Q4 2020 Glacier Bancorp Inc Earnings Call
[music].
Okay.
Yeah.
Good afternoon, ladies and gentlemen, and welcome to the Glacier Bancorp fourth quarter earnings conference call and.
At this time all participants on on a listen only mode. Later, we will conduct a question and answer your questions and instructions will follow at that time.
And he wants you require assistance during the conference. Please press Star then zero on your Touchtone telephone.
As a reminder, this conference is being recorded and now.
Like to turn the conference over to your host Mr. Randy Chesler, President and CEO. Please go ahead ma'am.
Alright, Thank you Angela.
And good morning, and thank you for joining us today with me here and Kalispell. This morning is Ron Cooper, our Chief Financial Officer, Angela dose, our Chief Accounting Officer.
Ireland, Poland and our treasurer.
Tom Dolan, our chief credit administrator, and Don Chery, our chief administrative officer.
Yesterday, we released our fourth quarter and full year 2020 earnings and today, we are ready to review those results the fourth quarter and full year results really demonstrate the quality of the glacier team with strong core of the company and the attractiveness of our business model.
We are navigating through the on going ongoing pandemic extremely well and I am.
And we're really proud of the glacier team, our senior staff at the holding company and as well as our 16 bank presidents and their teams for their commitment and leadership and service to their communities that they have demonstrated this year.
Despite the pandemic most of our customers have adjusted to the circumstances very well and are carrying on with business.
On our residential mortgage volume is at record levels with refinancing and new home purchases and our commercial lending business continues to improve.
The performance of our loan portfolio demonstrate the strengths of the markets and which we operate.
And the value of our conservative approach to credit.
Our markets were strong and before the pandemic driven by good quality of life.
And this friendly environment and low cost of living.
And we are seeing signs that the natural social distancing that comes with our less urban markets will only add to the attractiveness of the west.
Once again, the fourth quarter and full year results highlighted the consistent strength of our exceptional people customers and markets for the quarter, We reported earnings per share of 86.
A 39% increase from the prior year fourth quarter.
Net income was a record $81 9 million, which is an increase of $24 5 million or 43% from the prior year fourth quarter.
Highlighting the company's core earnings strength.
Pre tax pre provision net revenue for the quarter was $99 3 million, which was up 43% from the prior year fourth quarter.
Core deposits increased $579 million or 4% over the prior quarter and.
And noninterest bearing deposits were 37% of total core deposits at the end of this quarter compared to 34% at the end of the quarter a year ago.
The loan portfolio, excluding payroll protection program or Triple P loans organically increased 43 million or <unk> 42 basis points in the quarter.
Bank loan modifications related to COVID-19 decreased.
And $371 million and the quarter to $94 9 million or 93 basis points of loans, excluding triple key loans.
Nonperforming assets as a percentage of assets was 19 basis points compared to 27 basis points a year ago.
The team was very busy submitting triple P loan forgiveness applications to the SBA, which resulted in a $539 million decrease or 37% and the triple P portfolio and.
And $14 million of acceleration of net deferred fees due to the loan forgiveness.
The efficiency ratio was 53, 4% compared to 48, 5% last quarter.
If you take out the impact of the Triple P loans this quarter the efficiency ratio increased 106 basis points compared to the fourth quarter, a year ago, primarily due to performance based compensation.
We declared and paid a regular quarterly dividend of <unk> 30 per share. This represents our 140 <unk> consecutive quarterly dividend and the 46 dividend increase.
We also declared a special dividend for the year of <unk> 15 per share or 17 special dividend.
On a full year basis, we earned a record $266 million of net income and increase of 27% over the prior year record net income of $211 million.
Pre tax pre provision net revenue for the full year increased 42% to a record $368 million versus $259 million and 2019.
Earnings per share were $2 81.
Which represents an 18% increase from the prior year earnings per share of $2 38.
The Sba's Triple PD Lone program took a lot of our time during the year as we originated over 16000 loans for almost one 5 billion.
And we recently began the forgiveness process for customers and have received SBA forgiveness for $539 million and Triple P loans for our customers with $909 million and Triple P loans remaining the bulk of which we expect to be waived and the first half of 2021.
We've started the triple peaks and phase III program and as we're calling it and expect a fair amount of interest and the program, but not at levels. We saw with the initial triple fee program.
Loan growth was 17% for the year, including organic growth Triple P loans, and our Arizona acquisition.
It was an unprecedented year for deposit growth, primarily due to the record federal stimulus with deposits organically, increasing three 4 billion or 32% with noninterest deposit growth of one 6 billion or 44%.
The housing market and refinancings were at record levels across our footprint and resulted in a record gain on sale of loans of $99 5 million, which was an increase of $65 4 million or 192% over the prior year.
The regular and special dividend that we declared and and a fully resulted in a $1 33 per share dividend and increase of 2% over the prior year.
And early in the year, we closed the acquisition and state Bank of Arizona with assets of 745 million net.
<unk>, adding to our Arizona and community banking franchise.
Deposits continue to flow onto the balance sheet as a result of customers reduced spending and unprecedented government fiscal stimulus and monetary policy.
Core deposits now stand at $14 8 billion, which is an increase of $4 billion or 38% from the end of the prior year.
We believe some of these deposits will be spent and invested by our customers later this year and we see the pandemic circumstances and improve.
Total debt securities increased $2 $7 billion and 97% from the prior year we.
We continue to purchase debt securities with the excess liquidity from the increase in core deposits and the SBA forgiveness of Triple P loans debt securities represented 30% of total assets at year end compared to 20% at year end 2019.
The return on our debt securities reflected the impact of lower for longer interest rates ending at $2 two 9% down from 315 at the end of the prior year.
And that security income was $99 6 million.
Which is an increase of 17% or $14 1 million over the prior year.
We are taking a cautious approach to new investments given low current rates and risk at some point of deposit outflows and as a result, we're targeting a short average life, while maintaining higher levels of liquidity.
Our loan portfolio ended the year at $11 1 billion, which was an increase of 17% over the prior year.
Pricing on the new and renewed loans was lower due to the interest rate environment and as a result, the yield on the portfolio ended the year at five or four.
And 4% compared to 523% at the end of 2019.
Interest income was 627 million, which was an increase of $81 million on 15% over the full year 2019.
We recognized $38 million of interest income, including the 1% note rate and net deferred fees and costs from the Triple P loans, and 2020, which included $14 million and accelerated income from the SBA forgiveness with loans.
Net deferred fees remaining on the balance of the Triple P loans at the year and were $17 6 million the bulk of which we expect are recognized and the first half of 2021 as the remaining qualifying triple P loans from phase one are forgiven.
With all of our deposit growth, we're pleased to see our cost of core deposits declined nine basis points to nine basis points from 11, and the prior quarter and 21 at the end of 2019.
Total cost of funding was 14 basis points down 16 basis points from the prior year and.
Net margins continues to be difficult to hold due primarily to the interest rate environment. As we saw margin dropped from four one to 409 from 439 at the end of 2019.
The core <unk>.
Net interest margin ended the year at 405 versus <unk> 30 last year, and while we were successful and reducing the total cost of funding wasn't enough to outpace the decrease in yields on loans and debt securities.
Non interest income was driven by our record mortgage production.
Book gain on sale of loans of $99 5 million, which was $65 million or 100%, 192% over 2019.
Mortgage purchase and refinance business continues to be very strong.
In addition to local demand throughout the year, we saw an uptick and the number of out of state buyers, which was a factor and our record originations.
Credit performance was much better than expected during the year with net charge offs at $7 7 million or seven basis points of loans compared to $6 8 million or seven basis points of loans last year.
The Lincoln delinquent loans were 20 basis points of loans versus 24 at the end of last year and nonperforming assets decreased to $35 4 million and were 19 basis points of assets, which was down from 27 basis points a year ago.
During the year, we made over 3000 loan modifications and response to Covid concerns on loans totaling over $1 5 billion, representing about 15% of the loan portfolio, excluding triple P loans.
It is important to note that all of the loans that received a modification and we're performing as agreed before we gave them a modification and were all short term modifications.
At year and modifications decreased by $1 4 billion to $95 million or 93 basis points of the portfolio, excluding triple P loans.
We continue our enhanced monitoring of industries that we think pose higher risk due to the pandemic.
The total amount of loans under enhanced monitoring and $642 million or $6, 29% of our loan portfolio not including Triple P loans.
This includes loans to hotel motels restaurants, travel tourism and gaming oil and gas businesses.
We ended the year with only $23 million of these enhanced monitored loans and modification status are only 365% of the enhanced monitoring portfolio.
Even with the steep reduction we saw and modifications at year and we will continue with our enhanced monitoring process.
The higher risk industries for the foreseeable future.
And we continue with our rigorous approach to managing and proactively addressing any credit issues across the total portfolio.
Credit loss expense was $40 million for the year driven by the increased economic risks caused by the global pandemic. Our total allowance for credit loss stands at $158 million or 142% of loans, 155% of loans, not including Triple P loans, which.
Our 100% guaranteed.
We believe this is a very adequate and and prudent level given the uncertain circumstances caused by the impact of Covid.
And we expect to maintain these approximate levels until we see a more certain economic environment.
Total noninterest expense was $405 million, which increased $29 $9 million on 8% over 2019.
The increase was driven by compensation and benefit expense due to more employees, mainly from our acquisitions as well as increased performance related compensation as a result of our record year.
For the year, the efficiency ratio was 49, 97% and improvement compared to the prior year efficiency of 50, 777%.
Excluding the impact from the Triple P loans and the impact of the termination of the cash flow hedges in 2019, the efficiency ratio decreased by 190 109 basis points versus the prior year.
Tangible book value per common share of $18 21 at year end.
Increased.
And $2 60 or 17% versus prior year.
Our access to liquidity remains robust.
With growth due to an increase in core deposits and borrowing capacity at the end of the fourth quarter, the company and access to over $12 billion and liquidity. This includes $5 1 billion of unused borrowing capacity with $2 4 billion at the federal home loan Bank.
$2 1 billion and borrowing capacity at the federal reserve discount window, and tripled and liquidity facility and.
And $600 million of capacity and correspondent banks, and addition to $3 3 billion and Unpledged marketable securities and cash of $633 million.
An additional $3 2 billion and liquidity is available from other sources, including broker deposits over pledged securities and loans eligible for pledging at the federal home loan Bank.
Overall 2020 was another outstanding performance from the Glacier team.
And even more so given the extraordinarily difficult operating environment and 2020.
The team all three.
And from Montana to Arizona, once again demonstrated the commitment strength and leadership and performance.
It sets them far apart from other bankers and their communities and and the industry.
And underscoring this just yesterday.
<unk> announced America's best banks for 2021, and Glacier Bancorp was once again and the top 10 moving up to number three.
So those and my formal remarks, and non like Angela to open the line for any questions that you may have.
Ladies and gentlemen quick question at this time, Inc.
And the number one key on your telephone.
Just a question on finance, Sir you Richard Murphy yourself from the queue. Please press the patent pool.
Our first question comes from the line of Matthew Clark with Piper Sandler. Please go ahead.
Good morning, Matthew.
And Matthew.
Okay got it.
Angela.
Yeah.
And Joe Lebel.
Yes, Sir.
On hearing Matthew So maybe we can move on to another question.
And your next question is from the line of Jeff <unk> with D. A Davidson. Please go ahead.
Hi, Good morning can you hear me okay.
Good morning, Jeff, Yes, we can okay great.
So Randy just looking at nice.
Nice to scratch out some organic growth and typically sort of quiet.
The back half of the year back last quarter, but.
Interested and your thoughts.
Organic growth opportunity and maybe.
Narrowing that down to kind of areas of the footprint.
You think might be leading away and in 'twenty, one and just frame up overall with what you think of growth expectations for the year would be.
Yeah.
On.
There there are parts of the footprint that are.
Having more organic growth and others, we think.
We will have low double digit.
Growth net.
Next year somewhere around 4% to 5%.
The.
And.
Some of the.
Markets, particularly Arizona, just have an incredible inflow migration, particularly from California, theyre getting almost half of the out migration and that state.
And so they are extremely well positioned for some very solid growth.
And as well as.
Our business and Reno and the.
Nevada continues to gain.
From the out migration, so we expect to see some very very strong growth.
And the rest of our footprint.
The growth looks very solid.
And so among all of our eight states, we don't have a laggard.
Other than a couple of states that we think will probably be a bit stronger.
As we as we move forward the other one.
On his Colorado.
As COVID-19.
As the Covid circumstances improves that's a market with a lot of it.
And very very attractive business.
On circumstances that I think youll see.
As companies want to start to move Youll, see Colorado, and particularly Denver.
<unk> very well rest of our markets are very solid to Montana continues to do very well, Idaho continues to do very well, even Wyoming is perking along so.
We feel good about all our markets and then with a little axed on on those markets that I.
Went through.
Sure I appreciate it.
And then just.
Kind of broadening the from former.
Organic acquired.
More specifically on M&A and thoughts on.
As we kind of crawl out of this eventually do you think.
Do you think.
Seller price expectations are and from a from a price discovery.
<unk> had.
Maybe sporadic checkpoints with maybe some a few banks, but just thinking about you think that could be a big impediment as you look to.
And look to M&A.
Or is it a pretty rational group and you think once we open up you could see some activity.
Well, yes, I think theres, a number of factors and M&A and yes, I do think there are rational group.
That will respond to the market data.
But I think we have to take.
Take a step back M&A really.
And was in hibernation for most of 2020.
Due to the pandemic.
It's starting to come out of that.
And we are we've had we have a number of conversations so I think we have some some good and.
And a real time indication on where people I think that.
And we've re engaged with folks so people are and and so very focused on their business franchise.
With everything going on.
And then I think now they've just recently taken a step back and over the last couple of months and reopened the door on M&A. So we had a lot of good discussions.
Inc.
And there'll be a couple of factors and 'twenty, one and 'twenty two.
Number one I think we're going to see more people tried again to that M&A and.
Probably some.
Some banks that are less experienced and it.
And so I expect it to be a little more crowded I do expect there could be some price variability because of the inexperience of of some of the people that I would expect we'll get into the market.
But in the and I.
I think.
And the same things that have made us very successful and the past.
We'll be in play and 21 and and going forward and number one is the quality of our currency.
Greenlee and attractive to sellers number two is our business model, where we offer extremely unique opportunity for our bank and maintain a lot of its identity and people.
And as a result.
Have a transaction, where the communities and disrupted and actually better served as a result of it so very unique that most other companies cant do so.
I think it's going to start to heat up we're going to maintain our very disciplined approach to M&A as we always have.
And.
Where we're going to engage on a lot of discussions, but probably a little period here initially when the price discovery.
And has to occur, but part of Thats, the job and the investment banker that sit down with the seller and talk about.
Valuation and I think with those discussions that will really help.
And sellers to pricing that.
But I think is really fair and the marketplace.
Got it thanks, Randy I'll step back thanks.
Yes.
And once again, ladies and gentlemen, if you would like to ask a question. Please press star one.
Our next question is from the line of Michael Young with Securities. Please go ahead.
Hey, good morning, everyone.
Good morning, Michael.
Wanted to maybe just ask on on net interest income.
And I've heard the comments about the NIM pressure I think that's something we're seeing.
Italy across the industry, and it's incredibly difficult to predict with PPP and purchase accounting accretion and kind.
Balance sheet movements that are going on but.
As we just think about sort of the NII dollars trajectory from here.
Maybe if it's easier to talk about on a core basis kind of ex PPP do you have and outlook on kind of that and can we trend higher and some of the extra liquidity and deployed into securities.
Or do you plan to just kind of hold that liquidity and wait for the growth to return.
Yes, im going to ask Ron to give you a little more detail. There we've had a lot of discussion about it obviously.
Net interest margin is going to be under pressure because of the rates, but net interest income and is really what we're focused on.
Because the margin can go down but net interest income is what drives EPS and.
On.
Growth and the company. So volume do you want to give a little color to that question.
Filled upward trajectory will occur and that we can have the <unk>.
Organic loan growth and im going to segue and effective and PPP, but if we can grow the organic loans and we can get.
And ill say, 4%.
Youll see some trajectory going up there, but realistically it the deposits continue to come in and whether that 5% growth and perfect that depends upon stimulus on a whole bunch of other factors.
And we'll continue to put that into the investment portfolio and so that you have out there of that.
And are certainly out there down per as a percentage of our earning asset our investment securities are up but well put that money to work and sell our net interest income will expand.
Let me.
Taco about tilda.
Got.
PPP round to round one.
We had 37% of our long.
Forgiven got $910 million remaining and so we think that.
Forgiveness.
All occur primarily and a FERC have and Thats, a net positive coupon at night, but getting the processing fees and we're averaging 375%.
That's a real positive net net.
Of course, we're already underway with the second version of the PPP program.
So that will that will help but we think forgiveness on that program.
Occur likely more in the fourth quarter.
And it could range from 40% to 50%. We don't know we know it's going to be easier, we and other more eligible expenses.
So with that all in mind, yes, there definitely upward trajectory of our net interest income.
Okay. That's helpful and Randy I guess, then the flip side of that equation is kind of managing the company the expense base and kind of what you are.
Talking to the various president's about as a result, and kind of the outlook for the year.
So maybe you could you just talk about the messaging and maybe what the goals are and maybe from an efficiency ratio standpoint, given all the moving pieces on revenue.
Yeah, we think efficiency is going to be very very important measure.
It is the most prominent part of our compensation plan. So I think that can answer part of the question about focus.
And so.
Yes, we think that that's an important lever, we still intend to be and the same range that we talked about last year at $54, 55%.
That gives us good opportunity to.
We think it's a good efficiency rate and also gives us an opportunity. If we are able to overachieve that to invest back in the business. So.
And we're 2021 and still targeting the range of $54, 55%.
Okay, and maybe just last one from me just on those investments.
And it will depend on making kind of.
Some of your footprint and maybe being shut down and some of it not have you kind of realize any areas of investment that are needed and what are the plans for 2021 there.
So Michael we we lost a little bit on your question, maybe you can re ask it and appreciate it.
Yes, sure sorry about that can you hear me okay, yes.
Okay.
So was just asking about kind of the areas of investment and 2021, if theyre more technology focused given maybe some things that were raised through the pandemic and some shutdowns or.
And if they're going to be more people and lender hiring kind of focus.
Yes.
We continue to invest and technology across the entire company and.
And ways that we think.
We can and.
Prove either internal process and reduce expense.
And improved control.
And on and on the business side.
And so we have a number of investments.
Some are geared towards improving the customer experience in terms of.
For opening accounts, we've made that a lot easier and quicker.
And virtual.
And so people, especially in this environment can do it without coming into a branch.
And quickly we've also invested in on <unk>.
Mortgage business technology too.
Set the stage for further growth and better control.
We've invested in.
Some enhancement to our payment services.
Products.
So those are just some of the examples Michael but we really.
And when we think about investments.
Number one or any kind of control items, where we feel we can reduce risk or our high priority.
And then revenue enhancing investments are also prioritize so to.
We have our top 10 initiatives.
Every year and we're going to stay focused on those some of those I mentioned in response to your question.
But those are those are the areas that.
We like to make investments and and again staying at $54 55 range, we don't we don't.
Really following kind of a big Cliff investment strategy, where we.
Take a big dollar investment, we do these and bite size pieces, which we like because we can control the investment we can see the result.
We can make sure the things that are working the way, we like and we.
We feel like and we've seen and we get a very good result.
By following that process.
Okay.
Okay. Thanks.
Your next question is from the line of Jackie Bohlen with <unk>. Please go ahead.
Hi, everyone and good morning.
Warren and Jackie.
And I wanted to stick with expenses, but looking more at the run rate and the fourth quarter and kind of stripping out what may have been unique and 30.
With that other expense line items, and I know that and the third quarter, you had a little over $2 million unfunded commitment expense and Thats now well with small and the quarter captured on the provision.
Normalized for that and then I've also about and my notes that you had about $2 million and third party consulting fees it looks like that line items.
And thats quite a bit this quarter. So I'm just wondering if there was anything you book and there that won't be repeating next quarter.
Yes.
What I would call a lot of clear the deck activities.
And there that we think we got some expenses incurred in there that wont be repeated.
And.
But we wanted to clear out so there were some.
Product expenses and legal expenses, a mishmash combination and many items in there, but if I had to categorize them I would say on a one time.
<unk> expenses and kind of clear the deck. So we start 'twenty, one whether it's fresh slate as we possibly can.
And do you have just a roundabout estimate of how much that might have amounted to in the quarter.
Yes, I think I'm going to ask where on the cover that because I think to your question and get that kind of a run rate expectation for 'twenty one.
So I think he can.
Answer both of those for you Hi, Jackie Okay. Thank you.
And those items those items are roughly three $3 million to $4 million.
You might recall.
I do want to comment though on.
On the $2 million of third party consultant expenses over and the and.
The third quarter I don't know, if youre, putting that and yeah, yeah got it and the third.
Okay great.
Okay. Thank you and then I guess.
And I'll spell.
And ladies and sort of more of the run rate question, and Jeff, Greg and ask what I'm getting at it.
And just thinking about compensation and I know theres been some question Paul and term.
Yeah.
Given the changing environment between early this year and later this year and I just wanted to see what a normalized run rate would be for a compensation next year understanding that we're going into the first quarter with seasonally high.
So Jack here, the connection blurred, a little bit there, but I believe.
Were asking about the run rate.
And of expenses and there was a question about compensation, but maybe Ron do you want to just talk about gen.
General run rate and then we will see it Jackie if you have any other questions.
Yes, Jack is on that on the compensation.
Yeah.
Let's see a $72 million for the comp because we're going to have some higher calorie people et cetera.
That would be fair, but the important thing very more important is that when we originate the PPP loans likely did on the second quarter, particularly.
We're going to have some compensation expense, that's going to be pulled out of compensation and then gets added to the loan and we then amortize out as part of the yield on the PPP loans and.
And so just ballpark and where we think we're going to have less demand. We think for the second round of PPP loans and that number could range anywhere from 4% to $6 million.
That will come out of compensations again.
You see it.
But the run rate for the comparable would be $72 million.
So.
So I understand clearly to that $72 million already included.
And in $4 million to $6 million or would that 70 to temporarily decline.
66 to six day.
And <unk>.
Temporary decline thank you.
Good clarification.
Great. Thank you.
You are welcome.
And your next question is from the line of Matthew Clark with Piper Sandler. Please go ahead.
Hey, good morning.
Okay.
Okay.
<unk>.
Do you have any.
Cost saves left from here.
On your most recent deal.
Can be realized.
Cost saves on M&A.
Yeah from the <unk>.
Yes.
Deal.
And I don't know I think that.
A lot of our certainly and.
And Nevada, and and Arizona.
Our combination of and Arizona the foothills with the state Bank of Arizona has been done we've converted it is part of what we tried to recognize this year is to clear out any kind of acquisition expense cost savings.
And we're going be very efficient because they picked up a lot of scale, specifically and Arizona as they've gotten bigger but cost saves as a result of the acquisition I would say that we recognize that and that business now is positioned well as a complete bank.
And configured in a way that we think it needs to be to go forward.
Okay, Great I, just had some additional savings and my numbers on pick it up.
Okay and then.
Do you happen to have the weighted average rate on new loan production this quarter as well as.
The weighted average rate on new securities and.
The incremental margin going forward.
Yes, and this is Ron here until the <unk>.
The incremental rate on the on the loan production and that fourth quarter.
4% is really where it was.
Again that I say that because the bigger the alone.
And the tight of a quality, but the smaller loans.
The higher than that in fact, I would say it really came in and around 415, if I look at my notes here for one 5%.
Clarify and then on the.
Investment Securities.
Gosh I wish it was higher.
If we can get 90 basis points and are worth celebrating up here high five and everybody and.
And if the market today and on to Randy's point and has.
<unk>, we're staying short and.
And keep them.
Quality, primarily we're investing and the 10 year.
Data maturity residential mortgage backed security and if we get good cash flow off of that and trying to catch and be ready.
When rates rise.
Okay, Great and then just any.
Change and the way Youre looking at tax credit investments with the change and the administration and whether or not that might.
Cause your tax rate to go up a little bit going forward or not.
We are so the nice thing is that.
The yields that we're getting.
On the.
Low income housing and.
And especially the new market has been.
And really pretty good and.
And so.
And when they make and equity commitment, we haven't even necessarily booked all of those credits so youre going to see more credits coming on.
And the future irrespective of what's going on with the current administration, because we make these investments over a two or three year time horizon.
And youre going to see those investments.
Come on and.
Like for instance, you've noticed that our tax rate for 2019 was 19%.
And it was also 19% for 'twenty and 'twenty, because we significantly grew.
Even though we significantly grew our our income I'm going to state taxable income book income et cetera, we picked up the muni. So we're going to get a lift there on the tax equivalent yield.
Yeah.
We will also get a <unk>.
Lift because we've got more of these tax credits so it bodes well for US I think we're a pretty tax efficient.
And then go out and say that I think our tax rate for 'twenty, one maybe it'll be 20%.
Because of those <unk>, Inc.
Things that we've made investments and given the muni if we put on in the first quarter of last year, and then more styles and continually buildup of tax credits.
Okay, great I figured that was.
What are your favorite question, but anyway, I figured I'd ask it.
Thank you.
You bet.
And your next question was on the line.
And Michael Johnson.
Please go ahead.
Hey, thanks for the follow up.
Just wanted to follow up on kind of the fee income side in particular.
And on loans sales obviously.
The expectation is for volumes and the market to be down a little bit next year with with refi trending lower but I would imagine the.
The work from home move to your areas and is a positive and you guys have been making a lot of investments and that business. So should we expect that to.
I don't know attract track industry trends or with market share gains should you do better than that.
And the outlook on that would be helpful.
Sure Yeah, no we've so.
So we think the mortgage business will probably be in line with the.
Mortgage bankers forecast of around 25% decline and business.
We think our gains will probably.
Be off a little more than that for a couple of reasons one is.
Our markets are stronger than the national market. Unfortunately, we don't have the inventory so as they shift and to purchase and.
And many of our markets. We just don't have the houses to sell and so thats, probably going to hold us closer to the national forecast on business. The other shift is as the business shifts from.
Less more purchase and less refi.
And the overall business declines a little bit and the marketplace, our ability to get a premium pricing may deteriorate, a little bit so we're expecting a little less gains on the mortgages. So.
The gain will be off maybe a little bit more than what the MBA is calling for and mortgage originations.
Okay perfect. Yeah, that's kind of what I was expecting and then.
Maybe just on the reserve or allowance from here day, one kind of seasonal reserve for you. All you were at kind of a.
<unk> sort of rate.
And one 5% of loans, so as PPP wind off and you know, we kind of get beyond this pandemic impact and macro outlook et cetera, and that where we should still expect that reserve level to trend down towards or would it be lower than that due to some mix shift or any other indicators.
Let me I'm going to ask Tom to give you some color on that I'd, just tell you that at that and.
Hey.
Right now, where we're positioned and right now.
And what we see as the economic forecast.
We just don't expect a lot of change and that level and.
Until we get a lot more certainty and the look forward, but Tom do you want to add some color to that and that's not too much more to add but.
And we evaluate the economic forecasts on a regular basis and hotel.
As a material change and the future. We just we don't see a lot of a lot of reduction on me and the allowance.
Certainly as we saw this last year, what can change quarter over quarter, but.
Given what we know today I don't foresee any any significant changes.
Okay. Thanks, I appreciate the follow ups.
You bet.
And I'm showing no more questions at this time I would like to turn the call back to management for closing remark.
Thank you Angela.
Well I want to thank everybody for dialing in today for.
And for those of you not and the West all of our ski resorts are open and Montana, Wyoming, Idaho, Utah, Colorado, and Nevada, and even Arizona ski resort with a lot of snow, so some with new snow and others with snow on the way. So it's a great time to come out and visit.
The other day, we'd like to say is please keep your Covid guard up.
And we still have a ways to go before this virus is behind us.
And we sure hope you all have a great day and a wonderful weekend. Thank you.
Ladies and gentlemen. This concludes today's conference call. Thank you for your participation and have a wonderful day.
You may all disconnect.
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