Q4 2019 Earnings Call

Is provided the organization?

Rick will be missed but he deserves this time for himself and his family. I wish Rick and his family the very best as he transitioned into his new chapter.

People's Utah Bancorp achieve strong financial performance for the fourth quarter and the 12 months ended December 31st, 2019. We accomplished a return on assets of 1.9% for the fourth quarter and all of 2019.

Our return on Equity was 14.1% for the same respective periods. Even as our tangible common Equity to tangible assets increased to 12.8% and our allowance for loan losses to offer loans grew to 1.9% at year end.

Total assets Grew 10.2% From A year ago this growth is primarily the result of strong low-cost deposits.

Total deposits were up $179 million or 9.6% year-over-year as our retail branches commercial group and Commercial treasury management team focused on raising deposits from existing clients as well as the acquisition of new client relationships. We're in the process of rolling out a new treasury management platform that we believe will help us continue to grow our low-cost commercial deposit base wage and improve our fee income.

our total cost of

Deposits was 44 basis points for the fourth quarter and 46 basis points were all of 2019 which we believe highlights the strength of our deposit franchise.

Non-interest bearing deposits to Total deposits increased to 35% a year in we continue to experience significant competition for deposits and anticipate that deposit bettas will be lower than in Prior interest rate reductions Cycles.

Loans held for investment remain flat and 1.68 billion in at December 31st, 2019 compared with a year ago during 2019. We focused on reducing concentrations in our acquisition Development and Construction portfolio as well as overall commercial real estate concentrations ATC loans to Total Capital declined from 113% at December Thirty One 2018 to 84% at December Thirty One 2019 commercial real estate loans to Total Capital declined from 150% to 204% for the same respective periods. We recently created a business vertical focused on construction lending to home builders. We believe the civilization of this key area will improve our ability to meet our clients needs from both a service and product offering perspective while ensuring that we effectively manage our credit exposure.

We are experiencing long.

strong loan volume in this business vertical present life

major Focus continues to be on expanding our C&I portfolio through Commercial Banking centers. We operate to Commercial Banking centers in Salt Lake County and have recently hired a Commercial Banking Center manager in Utah County. We anticipate increased organic growth in our portfolio from our Commercial Banking centers during 2020.

To replace Rick Anderson's roll. We promote a Judd Austin to the position of Jeep banking officer in this capacity. Judd will oversee our entire Branch Network bank card call center and banking operations judge formerly held the position of market area president for cash County and he's been with the company since 2006 and has provided outstanding leadership Innovation and execution to the organization. We're excited to be able to more fully utilized judge talents and Leadership across the entire Retail Bank platform with judge promotion have heard a strong regional manager in Cache County who has extensive. Experience in the Cache Valley Market and has a proven track record of growing commercial relationships. We also rebirth recently hired a season Commercial Banking leader for the Saint George Market who has a 40-year track record of building markets. We anticipate strong loan growth in our retail banking operations during mm.

20 as mentioned

On previous calls we made the decision to rebuild our oldest actually our second oldest branch in the system in Alpine, Utah. We have completed the rebuild of the branch and expect to have a grand opening in February . The Alpine branch is one of our largest branches with over a hundred twenty million dollars in deposits in the fourth quarter. We successfully implemented an online commercial lending origination system. Encino is an industry leader in the commercial banking l o s space the goal of this project is to ensure that we continue to provide our history High touch and unparalleled responsiveness to our clients and to be able to offer the same Client Service as we continue to grow in size and complexity page and our geographical footprint during 2020. We anticipate implementing Encinos point-of-sale application, which we expect will further improve our responsiveness to our clients.

We recently hired ahead of our mortgage banking division with a strong national and local history of growing the mortgage business. He's currently in the process of replacing our mortgage loan origination system and hiring a number of loan officers. We anticipate higher Loan mortgage volume during 20/20 as we significantly strengthen the leadership systems and Staffing in our mortgage banking area.

over the past

15 months with a promotion of our current chief credit officer the higher hiring of a general counsel with extensive loan workout experience the hiring of a season of season credit Riders the promotion of a loan work out Specialists and the hiring of a loan review manager. We have significantly improved our overall underwriting and Loan monitoring processes and procedures off as a result. We believe we have improved the identification credit risk rating and resolution of credit related issues in our loan portfolio over the past several quarters, the overall quality of our loan portfolio will remain strong has does the overall economic climate in Utah?

During the fourth quarter. We announced the change of the name of our bank from people's Intermountain bank to Alta Bank combining are three existing wage and names Bank of American Fork Lewiston State Bank and people's Town and Country Bank under one unified name. We believe the Ulta Bank name also better represents. The bank's mission to be the best bang for your business.

We Remain the law.

Or just Community Bank in Utah are prior outsize outside research indicated that our clients have a highly favorable opinion of US based on our high-touch model driven by excellent client service have that reputation of service speed and value reached prospective clients as well. But Confusion by are numerous geographically limiting name's wage costs perception that we were too small to meet all their banking needs. We believe that bringing our operating units under a single name clarifies our Market position bolsters The View that we had the size and scale to handle the full range of banking needs for both current and prospective clients and makes clear that clients will receive the same personalized service from Preston Idaho to st. George Utah from Bankers and decision-makers who work with clients to understand their specific needs and design customized Financial Solutions through the first sixty days since the Rebrand launch the real purchase.

Has held true as part of the transition to.

New unifying brand with broader regional market appeal we plan to change the name of people's Utah Bancorp to Alta band Court. We intend on seeking the required shareholder approval for that name change as part of our 2020 annual meeting as well as requisite regulatory approvals. In addition. We have reserved with NASDAQ that temper the ticker symbol alt-a and we intend to change the ticker symbol in conjunction with an approved name change of the holding company around June 30th 2020 patiently we anticipate these efforts will result in Greater loan and deposit growth and higher overall revenues.

We fortified our balance sheet in 2019 as we increased our capital and allowance ratios and managed our overall loan concentrations. We believe these strategic initiatives position us for stronger than 20 20 and anticipate that our loan portfolio growth rate will return to Historic levels the economic outlook for the Utah Market continues to be strong which provides us further opportunities to provide high-quality growth. We also continue to evaluate potential acquisition opportunities throughout the Intermountain West. I'm also pleased to announce that the board of directors declared a 7.7% increase in the quarterly dividend payment to $0.14 per common share the dividend will be payable on February 18th 2020 to shareholders of record as of February 10th, 2050 the dividend payout ratio for earnings for the fourth quarter of 2019 was 22.63% I will now turn the call back over to Mark to discuss our financial results. Marja.

Thank you, Len.

Was eleven point seven million dollars or $0.61 per diluted common share for the fourth quarter of 2019 compared with 11.1 million dollars or $0.59 per diluted common share for the third quarter of 2016 and ten point seven million dollars or $0.56 per diluted common share for the fourth quarter of a year ago for the 12 months ended December 31st, 2019. Net income was 44.3 million dollars or $2.33 per diluted common share compared to the Forty point, six million dollars or $2.14 per diluted common share for the same period a year earlier for the fourth quarter of 2019 net interest income declined 0.9 million dollars or three and a half percent to twenty seven point 1 million dollars compared with Twenty Eight Point 1 million dollars for the same period a year earlier took the client is primarily the result of net interest margins narrowing 72 basis points to 4.69% for the same comparable periods offset by average interest-earning assets increasing 200 Thursday.

five million dollars or 11.5

Eight percent the 2.3 billion dollars for the same comparable. The narrow narrowing of net interest margins is primarily the result of three consecutive 25 basis-point Benchmark rate reductions by the Federal Reserve and an increase in the average amount of lower-yielding cash and investment Securities held by us stemming from average core deposits increasing $179 or 9.6% for the same respect. The percentage of average loans to Total average interest-earning assets decrease to 73.6% for the fourth quarter of 2019 compared with 83% for the fourth quarter of 2018 yields on interest-earning assets declined 72 basis points to 5.08% for the fourth quarter of 2019 compared to 5.8% of the same to you earlier.

The decline in yields an interesting assets is primarily the result of average amounts of cash investment Securities held by Us increasing $256 or 74% to 603 million hours for the same comparable periods with a yield on cash investment Securities declining ten basis points to 1.95% for the same respective periods. In addition the yield on loans declined Thursday 6 basis points for the same comparable periods in average loan outstandings decreased twenty point six billion dollars or 1.2% to 1.69 billion dollars for the same respective periods month for the fourth quarter of 2019 total cost of interest bearing liabilities increased increased three basis points to 0.67% compared to the 0.64% for the same period a year ago and is the remote at the cost of interest bearing deposits increasing four basis points to 0.67% compared with 0.63% for the same period of your earlier.

For the fourth quarter of two thousand.

19 the total cost of funds increased two basis points to 0.44% compared to 0.42% for the same period of year ago.

For the fourth quarter 2019 acquisition accounting adjustments including the the accretion of loan discounts and amortization of core deposit intangibles added 8 basis points to net interest margin for the month of December 31st, 2019. Net interest income grew one point seven million dollars or 1.6% to $110 compared with a hundred million dollars to the same period of your earlier about the increase here is primarily the result of average interest-earning assets growing a hundred thirty million dollars or 6.3% offset by net interest margins narrowing 24 basis points to 5.05% compared with 5.29% for the same comparable.

The narrow margins for the year is primarily the result of of the FED reductions. I mentioned earlier and an increase in the average amount of lower-yielding cash investment Securities held by of stemming from average core deposits increasing 155 million dollars or 8.4% for the same respective periods. The percentage of average loans to average interest-earning assets decreasing down to 77.3% for all of 2019 compared with 83% for all of 2018 for the 12 months ended December 31st, 2019 yields on interest-earning assets, Joe Klein 17 basis points to 5.47% compared to the 5.64% for the same period of your earlier the declining yields on interest or any assets is primarily the result of an average amount of cash investment Securities held by Us increasing $150 or 44% to $490 for the same comparable. The yield on cash and investment Securities increase 7tj.

This points to 2.1 to 4.

Sent for the same respective periods. In addition to the yield on loans increased 7 basis points to 6.45% of the same comparable periods in average loans outstanding decreased 17.55 dollars or 1% to 1.68 billion dollars for the same respective periods, the 12 months ended December 31st, 2019 total cost of interest bearing liabilities increased 13 basis points to 0.7% for all of 2019 compared with 0.58% for all of 2018. And as a result of cost of interest bearing deposits increasing 22 basis points to 0.71% for all of 2018 compared to the 0.49% for all of 2018 for the 12 months ended. Mm December 31st, 2019. The total cost of funds increased basis points the 0.46 per month compared to 0.38% of the same period of year ago for the 12 months ended December 31st, 2019 acquisition accounting adjustments, including the accretion of loan discounts and amortization of core deposit intangibles. Yep.

9 basis points to the net interest margin

For the fourth quarter of 2019 provision for loan losses were 1.2 million dollars compared to a 3.2 million dollars for the same period a year earlier for the fourth quarter of 2019. We incurred net charge-offs of zero point two million dollars compared with net charge-offs of 1.2 million dollars for the same period of year ago the decrease in provision for loan losses in the fourth quarter of 2019 is due primarily to a decrease in charge off and no loan growth quarter-over-quarter the 12 months ended December 31st, 2019 provision for loan losses were $7 compared with eight point six million dollars for the same period of your earlier for the 12 months ended December thirty first two thousand years to encourage net charge-offs of zero point eight million dollars compared with net charge-offs of one point seven million dollars for the same. Year ago the decrease in provision for loan losses for all of 2019 is due primarily to a zero nine million dollars decrease in charge off and no loan growth year-over-year.

So the 12 months ended December 31st, 2019 annualized net charge or targets were 0.05% compared to 0.10% for the same period a year ago.

not

From assets increased to eight point eight million dollars at December 31st, 2019 compared with four point five million dollars at December 31st, 2018 non-performing asset to total assets. We're 0.37% at December 31st, 2019 compared with 0.21% a year earlier. The four point six million dollar increase in NPA is quarter-over-quarter half. The amount was one relationship that we actively managed out of the bank which fully paid off this month. The remaining loans have either been charged down to their net realizable value or we have set aside specific reserved. The allowance for loan loss loss is increased 6.2 million dollars or 24.5% to 331.4 million dollars at December 31st, 2019 compared with twenty five point two million dollars for the same period a year ago the allowance for loan losses two loans held for investment was 1.87% at the end of the year compared with one dog.

5% a year earlier

In accordance with acquisition accounting loans acquired from the Utah branches of Banner Bank and from Town and Country Bank where recorded at their estimated fair value which resulted in a net discount Tom Jones to loan contractual amounts a portion of which reflect the discount for possible credit losses credit discounts are included in the determination of fair value. And as a result, no allowance for loan losses is rejected for required loans at the acquisition date. The discount recorded on acquired loans is not reflected in the allowance for loan losses or related allowance for coverage ratios. The remaining discounts on acquired loans with six point one thousand dollars at the end of the year in June 2016, the financial accounting standards or rephrase be issued Accounting Standards update or ASU regarding current expected credit losses. The ASU significantly changes the accounting for credit losses measurement on loans and debt securities.

For loans and held-to-maturity debt Securities the ASU requires a current expected credit loss or Cecil measurement to estimate the allowance for credit losses or ACL for the remaining estimated life of the financial package, including off-balance-sheet credit exposures using historical experience current conditions and reasonable and supportable forecast. The ASU eliminates the existing existing guidance for purchase credit impaired or PCI loans, but requires an allowance purchase Financial assets with more than an insignificant deterioration since origination, otherwise known as purchase credit app. Or p c d assets in addition to the ASU modifies the other than temporary impairment model for available-for-sale debt Securities to require it allows for credit impairment instead of a direct write down which is for the reversal of credit impairments in future periods based on Improvement in credit to say issue is effective for in term and annual reporting periods beginning after December 15th, 2019 dog.

October 16th

In nineteen the faster you voted to delay the adoption by two years to January twenty twenty three for private companies not-for-profit companies and certain small public companies that meet the definition of a smaller reporting a company or SRC as defined by the Securities and Exchange Commission to meet the requirements of mass and energy must be an issuer as defined by the SEC and have public float of less than two hundred fifty million dollars or public float of less than seven hundred million dollars in annual revenues of less than $100 as of June 30th. 2019. Our public float was $466 in annual revenues a 1018 were $130 as a result. We are not an SRC and therefore we are required to adopt the ASU effective January 1st 2020.

In implementing the intent to recognize an ACL or for health maturity and available-for-sale debt Securities. The ACL on available-for-sale debt Securities will be subject to elimination based on the fair value of the debt Securities based on the credit quality of the existing debt Securities. We do not expect the ACL for debt Securities to be material.

we expect

To use the weighted average remaining maturity or warm approach adjusted for prepayments to calculate Cecil.

As described in the past be staff question and answers we intend to use a qualitative approach to just historical loss information for current conditions and for reasonable and supportable forecasts in this section of ASU, 320-2039 an entity shall not rely solely on Advanced estimate credit losses on an entity uses historical information that shall consider the need to adjust Oracle information to reflect the the extent to which management expects current conditions and reasonable and supportable forecast differ from the conditions that existed for the period over which historical information was evaluated. He just has the historical lost information may be qualitative in nature and should reflect changes related to the relevant data such as changes in unemployment rates property values commodity values delinquency or other factors that are subject to credit losses on the financial asset or in the groups of financial assets evaluated. We expect the ACL to increase Upon A. Adoption because the ACL is required to cover the full remaining expected.

Good life in the portfolio. That is

Greater than 1 year rather than the incurred lost model that assumes annual credit losses under current US Gap in addition a portion of the increase will be due to PCI loans that will be reclassified as PCB loans with a credit related non-credible discount increasing both ACL and Loan balances, but not retained earnings. However, credible discounts held on on PCM loans are not allowed to be moved to a CL as part of the doctrine of this ASU. We will set aside additional ACL for the non PCD loans through retained earnings upon adoption of this ASU off as a result. We will continue to hold a credible discounts that will be recorded to interest income over the remaining life of non PCD loans as well as a similar amount in a CL. We expect rain in earnings and those of other Banks after adoption do the nature and time Horizon used to calculate Cecil in addition. We expect a a potential negative impact to credit availability and rebirth

loan terms to borrowers at this AC at

You is adopted by financial institutions lastly. We expect a lack of comparability with financial performance too many of our peers as we adopt this ASU due to the delayed adoption for public office with total assets similar in size to us the ultimate effect of peaceful on our ACL will depend on the size and composition of the loan portfolio the loan portfolios credit quality and economic conditions of the time of adoption as well. As any refinements two models methodologies and other key assumptions used

We expect an increase in HDL of approximately 10 to $14 or approximately 30 to 45% This increase will include the gross up for non-credible discounts on home loans between approximately two point five million dollars to five million dollars or approximately ten to fifteen percent. We expect the cumulative tax affected impact total shareholders' Equity of between six million dollars to eight million dollars or approximately 2 to 2 and half percent. We expect our regulatory Capital mounts and ratios to be negatively impacted an increase in our ACL will result in a decrease in a military cap amount and ratios Bank regulatory agencies are provided regulatory Capital relief for an initial Capital decrease from the adoption of this ASU by allowing a phase adoption three years on a straight-line basis, which we expect to utilize.

for the fourth quarter of two

From nineteen ninety nine percent comes 3.8 million dollars compared with three point six million dollars for the same period a year ago. The increase was primarily due to a zero point two million dollar increase in Mortgage Banking income resulting from higher loan know Nations, which is a tribute to a lower interest rate environment for the same comparable period for the 12 months ended December 31st, 2019. Income of 15.2 million dollars compared with $15,000 for all of 2018. The increase was primarily due to a zero point six million dollar increase in Mortgage Banking income resulting from higher loan originations, which is attributable to a lower interest rate environment for the same comparable periods for the fourth quarter of 2019. Expense was fourteen point six million dollars compared with 14.8 million dollars to the same period a year earlier for the fourth quarter of 2019. Our our efficiency ratio was 47.3% compared with 46.9% for the same. Year ago for the 12 months ended December 31st, 2019. Is expense with 60.3 million dollars wage.

for $62 for the same period of your

Earlier the 12 months ended December 31st, 2019. Our efficiency ratio is 48.2% compared with 50.3% for the same period of year ago the decrease in non-interest expect from both the three and twelve months ended December 31st, 2019 was primarily the result of lower salaries and employee benefits resulting from lower incentive payments and lower FDIC premiums do the application of small Bank December credits. These lower amounts of partially offset by higher data processing costs resulting primarily from the implementation of our new commercial loan origination system and higher model in advertising costs associated with the rollout of the new brand.

For the fourth quarter 2019 income tax expense was three point four million dollars compared with 2.9 Million dollars for the same period of your earlier for the 12 months ended December 31st, 2019. Income tax expense was thirteen point five thousand dollars compared with twelve Point 1 million dollars for the same. A year ago for the fourth quarter 2019. The effective tax base rate was 22.5% compared with twenty 1.5% the same. A year ago month for the 12 months ended December 31st, 2019. The effective tax rate was 23.4% compared with 22.9% for the same period of year ago trying to call back to Len Jo's. Thank you Mark. You've had a lot going on with this diesel implementation for sure. We're pleased with the strong financial performance and positioning we achieved in the fourth quarter of 2019 in particular were pleased with the momentum. We've experienced with our treasury cash management commercial program and the resulting growth and deposits.

We continue to focus on taking it.

Manage the outstanding economic prospects in the markets. We serve we're passing it in the Susie Astic about our prospects to expand our commercial relationships too small and medium-sized businesses throughout our branches and Commercial Banking centers. In addition. We continue to actively pursue potential acquisition opportunities throughout the Intermountain West which we believe is a crucial component of our business strategy and shareholder value creation model going forward. We appreciate you all joining us today, and we now will turn it back to the moderator to open it up for questions.

We will now begin the question-and-answer session to ask a question. You may press star than one on your touchtone phone. If you are using a speaker phone, please pick up your handset before pressing the keys off at anytime. Your question has been addressed and you would like to withdraw your question, please press star then to the first question comes from Jeff from d a Davidson wage, please go ahead.

Good morning guys morning Jeff. Hi, Jeff several Cecil questions. Not just get a lot. You took the expense line. I think there's some some items there. I want to make sure I get a my hands around and I think you know, you know here at 14 and 1/2, you mentioned some life there. I'm trying to get a run rate and and kind of where you are on the life cycle of the kind of the the name change and some of the other Investments you've made a 14.6 million this quarter if I were to think about the comp line, is there kind of some year-end.

maybe some

True up on that line, and then you've talked about the let's see if you can touch your own kind of how many more if or when they use those in the future. And then I guess the data processing so some some pieces. They're just trying to get some clarity on the expense run right? Thanks.

Jeff I'll I'll turn the the meat of the numbers back over to Mark in a second. But you hit on a point that was real our incentive plans in the organization were highly weighted toward loan growth and we were flat for the year. So there was an accrual reversal that was relatively significant because of the lack of loan growth for the year mark can get more into the numbers with you on that and then we're now getting to a stabilization rate. Although it'll be increased from where we were last year on our marketing expenses with the brand change. So we've gone through all the one-time expenses now, it's just re-launching advertising marketing and uh some of those community events with putting the name out there that'll be off work from miliar with years past and last year. So I'm sure with respect to salaries. The the cruel adjustment was about a million dollars as we chewed up at the end of the year birth.

When you look at, uh, the data processing cost will will run about the level. We're running this this quarter.

Um going forward with respect to FDIC premiums. We we have about 1/4 left of the the credit. Um, so we'll the first quarter we'll have, you know, no girls rooms then but then going forward will you'll you'll see the full assessment for the rest of the year, um land mentioned marketing and advertising and and we're you know, we for the most part I've gone through a lot of numbers. So we'll see a more normalized line item. They're going forward. Okay, so it sounds like maybe 15 and 1/2 on with the the comp line at that million back. And then I guess if you know one more quarter of the FDIC kind of low cost but and and then just kind of grow thoughts that is a fair number. That's that's that's exactly right not keep in mind though that you know in the first quarter. We do have our annual Merit increases and so that will increase salaries in the first quarter wage.

And then will stabilize from there. Okay, great and laid on the loan growth.

You know you you've referenced back to historical levels. If you could kind of range-bound of a mid to high single-digit, obviously, there's been some years going a couple of years back where you were tripping that by by some margin but given kind of the movement within the construction book reducing that exposure but then bringing on your home builder vertical. I just try to get a sense of what historical level would mean in present-day. Yeah that's perceptive of you Jeff D.

What we would without providing too much got guidance. I think it would be tough to predict double-digit just given the cautious this with which we operate but that said we would hope that we would you utilize all that incentive that we have budgeted for this year with people hitting those numbers. So we have processes in place with the black one reservation system that in time will make it easier more consistent. We feel we've got an incredible arm around our portfolio as far as knowing what's there and to a point where we're actually taking on some larger deals again, and we're we're we've gone below our floor of comfort frankly on the ABC song We're actually willing to take on a little a few more projects a little bigger projects that pipeline is building. So I think the mid-single digits is a fair number.

Great, I will step back.

Thank you. Thank you. Thanks Jeff.

Again, if you have any question, please press * then 1 the next question comes from Andrew from Piper Sandler, please go ahead morning guys. How are you? Good Andrew. Are you you're gone through a Rebrand yourself, huh? Yeah. Yeah certainly have just want to touch on the margin a little bit suddenly seems like like when he was coming in but also the fact that he's pressured. I mean, how do you think the margin can can react from here? Just giving what you're seeing on loans right now and and Loan yields and maybe an improvement in the in the earning asset make says the same as long breath comes on and and you're right on I mean, we we had strong deposit growth and as a result, we were holding a lot more cash investment Securities than than we typically would like to do what I what I will tell you is after we kind of finished the the end of the year and you know looking at kind of the overall liquidity in the market we

so, full and and putting more of that cash to you since so we've purchased more investment Securities, um advertisement security so that

You know we can get a little more yield on that side. But because they're amortizing the cash will come back and we'll be able to redeploy that cash into loans as dead on book starts to build, you know, clearly the the faster that we grow the loan book The the you know, we'll see margins kind of rebound wage given, you know, the the level of yield that we're able to get on our on our loan portfolio. So, you know, if we if we hit that strong loan growth that we're talking about then then we should see em and stabilized and or increased um, depending upon the amount of growth that we see are the are the lonely old pressures continuing into this quarter from what you're seeing.

No, I think we're we're kind of where we would want to be again. You know, if you look at our portfolio, it's very short. You know, our our duration is less than two years. In fact, you know, you look at last year. Our loan volume was 1.1 billion dollars to maintain the one point six billion dollars that were we hold so we turn the portfolio rather quickly and as a result of we're kind of, you know at market now and and again with growth we should see those yields improve and and particularly the construction portfolio, you know that portfolio turns off the type of asset, you know, three to four times a year and with the the one-time fees that we get with that that that can certainly improve our margins over also, you know, as Lynn mentioned, we we offer we're below kind of the target level that we'd like to be from a construction portfolio perspective and and would like to see that grow a little bit more than where we're at right now and and and with the e

To see higher margins as well. Gotcha. That's very helpful. Thanks for taking the questions. I'll step back for you.

The next question is a follow-up question from Jeff release from d a Davidson, please go ahead. Yeah. Thanks just on the whole new nautical balance is has been taken care of subsequent to quarter-end the other add and and maybe just just for edification. It's just the what was added what kind of loan segment or category was was that in what type of loans it's really mixed and there are there are several nothing incredibly outstanding. I think there was an assisted-living item in there for a little over a million dollars. I think which is the largest one. So the rest of them there's a little bit of everything there's some days there's a nag related item in there and then

You know, it's not really in our Builder our construction. I think there there might be a Hospitality unit or two in there. But we we're a dynamic in the management of that our chief credit officer meets monthly and goes through the whole portfolio and anything has a a sniffle. He'll take a look at it and adjust. So we we manage that not as necessarily A tell the world. That's an internal manageable number that we utilize to keep our eyes on. We haven't you've seen it's been dynamically used over the last couple of years and we haven't had any significant losses of reserves or in pretty good shape and we feel we're well Reserve even as you'll see items go in and out. You're not seeing them going to the the charge off buckets. We're working through the dog.

So yeah, we've had half of it.

Reduce already this month from quarter-end. But again, it's not the end of the quarter. So there may be some others that'll go in and come out by the time we all see it again, right? The other thing I would say is that Thursday. We're also very aggressive about charging amounts or set aside specific reserves, um quickly and so, uh, you know, we feel like what's in that book is, you know is often fairly valued and and and aggressive from a from a perspective, you know again, I guess, you know, the number is very small as well. Right? I mean we did see the increase but it still sucks.

Right, I think peace. Is that what in particular without getting too too much into detail maybe total lack exposure would also be helpful. I I didn't know that was a major part. Yeah. We have a little bit of a Lewiston up in the Cache Valley that we've got a few agricultural clients and the one in particular happens to be a mink farm. And for some reason makes those are out of school. I didn't know that. All right, the the tax rate just you're creeping up. I guess twenty-three and and change for the year anything mark on on twenty-twenty.

Yeah, I think.

That that higher level is what I would expect, you know in in previous years. We had a lot of disqualifying dispositions and we're doing our excuse now rather than stock options. And so I'm not seeing that that benefit going forward. So the the run-rate was that we have right now is is what I would expect line for it.

Okay, great. Thanks.

Thanks, Jeff. Thank you.

Yeah, no more questions in the queue. This concludes. Our question-and-answer session. I would like to turn the conference back over to Len Williams for any closing remarks.

Great. Thank you. Well, I think as we stated we're pretty bullish on the fundamentals where the organization States today where the focus is our where where we have been a production staff to drive us forward. So we're feeling pretty good about 20 20. Do you tie economies holding strong to date? There's still an undersupply of residential places to live. There's still growth in in migration here wages continue to increase with no unemployment virtually. So we're dead. We now feel were even better positioned to take advantage of that than we have been in the past. We wanted to ensure that the the store was minded. We knew where the bugs were and we feel pretty strong that we've gotten uh exposed to identification in our credit portfolio as well. So Full Speed Ahead. Thank you all for joining us on the call. Thank you for your support of the organization, and we're looking forward to 20 20 being a great year. Have a great day.

The conference has now concluded thank you for attending today's presentation. You may now disconnect.

Dead dead dead.