows the details related to our allowance for credit losses on loans. On the bottom of the slide is a roll forward of our allowance balance. With the closing of the Level One Bank acquisition, we recorded a CECL day one allowance for the purchased credit deteriorated loans in the amount of $16.6 million, as well as a CECL day one allowance for non-purchased credit deteriorated loans that was recorded through provision expense in the amount of $14 million. Also recorded through provision expense this quarter was $2.8 million of reserve for Level One's unfunded commitments, bringing total provision expense for the quarter of $16.8 million. Also, during the first half of the year, we had net recoveries of $300 thousand, which brought the ending allowance for credit losses on loans to a robust $226.3 million. The coverage ratio trend is shown in the graph on the top left. Our coverage ratio at the end of Q2 is 1.98%, down from 2.09% from the prior quarter, mainly due to strong loan growth. This reserve, coupled with the remaining fair value accretion of $37.3 million, provides excellent protection as we head into an uncertain economic environment. Now I will move to slide 13. The total cost of deposits on the bottom left chart shows deposit costs increased this quarter by 10 basis points, up to a total of 23 basis points. This increase reflected deposit pricing pressure that was present in the municipal deposit space. Our cost of consumer deposits continues to remain low, although it's possible we could see some competition in pricing for consumer deposits increase in the third quarter in some of our markets. The average consumer DDA balance continues to be elevated from pre-pandemic levels, although we did see it begin to decline in May. Slide 14 shows the trending of our net interest margin. Line one shows net interest income on a fully tax equivalent basis of $134.8 million. When you back out non-core interest income items such as fair value accretion on line two and the impact of PPP loans shown on line three, our core net interest income totals $130.7 million, which is shown on line four. Compared to the prior quarter total of $105.1 million, the increase in core net interest income was $25.6 million, $18.3 million of which was contributed from the loan and deposit portfolios of Level One. Stated net interest margin on line seven totaled 3.28% for the quarter. Adjusting for the fair value accretion and the impact of PPP loans brings us to a core net interest margin of 3.19%, which is shown on line 10, an increase of 22 basis points from last quarter's NIM of 2.97%, reflecting the asset sensitivity of our balance sheet. We expect to see meaningful increases each quarter going forward as the Fed continues to increase rates. On slide 15, non-interest income totaled $28.3 million for the quarter, with total customer related fees of $25.8 million, an increase of $2.8 million, reflecting the addition of Level One Bank fees, which are primarily in service charges on deposits and gain on the sale of mortgage loans. Wealth management fees increased $300,000, and while investment management fees are under pressure due to the decline in asset values, this was offset by the seasonal collection of tax prep fees along with fees from estate settlements. Moving to slide 16, total expenses for the quarter totaled $97.3 million, which was elevated due to acquisition costs incurred during the quarter of $12.5 million. $10 million of those acquisition costs were one-time charges, $3 million of which was for severance and retention bonuses reflected in salaries and benefits, and the remainder was mostly contract termination charges and advisory fees, which are recorded in the professional and other outside services line in the income statement and reflected in the other category on this chart. Excluding these acquisition costs are core expenses of approximately $85 million, reflecting the addition of Level One. Core expenses were well managed this quarter, with an increase seen in salaries incentives of $1.5 million. Slide 17 shows our capital ratios. I previously mentioned the decline in the tangible common equity ratio due to AOCI changes and the acquisition of Level One. Although this was a meaningful decline, our strong earnings and increasing net interest income will create capital strengthening this ratio going forward. Additionally, given we have $226 million in the allowance for credit losses, which adds to our balance sheet safety and soundness, we feel comfortable with our current capital position. Overall, our financial results reflect strong fundamentals for the quarter, and we are pleased with the results. That concludes my remarks, and I will now turn it over to our Chief Credit Officer, John Martin, to discuss asset quality. Thanks, Michele, and good afternoon. My remarks start on slide 18, where I'll highlight the loan portfolio, including segmentation growth and industry concentration, review asset quality, and the non-performing asset roll forward before ending with a few high-level comments about the current environment. Turning to slide 18. As I've highlighted on prior calls, the loan portfolio is diversified and commercially oriented, with concentrations consistent with segments of the economy found in our geographies. In the quarter, excluding the $59 million of PPP paydowns, the loan portfolio grew $468 million or 20% annualized. We've experienced broad growth in commercial industrial loans, including both the regional C&I and sponsor finance businesses as well as construction and public finance. Also this quarter, we had robust residential mortgage portfolio growth. Customers were attracted to adjustable rate products with rising interest rates. While this resulted in a lower gain on sales mentioned previously, it did have the benefit of additional on-balance sheet loan growth. With respect to the Level One portfolio, through our initial credit due diligence process and subsequent reviews, we have, we continue to gain a deeper understanding of key relationships in the credit underwriting. The loan book is similar to the existing First Merchants commercially oriented portfolio and also added meaningful mortgage footings. We have folded the commercial portfolio into our regular quarterly asset quality review process and continue to refine our credit grading. Turning to slide 19. This slide highlights our asset quality trends and position. We continue to have a favorable asset quality profile with non-accrual loans on line one up $3.3 million even after adding $9.4 million of acquired Level One non-accrual loans. Other real estate increased by net $200,000 and 90 days past due loans were $600,000, down from $2.1 million last quarter. This resulted in NPAs and 90 days past due up $2.1 million and as a percentage of loans and ORE of 0.47%. Dropping down to classified loans on line seven or loans with a well-defined weakness. With the addition of $73.5 million of classified loans from Level One, we ended the quarter at 1.68% of loans. While this does represent a modest increase, the level continues to remain at historic lows. Rounding out the slide, net charge-offs for the quarter were roughly $300,000 or 1 basis point and a year-to-date net recovery of $300,000. Finishing up on slide 20, I provided the non-performing asset roll forward, which reconciles the changes in NPAs. Starting in the far right column, which excludes Level One, we started the quarter with $51.2 million in NPAs and 90 days past due loans and added $3.7 million in new non-accruals and resolved $8.9 million in existing non-accruals. With $500,000 moving to ORE, $500,000 in gross charge-offs and $1.4 million in non-accruals. Non-accruals declined $6.1 million in the quarter. These changes, along with ORE sales and write-downs on lines 8 and 9, as well as the decrease in 90 days past due, resulted in a $7.9 million NPA and 90-day past due decline on line 13 to $43.3 million before adding an additional $10 million from the Level One portfolio. In summary, our asset quality position is strong and remains stable. We continue to onboard the Level One team into our existing system-wide asset quality and portfolio monitoring process. Finally, we have begun and continue to work with borrowers who are navigating the effects of higher interest rates, supply chain issues and higher commodity prices. None of these challenges are unique to First Merchants or its customers. As I've mentioned previously, I believe our current asset quality position and allowance positions us well to work through individual issues or asset quality concerns as they might arise. Thank you for your attention. I'll turn the call back over to Mark. Well, thanks, team. As you can tell, we always enjoy sharing our performance through detailed slides, which obviously this quarter was necessary with a really high level of transparency. We hope that you can see the positive story that we see every day. In a quarter where there's a lot of M&A activity and some of the PPP impacts, it does take some time to slow down and make sure we're sharing it in detail. Slide 21 highlights our track record of performance over a number of years, and slide 22 does the same thing, just sharing the, in our asset growth, including organic and M&A activities, to include Level One, which as we mentioned, closed April first. Slide 23 is a reminder of our vision, our mission, our team statements and the strategic imperatives that guide our decision making. I'm confident that when you look at our results and our activities, they're aligned with our brand focus, cultural transformation, organic growth, our digital transformation, our top quartile financial performance, and leveraging M&A as a core competency. I hope when you hear this story, you feel like it is a true stakeholder-centric business model that we believe over time produces better returns. Thanks for your attention and your investment in First Merchants. Howard, at this time, we are happy to take questions. Yes, sir. Ladies and gentlemen, if you have a question or comment at this time, please press star one one on your telephone keypad. Again, if you have a question or comment, please press star one one. Please stand by while we compile the Q&A roster. Our first question or comment comes from the line of Ben Gerlinger from Hovde Group. Your line is open. Hey, good morning. It's actually Ben. I'm curious, when you think about the broader landscape here, you seem to have a pretty healthy loan growth. I mean, Level One gives you a lot of runway in that Michigan area. Are there any areas that you're looking at differently now under the assumption that potentially we could be, you know, a bit more of a recessionary environment, like other areas that you might be leaning into or pulling back on in terms of overall loan growth in the categories within the loan portfolio? No, I guess between Mike Stewart and John and I, we can address that issue with, you know, our underwriting standards are essentially the same. We're clearly looking at areas, trying to identify where there may be inflated prices, it just being as cautious as possible. I feel like what we're finding is that the core strategy that we've been executing on for a number of years is working effectively. You know, so far we haven't really gone in to try to make any real changes to our underwriting standards. You know, I might just add, this is John. You know, while with rising rates it may make individual projects maybe less attractive, I'd agree with Mark. I mean, our underwriting standards are based on sound underwriting and sound business approach to the business of lending. I don't see. There hasn't been any change in our policies necessarily as a result of you know any impending recession. Gotcha. That's very fair. Kind of thinking more strategically, Mark, you're probably one of the top decile in terms of corporate managers and stewards of capital. When you think over the longer term with the pending integration and potential cost savings, hopefully flowing through to the bottom line, do you think that there could be deployed in anything strategically that would set you guys up not only for the next year, but more so the next decade of growth? Where specifically you think you could potentially invest more in the longer term? Yeah. Those strategic imperatives I mentioned are really matter to me, they matter to our team. You know, I would say the investment of capital that continues to flow into our business is focused on our human capital, our human assets, our people, and to the digital platforms that we think are transforming the business, where our physical locations and even the expertise and talent that we have are focused on advice and consultation. We're trying to digitize all of the day-to-day just transactional activities as much as possible, both from a user and a customer experience as well as in the back office. Just trying to make sure that our most valuable asset, our employees, are focused on value add activities that truly matter to the customer. You know, that has been our focus. It's gonna continue to be our focus, and we do have a kind of a digital roadmap and we're even, you know, assessing more extensively where we may be able to find some additional process automation. Gotcha. I appreciate that. Great. Technically, this is as of April first full quarter of kind of the pro forma. Congrats on Q2 and looking forward to the latter half of the year. Yeah. Thank you. Thank you. Our next question or comment comes from the line of Daniel Tamayo from Raymond James. Just a second. Mr. Tamayo, your line is open. Morning, everyone. Thanks for taking my question. Yeah, I think first, just like to start on the margin. You know, a lot of expansion in the quarter. You've got puts and takes, especially with the acquisition and the repricing of the deposits there. I'm just curious, Michele, on your thoughts on, you know, how big the expansion in the back half of the year that you think we could see. Yeah. Good morning, Daniel. We think we could see another 20 basis points lift from margin through the end of the year from rate increases. Now, a couple of assumptions that are important in that is that's just assuming a static balance sheet, so no growth. I mean, obviously we'll have growth portfolio, which will add more margin. The other thing is the deposit betas that we're using in that estimate are at 35%, which is probably a really conservative estimate. I mean, we are expecting some deposit competition to pick up, but I still feel that we will probably end up with a deposit beta that might be lower than that, but that is what we're modeling currently. Okay. Terrific. I know this is a little bit a ways away, but I'm more just curious on your high-level thoughts about what do you think happens to the margin, assuming we get a stabilization in rates kind of towards the end of the year? Seems to be diverging opinions on this, in terms of whether or not we see continued expansion or kind of peak margin in the fourth quarter or the first quarter of next year in that scenario. I think we will still see expansion probably even in the first quarter of 2023, just based on the lagging deposit pricing and then also even just some of the repricing on our loan book. Maybe it will stabilize after that. Okay. I appreciate that. And then maybe just one last one on capital. So, you know, you mentioned being very comfortable with capital, and I understand that given the ACL and regulatory capital ratios. With the TCE down just over 7%, does that impact the way you look at repurchases in M&A? I mean, do you want to get back to 9% before you consider those? Or do you think you can do both at the same time? That's a great question. You know, I think 9% as a stated target, maybe a little higher. We're doing a lot of capital analysis right now because we have sub-debt that matures next year. Just looking at, you know, what is the optimal use of hybrids. You know, in terms of share repurchase, we're definitely on the sidelines at this point. You know, if we were to find an acquisition, you know, late 2023, early 2024, somewhere in that ballpark, it would probably need to be with more stock, which does put a little additional pressure on some of the EPS accretion analysis that we'd like to see. Our focus, I've got to tell you right now, is about delivering results based on the current acquisition, and we're really excited about finishing 2022 and delivering on all of 2023 with the new geography and the new balance sheet that we have. You know, I don't wanna make M&A a priority. You asked the question, so I'm just sharing some of our thoughts. You know, it's. We're in a great place to perform over the next 18 months or so, and we're not gonna mess that up. That's where the priority is. All right. Great. Thanks. Thanks for taking my questions. Thank you. Our next question or comment comes from the line of Terry McEvoy from Stephens. Mr. McEvoy, your line is open. Hi. Good morning, everyone. Good morning. Maybe a couple questions on Level. Could you make some comments, if possible, on client and employee retention? Then as it relates to the cost savings from the transaction, where you are right now in terms of achieving the cost savings, and when do you expect to hit that full run rate? This is Mike Stewart. I'll talk a little bit about the Level One client and employee retention. Very good at the macro level. Employee base across the spectrum has been very consistent, very patient, and very willing to work with us through the change event. They've got a strong belief system that First Merchants can deliver on additional capabilities, and they're looking forward to adding that to their winning tradition. I feel good about the people. Really low turnover. Moreover, we've been able to utilize some of the staff that might not otherwise have stayed in the company to fill open positions in our bank. It's been a really good transition thus far. The client side also very stable. When I make those comments about how optimistic I get around the greater Michigan marketplace, Detroit marketplace, it comes from the idea that or the fact that I see their existing clients already utilizing First Merchants for larger loans, additional products and services. Those clients are actually in a buying mode with us now, and we haven't even gone through the integration. On the whole, the Level One balance sheet and the client units volumes have been very stable. I'll let Michelle answer the other part of the question. Yes. Good morning, Terry. We had estimated 30% cost savings on the deal, and we're actually really pleased with our ability to take that cost out. Currently, we are carrying probably about $2.7 million per quarter in cost relative to integration team members, their core processing expense that we think will go away come Q4. But like I said, we feel like once that cost goes away and we get to Q4, we will have achieved our target of the 30% cost savings. Great. Thank you both. Terry, this is Mark. I do think it's interesting, you know, remote work has changed the operating environment for really all banks. From an M&A perspective, we've seen a pretty dramatic change. As Mike Stewart mentioned, I think we have at least 30, if not 32 or 33 people that have taken open positions with First Merchants because they have the ability to work remote. You know, that normally would have left the company for cost savings reasons and gone to work somewhere else in the geography because we needed those positions to be in our centralized headquarters. It's exciting to be able to retain an extra 30+ people that are talented, seasoned, mostly administrative bankers that can join our team and work remotely. It's one of the nice attributes of how the work environment has changed. Okay. I appreciate the color there. Thank you. Maybe one last question for John Martin. The sponsor finance portfolio, it was up in the quarter. I guess, what are you doing and what are you seeing in that portfolio today? The portfolio itself, kind of ebbs and flows as we have, you know, portfolio companies to individual sponsors that get refinanced out or the fund closes. As they do the names in that, you know, start to pay out and/or otherwise liquidate and, you know, wind up reducing balances. Likewise, in the quarter, we continue to see, we saw strong growth from sponsors as well as adding sponsors. I'll let Stu add to that comment from a marketing and sales perspective. Yeah. Well, from a credit point of view, there's 61 portfolio companies in that book, and we track various credit metrics. The portfolio from leverage profile, from fixed charge coverage ratio, from enterprise value has never been better. The metrics are as strong as they've been in the past 8 quarters. Great. I appreciate that. Thanks, everyone. Thanks, Terry McEvoy. Thank you. Thank you. Our next question or comment comes from the line of Damon DelMonte from KBW. Stand by. Mr. DelMonte- Hey, good. Your line is open. Thanks. Good morning, everyone. Hope everybody's doing well today. First question, just wanted to- Morning. Morning, Michele. Just wanted to circle back on the expense outlook. You know, you guys had identified $12.5 million of merger charges, and you had alluded to $10 million of it being kind of one time in nature. Was the other $2.5 million, what you just mentioned about like integration costs and members that are kind of still on the books for the next couple quarters? Is that what that difference was? Yes, that's correct. Yeah. Okay. Through the next 1 quarter, really. Yeah. Next quarter. Can you kind of give us a little direction as to how the, you know, the cadence of expenses will go over the next two quarters as you complete the integration and those costs roll off? Sure Come down a little bit in the third quarter and then maybe, you know, bottom out in the fourth quarter or any insight would be great? Sure. Well, you know, bringing out the $10 million in one-time charges, what we'll, you know, next quarter, that'll bring you down to an average of $87 million. Then when we do our integration, obviously the other $2.7 million will go away in the fourth quarter. You're really kind of looking at just a static run rate of about $84 million. That would be the normalized level. I do think that we could see some wage growth through the end of this year. We may end the year a little bit up from that, but hopefully that gives you kind of the color of where you see us trending through the rest of the year. Got it. Okay. That's helpful. Thank you. How about on the fee income side of things? You know, do you think that this quarter's core level is a good run rate? Are you seeing any, you know, any additional pressures from any of the fee sources? You know, I think this quarter is a good run rate. Looking at like mortgage loan sale gains, I feel like that's kind of a low point. We're retaining quite a bit of the portfolio, and so I feel like that should be pretty stable, assuming buyer activity doesn't slow significantly. I think this quarter is a good run rate to use for combined Level One First Merchants. Okay, great. Just lastly, I think you guys booked about $3.2 million in fair value accretion this quarter. Do you expect something in that $3 million range over the next, you know, few quarters until some of those loans start to burn off the books? Yeah, I do. Okay, perfect. All right. That's all that I had. Thank you very much. Nice quarter. Thanks. Thank you. Thank you. Our next question or comment comes from the line of Nathan Race from Piper Sandler. Mr. Race, your line is open. Hey, good morning, everyone. My questions were asked. Thanks for the color. Thank you. Our next question or comment comes from the line of Brian Martin from Janney Montgomery Scott. Stand by. Mr. Martin, your line is open. Hey, good morning, guys. Thanks for taking the question. Just kind of wanted to get a sense, Michelle, just I appreciate the color on the, on the margin outlook and just expectations with the betas. But just as you kind of go forward, can you just remind us now with the consolidation with Level One, just kind of what's repricing? I think you said most of the stuff is burned through the floors, but just kind of what's variable rate today that is moving right away that, as we think about these next couple rate increases, just kind of how that plays in. Then the deposit beta. Is your assumption on the deposit betas, are they the 35%, does that start, you know, 100, you know, is it 35% with the next hike? Is it kind of, you know, move up to that level as you get between now and year-end in your assumptions? Okay, yeah. Let me start with the loans. You know, $7.4 billion of our loans are, or 65% are variable rate. $5 billion of that reprices in one month, $6 billion reprices in three months, and really primarily the rest of it reprices over the course of 12 months. A very high percentage of variable rate loans, and that gives us some great lift. On the deposit betas, the 35% is through the cycle, and we do think that it'll start off a little bit slower and then pick up, you know, through more towards the end of the year and in the first quarter of 2023. Gotcha. Okay, that's helpful. Then how about just, I don't know, maybe one for John. Just as far as the, you know, the credit quality. It sounds like you guys are monitoring it and whatnot. You know, I guess, but just where the ACL is at today, you know, following the acquisition here and, you know, the health of the portfolio. I mean, how do we think about that, you know, over the near term, especially given, you know, the, you know, how, you know, I guess it sounds like things are still, you know, very, very strong. Yeah. I think, Damon, the way I'd answer the question is, you know, we're, you know, continuing to review the book and the way the allowance, you know, the ACL works for us is that I'm putting individual specific reserves on loans. From that perspective, those specific reserves are, you know, relatively modest amount of the total allowance. I think, you know, where we're at, we're gonna probably continue to trend down. You'll start to see, you know, the allowance relief, assuming the market conditions to continue to remain stable and perform at the levels they are right now. Sorry, Brian, I didn't mean to call you Damon there. Oh, that's okay. I got it. No worries. Then, okay, I appreciate that, John. Maybe just the last one for me was just as far as you guys mentioned some further branch closings, some this quarter, some next quarter. I guess is this, is there more of this to come, or is this kind of, you know, the bulk of what you guys are expecting to do on the branch closure front? It's only a handful. I think you said two or three in the next quarter, third quarter. Just, you know, how we're thinking about that going forward. Yeah. We did 17 consolidations last year. Right. You know, quite a bit fewer this year. You know, just continuing to evaluate our highest performing locations, those that are on the lower end of the performance spectrum in terms of monitoring balances and even probably more importantly, just transaction levels. Where we see customers moving to our digital platforms and kind of requiring the branch locations, the physical locations at a lesser level, we're assessing opportunities. You know, we don't have anywhere near the number, you know, like 17 we did a year ago. We are going to continue to just look for opportunities to be efficient and redeploy capital into digital channels and into people. Yeah. No, it makes sense. I appreciate it, Mark. Okay. Thank you for taking the questions. Nice quarter, you guys. Congrats on the deal and getting it closed and how things are going. Thanks, Brian. Thanks, Brian. Thank you. I'm showing no additional questions in the queue at this time. I'd like to turn the conference back over to Mr. Hardwick and management for any closing remarks. Thank you, Howard. Hey, thanks for the time, everyone, today. When I think about our quarter and the remainder of 2022, I'm enthusiastic. I think we have a great story. We always talk about our ability to grow organically in the mid to high single digits. Obviously, we exceeded that this quarter. I think our organic growth story is really strengthened by the addition of Level One and the Detroit MSA that we now serve in a more robust way with both locations south of the city and, you know, in the city and also on the north and west sides. You know, we're an efficient organization. We've always had a strong efficiency ratio relative to peer. Even though we're investing in the company through people and technology in a way that I'm proud of, that I think allows us to have a long-term strategy and long-term success, the operating leverage that comes out of the acquisitions and streamlining the branch operation, et cetera, you know, just allow us to continue to produce those kinds of results. Our confidence level's incredibly high and we think given where the price earnings multiple is right now, that there's great upside. It's an interesting time. The world has some uncertainty facing it, but I think First Merchants is incredibly well positioned to weather whatever comes at us and to come out on the back end of that as one of the strongest banks, you know, in the United States. We're gonna keep delivering and keep working hard for all of you. Thank you. Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.