Question-and-Answer Session
Operator
(Operator Instructions). Our first question comes from John Pancari from J.P. Morgan. Please go ahead with your question or comments.
John Pancari
Good afternoon. Can you give a little bit more detail on the loan deposit growth? I know we’ve just seen the differences between the linked quarter growth rates on an average basis versus the period and numbers. I’m just trying to see which ones should we take as being more indicative of the ongoing trends, both from the loan and deposit side.
Peter Bartholow
John, this is Peter. As I said, the strength of Q1 linked quarter averages was really built on Q4 outstandings. We had, if you will recall, a significant surge really in the last third of the fourth quarter that did not have that big an effect on the quarterly averages but obviously left us in a position, as I recall, we started the quarter 4% above the linked quarter average. So we essentially maintained that level. Q1 is always our weakest quarter. George commented on the pipeline. So I don’t believe the point-to-point growth in either loans or deposits is necessary indicative of where the second, third, and fourth quarters would be.
Pipeline is strong. Deposit issues are addressed. We can control those to some degree provided in the commercial markets if you are willing to pay the price. But as I commented, the demand for liquidity worldwide has made us look at alternative funding sources especially when most of the growth is in a very short-term earning asset category, loans held for sale.
John Pancari
Okay. And you indicated the pipeline is stronger. What specific areas you really see the strength still in the pipeline, is it specifically C&I versus commercial real estate, if you can just elaborate?
George Jones
John, this is George. Primarily we see it in the C&I portfolio, but we are seeing some very good real estate, commercial real estate transactions today also. But I would say preponderant it's C&I portfolio and we are continuing to see good demand and good growth in our loans held for sale category. We are very cautious about that. We understand what the mortgage markets are today, but as I mentioned before, we really do have an opportunity here to selectively grow that portfolio, I believe, on a very safe and sound basis today with new underwriting standards and new investors.
John Pancari
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