Q4 2020 United Community Banks Inc Earnings Call
Good morning, and welcome to United Community Banks fourth quarter, 'twenty 'twenty earnings call hosting the call today are chairman and Chief Executive Officer, Lynn Harton, Chief Financial Officer, Jefferson Harralson, Chief Banking Officer, Rich Bradshaw, and Chief Risk Officer, Rob Edwards.
Not in this presentation today includes references to operating earnings pretax pre credit earnings and other non-GAAP financial information for these non-GAAP financial measures United has provided a reconciliation to the corresponding GAAP financial measure in the financial highlights section of the earnings release as well as at the end of the Investor presentation.
Both are included on the website at UCB I Dot com copies of the fourth quarter's earnings release and Investor presentation were filed last night on form 8-K, with the SEC and a replay of this call will be available in the Investor Relations section of the company's website at U C. B I Dot com. Please be aware that during this call.
Forward looking statements may be made by representatives of United any forward looking statements should be considered in light of risks and uncertainties described on page three of the company's 2019 form 10-K as well as other information provided by the company in its filings with the SEC and included on its website at this time I'll turn the call over to Lynn.
Good morning, and thank you all for joining our call.
Results. This quarter were driven both by strong underlying business performance and a very successful start to the P. P. P forgiveness E.
E. P. S came in at 66 cents on a GAAP basis, and 68 cents on an operating basis.
Both representing solid improvements over both last quarter and last year.
Our return on assets of 1.3 per cent drove a return on common equity of $12 four per cent.
On an operating basis, our return on assets was 1.34 per cent and we reached 16, 3% and our return on tangible common equity. These numbers include a discretionary eight and a half million dollar contribution to the United Community Bank Foundation.
Excluding this our operating ROA was one point for 9% and our earnings per share was <unk> 75 cents.
For some time I wanted to take a more strategic approach to our charitable giving.
And in doing so make an even greater positive impact in our communities.
Having the one time gain from T. P. P fees it seemed like the perfect opportunity to launch that initiative.
I believe this will be a win win for all of our constituents. It certainly would be good for our communities as we focus on improving the vitality of our markets.
Our employees are excited about having support from the foundation for the local charitable events and boards that they have served on for many years.
It will also enhance our brand as the banks that service built and continue to differentiate us in our markets from the banks we compete with.
Our teams continue to deliver strong loan and deposit growth with 8% core loan growth and 13% annualized core transaction deposit growth.
We are continuing to drive down deposit cost, which fell to 17 basis points this quarter down eight basis points from last quarter.
The low rate environment has pressured the margin, which without P. P. P fees would've declined about 10 basis points.
Credit continues to perform well net charge offs were five basis points for the quarter and nonperforming assets were 55 basis points of total loans.
We are seeing increases in criticized and classified loan levels as you would expect driven by cash.
Covid impacted segments, our allowance was essentially flat for the quarter is improving economic forecast offset the provisions needed for loan growth. This was a strong quarter for the company and reflects great efforts by our teams throughout the bank for maintained focus and continue to take care of our customers for more details I'll turn it over to the.
Team here and I'll start with Rob.
Thank you Lynn I will start my comments on page seven we were pleased with our loan growth in the quarter, excluding PPP loans, we had $243 million in loan growth, which translates into 8% annualized gross in the quarter growth was well distributed across different portfolios from residential.
Two equipment for and I asked our commercial to real estate.
We were also pleased with the progress we made in helping our P. P. P borrowers achieve forgiveness with just over half of our P. P. P loans being forgiven in Q4.
On page eight we also feel good about our credit quality given the stress in the economy and the high degree of uncertainty our net charge offs were very low in the quarter at just five basis points with the benefit of strong recoveries again this quarter. The Vita net charge offs were also relatively low in the fourth quarter at 75 base.
At this point, which is the best number that unit has reported since the third quarter of 2019, our loan loss provision was $2 $9 million this quarter and totaled $84 million for the full year as we significantly built the reserve as the economic forecast deteriorated with the Panther.
Mick on page nine we gave you some more detail on credit.
Loan deferrals were $1.85 billion at June 30th as we took care of our customers at the start of the pandemic, but as the pandemic continued the impact of the stress became more clearly identified in specific sub portfolios. So.
So deferrals have come all the way down to 71 million at year end, but as you would expect we did downgrade some loans, which drove increases in our criticized and classified loans.
$207 million that mostly came from our hotel and senior care portfolios I will remind you that both our hotel and senior care books have significant equity the average occupancy of the hotel portfolio is 51% and is being pulled down by the urban.
Emitted service subcategory, which carries a 42% occupancy we provide greater detail on both portfolios in the appendix.
NPA has increased to $12 million and stand at 55 basis points of total loans. All said, we feel good about where we are on credit and where our reserve is page.
Page 10 shows a walk up on the reserve in Q4, we put $3.3 million into the reserve in Q4 due to loan growth, but our economic forecast improved a bit which resulted in $2 $2 million coming out of the reserve you also see a $3 $1 million.
Increase from specific reserves, which corresponds with the C&I increase of N P. As in the quarter that you saw on the previous page net net excluding PPP loans, our reserve percentage was basically flat at 1.38%.
With that I'll pass it over to Jefferson.
Thank you Rob I'm going to start my comments on page 11, and talk about capital our capital ratios were relatively flat in the quarter and remained significantly above peer levels. We expect to use capital in 'twenty 'twenty, one and are starting with two relatively small redemptions of our sub debt in a trust preferred.
In the first quarter, we are optimistic we can put some capital to work via M&A.
And if that does not happen you should expect to see some more redemptions of this type and for us to consider using our $50 million repurchase authorization. This year on page 13, you can see our net interest income and net interest margin. Our margin was impacted by significant P. P. P forgiveness in the quarter and the.
Impact of loan accretion was stable.
Excluding these two items, our core margin was down 10 basis points.
About six basis points up 10 basis points of core margin pressure came from increased liquidity in the quarter.
This increased liquidity was driven by the $671 million of PPP forgiveness, and our 17% annualized or $629 million and deposit growth in the quarter. More importantly, we were able to grow core net interest income by 8% annualized in the quarter disc.
Fight the environmental headwinds due to our strong underlying loan growth and strong underlying deposit growth moving to page 13. It shows the details of the strong deposit growth I mentioned in the quarter deposit growth was strong all year with a total deposits up 23% year over year, excluding the <unk>.
Good deal.
This quarter's growth was benefited by our usual unexpected increases in public funds, but excluding public funds core transaction accounts were still up 13% annualized. We were also pleased that we made good progress on our cost of deposits moving down to 17 basis points from 25 basis.
Point to last quarter.
<unk> 14, we had a very strong quarter in non interest income.
Albeit down from last quarter's record result, the main driver of the decrease from last quarter was mortgage down $6 $1 million, we record mortgage revenue at the time of rate lock in rate locks were down 11% in Q4 versus Q3 also the gain on sale percentage declines.
In the quarter, requiring a write down in the pipeline.
Our mortgage production in January has started off as strong as ever but with the gain on sale of normalizing downward, we're expecting <unk> mortgage fee income and a $14 million to $16 million range.
We did sell some $17 million of SBA loans in the quarter driving a $1.5 million gain on sell in.
And we expect to be selling.
Greater amount of both SBA and <unk> loans in 'twenty and 'twenty one versus 2020.
On page 15, we talk on expenses, excluding merger related and other cost and our discretionary contribution to the foundation our expenses came in at $95 $5 million.
This $95 $5 million result included a $1.8 million accrual for paid time off or PTO as this year, we allowed our employees to carry over 80 hours of PTO into 'twenty and 'twenty one.
Assuming people, mostly stay with United in 2021, and we returned to normal operations in 2022, we would expect to get back the lion's share of this $1.8 million in 2021 and.
All said I anticipate that our Q1 run rate of operating expenses is plus or minus $92 million with a low single digit growth rate from there moving to page 16, we were very pleased that we were able to work with and help our customers achieve forgiveness on their PPP loans and at 12 31.
We had over 50% of our customers loans forgiven.
PPP has been and continues to be a major tool that we are using to attract new customers from other banks and we think we will make great progress with more forgiveness in the first quarter.
I'll finish there and pass it back to Lynn for closing comments.
Thank you Jefferson I know all of our United team is proud to have ended the year with a strong quarter.
As we know it's been a year filled with challenges that never would have been expected 12 months ago. In spite of those challenges we produced record levels of pretax pre provision income.
And grew pretax pre provision income by 15% in 2020.
We had record organic loan growth in dollar terms.
We had record organic deposit growth in 2020, with two and a half billion dollars and growth up 23%.
We also had record mortgage production, which nearly doubled in 2020 to $2 1 billion.
Our teams created United its own portal and processing system for P. P P origination and forgiveness.
And our bankers literally worked around the clock to deliver that much needed product to our customers.
We welcomed a new banks he sought to the United team and we're now established in great markets in Florida, Thanks to them.
We enhanced our executive team with the addition of our New General Counsel Melinda Davis Lux, we enhanced our board with the addition of Jim Clement <unk>, President of Eclipse and University and.
And we've made investments that will give returns for years to come with the establishment of a foundation and a new department focused on community development and engagement I'm.
I'm excited about 'twenty 'twenty, one and I believe we will continue to see opportunities to improve and grow.
To an outstanding team throughout the company.
Like to now open it up for questions.
Thank you.
The ask a question you will need to press Star then one on your telephone to withdraw your question. Please press the pound key.
Our first question will come from the line of Brad Milsap with Piper Sandler Your line is now open.
Hey, good morning, guys.
Sure.
Jefferson, maybe I wanted to start with the balance sheet.
Hum.
Obviously, you guys have had you know tremendous deposit growth this year.
I'm trying to figure out ways to put all the liquidity you work. It continues to be a challenge in the past I think you've talked about mid single digit type loan growth in 'twenty, one wanted to see if that.
Book kind of still held true and just.
Kind of what your plans were kind of in the face of all the liquidity whether it be additional bonds. Obviously, you've got some small amount of debt out there, but probably not enough to absorb kind of.
Kind of everything you are looking at this point just any additional color there is a way for loan growth and kind of how that impacts the NIM.
Yeah, so I'm going to pitch it to rich I'll start on the loan growth and I'll take that and we would enter the story for the balance sheet. Thank you and good morning, Brad Yes, we're expecting mid single digit growth.
In Q1 in 2000, a 2021 and the pipeline and activity are just very strong right now and we don't see that changing and again with our new hires were feeling very good and I think theres a great opportunity ahead for us.
And what that base of long ago that youre going to see some of the same things you've been saying already first of all we expect another $600 million and from a PPP forgiveness of more cash and so we probably become slightly more liquid again for for one more quarter, we are expecting the balance sheet to stay.
Totally flat to higher we'd expect these deposits have comment to stay now there is a a standard.
[noise] outcomes around that you may see deposits come in a little bit as you get forgiveness, but we think that deposits are most likely going to be sticky or a girl a little bit we have about $1.1 billion of cash again with more cash coming in.
We're going to first use it for loan growth and you kind of see securities growth from here, we had about $600 million of securities growth. This quarter I would expect something relatively similar.
Next quarter, and then from there I would expect a relatively stable size balance sheet with a mix change from cash to securities and securities to loans.
Great. That's helpful and maybe just kind of one follow up maybe for rich.
We've got around to you or a P. P P coming or tier I suppose I mean would you guys expect you.
So we participate you know kind of at the same level you did in round. One obviously adjusted for the size of the program or do you expect debt you could further increase share there given all the success you had there.
The first round.
I'm sure in your <unk> you are correct, we're living the P. P. P Dream again.
Officially opened up for banks, our size yesterday in our portal was open to give you a feel we had almost 1900 applications come through.
For about 230 million gives you an average loan size of about 120000, which is similar to we experienced the first time I would say the demand is.
Is a little smaller than the last time around part of that's driven by the requirements of the program and that they have to have a 25 per cent reduction quarter over quarter remember the Max loan size. This time is 2 million versus a $10 million. So there are some there are some changes so we're anticipating a I'm going to call it.
At a 400 million to $450 million to be the total demand.
And right now it's you know it feels like we're in the right position remember it's called the second draw program on purpose. So that it's primarily geared at existing P. P. P customers and so the ones that come through our portal or it's quite too it's really very easy for us to process and this time around there's very little of that.
Due on loans less than $150000.
Great. Thanks for all the color.
Yes, Sir.
Thank you. Our next question comes from the line of Michael Rose with Raymond James Your line is now open.
Hey, good morning, guys I'm, sorry, if I missed this but you know I understand the core margin was down about 10 basis points. It looks like Theres. Some some puts and takes you'll be redeeming some debt mix shift.
It's a loan growth maybe some debt securities purchases are we near a bottom in the in the core margin and could we actually see it expand as we move through the year just based on some of the stuff that you laid out.
Yes, yes.
Thanks for the question. So yes, I think we are in the first quarter I would call it flat to down five in a core margin and then I would expect at a higher throughout the year now this is.
Because of the mix changes have not including really anything with PPP too. So think of this as a sort of a forecast for my thoughts ex PPP.
Correct and then can you just give us an update on.
The lending hires I think you've hired 40 revenue producers over the past two years or so.
What are you what's your appetite as we move into this year.
It does seem like there's some some opportunities and see dislocations in some of your markets and then how much of that kind of mid single digit low loan growth is actually yes.
Coming from.
New originations versus kind of migration of books of business from some of those lenders you brought on share.
Sure. Michael This is rich again, great question. So in January we have hired 10 commercial people one for one private banker in there to give you a feel of those 10 six or in Florida. So we're taking advantage of our new platform in Florida in the Metro markets that were in there that we're in.
I will tell you there are a lot of good conversations going on some team lift out opportunities also tell you you know that bonuses have to be paid right. Now. So I would expect a very strong February in terms of our hiring and I feel very good about those conversations you know, particularly in Florida right now feels like.
Atlanta, a year ago, particularly with truest JP Morgan BMO Harris, there's just a lot of good opportunities for us and we're moving forward with that.
The last question you put in there to give you a feel in March of last year, we hired a team from tourist and central Atlanta. They started a week before effectively COVID-19 hit so for the first three months they were doing P. P. P.
And but what I'm really proud to tell you is that team did $65 million in commercial commitments last year, most of which were full thunder. So we feel really good and we're feeling good about the teams were talking to as far as the opportunity.
That's very helpful. Maybe just one more for me, but just more of a strategic question you guys did the <unk> deal you have a presence in Florida now.
What you need to do there to really get scale.
There is relatively small as it isn't just hiring teams is it M&A as well and then has there been any change in sort of the types of deals that you guys would look at I think you've historically done and talked about kind of down to 500, but kind of two or $3 billion side. Thanks.
So great question first relative to.
Florida.
There's nothing we need to do per Se I mean keep in mind you know it was a private bank commercial bank so bringing these teams on.
It was very consistent with what we've done we are going to be able to do that we are adding two retail locations to the Florida franchise that we're excited about.
With that said, we would be very interested in doing additional M&A in Florida as well as our other markets.
We've got conversations going on around our footprint and.
We feel good about the opportunity that will we will see there so.
In terms of the size as your range is correct given kind of what we see as the opportunity we're probably more focused on the larger end of that range today than the smaller end.
But you know where we're at.
Looking at any.
Anything in that size range in our markets with a with good with good teams and a culture that fits and we think we'll be able to do some have some good things happen this year.
Great I appreciate all the color. Thanks.
Thank you. Our next question comes from the line of Jennifer <unk> with <unk> Securities. Your line is now open.
Thanks, Good morning could you just talk about what you're seeing in terms of incoming interest.
Yeah.
And deal activity right now you seem pretty optimistic maybe something can happen this year.
Yeah, well I mean, I think everybody is looking.
Looking at the same things we are and you know in terms of margin I think.
What we're seeing is a lot of banks that don't have a diversified business mix are going to struggle more I mean, we've benefited from having a nevada is having mortgage operation, having having multiple levers to pull.
SBA etcetera.
I think if you're a smaller institution might you are a great company, but you may not have those levers I think they're thinking more seriously about who they are going to partner with and I think culture and.
Business model is playing more into that than raw price I think what we're seeing so.
I do think theres going to be some some good opportunities.
This year.
Thank you so much.
Thank you our next.
<unk> come from the line of Kevin Fitzsimmons with D. A Davidson your line is now open.
Good morning, everyone. Good morning, good morning.
Just on the subject of the increase we saw in criticized classifieds.
Yeah.
We've kind of known at some point, we were going to see this where deferrals have come down meaningfully, but now were seeing loans get.
Getting downgraded how would should we expect.
In the next few quarters do you use this quarter as more of a one time.
What pent up catch up and downgrading those credits or would you expect a similar kind of pace of downgrades and increases the criticized classifieds banks.
Hey, Kevin This is Rob thanks for the question.
Really two comments on how I'm thinking about it obviously the biggest driver in the space that we have here is the pandemic right. So the downgrades were almost entirely hotel and a lease up or fill up infill senior care properties.
So.
If the pandemic sort of subsides dramatically by the end of the second quarter and things begin to return to something closer to what they were pre pandemic I think.
This reversed this trend reverses pretty quickly if the pandemic persists.
Thank you.
There may be more.
Can also tell you sort of leading into the second point, maybe as we have a.
Our lowest pass risk grade.
<unk> increased by about $180 million in Q3 and.
And obviously a lot of that went into our criticized and classified during Q4.
That lowest pass grade in Q4 declined by $50 million. So.
If the pandemic persists I don't see a continued increase at the same rate, but I could see us have some additional credits move into criticized and classified.
Will mentioned, though.
Yeah.
And maybe it just goes back to how you feel about the pandemic, but.
Typically when you're building criticized and classified loans you have maybe a flawed product or a flawed management team or a flawed business model and in this case I don't feel like we have any of that we've got strong management teams strong borrowers strong products appropriately structure.
<unk>.
It really is an impact of.
A result of the impact of the pandemic.
Maybe talk about the primary driver of criteria, what what put something in the criticized category, which is really it's really low.
The increase is really more in the criticized category versus like that's right. Yeah, that's right. So.
If we have a credit that can't make amortizing P&I payments base.
Based off of current operations, then it gets downgraded to either criticized or classified so they've got to be able to make both the principal and interest payments on the amortizing debt.
Okay, Great Rob I appreciate that and Jefferson just one quick follow on on expenses I. Appreciate the outlook just curious if there are any specific initiatives.
Our debt are embedded within that outlook beyond deal related.
Cost saves that.
You expect to continue I would think.
Well you mentioned the the biggest one that you'll see is the $2 million per quarter as we start getting CCI cost savings is that conversion is happening later this quarter.
We had you'll see the follow through on the six branch closures that we had in December.
Late into some marks on cost savings.
Net P T O piece of it we don't think is going to.
Recur so some of that most likely comes back and then from the other kind of the other pieces of cost savings or just a lot of little things, we're trying to automate pieces.
Pieces of consumer lending, but its theres nothing thats name Theres nothing that were.
A big one big major project, that's going to cut a bunch of dollars, but there's a lot of little ones.
That we think are that are ongoing that we think can debt we think can help.
Alright, that's great. Thank you.
Thank you. Our next question comes from the line of Catherine Mealor with <unk>. Your line is now open.
Just wondering day follow up on some of the commentary Jefferson you made on the margin and thinking about the loan yields and deposit costs and my first question is can you give us a sense as to where new loan yields are coming on for your new production versus where the portfolio sits today and then also on the deposit side.
The costs are still low at 17 basis points, how much further room do you think you have there.
Alright, thanks on that and the I guess the loan yield piece is my biggest worry for next year as you know right now you're seeing the loan yields come in at relatively similar to where.
They're going off but.
We're sitting on a lot of cash a lot of banks are sitting on a lot of cash.
Loan growth is necessary to eat into that cash and so I'm concerned that you're going to see increased.
Price competition as we get into next year and I don't know if rich do you have comments on pricing I would say, we've seen a little of that but not a great amount right and so we're not concerned about it at this point.
So thats so.
So that's that's great. So you have that there on the.
On the deposit pricing, we were down at 12 basis points in Q3 of 2015 and that was our low mark and that is our target our interim target now so if rates stay here.
That's my target is try to get that down to 12 basis points.
Okay. That's great day on the securities yield Weird, New securities coming on that 600 million Youre investing a corner right. So.
This quarter. They came on at about 110 basis points out of the 110 basis points might be a little low.
Lower than you were expecting because some of it you're investing we're doing I would call. It alternative liquidity investing so we're buying some pieces.
Of bonds in the 50 to 80 basis point range. This is AAA portions of asset backed securities.
Credit cards and autos. This is two year unless paper.
This is the only only the AAA portion.
So as we are kind of moving we're moving some of those just to be outside of cash before it goes into security. So if you think about the core.
Securities portfolio, which is also growing you're closer to kind of 150 to $1 75.
But thank you okay.
Thank you. Our next question comes from the line of Brody Preston with Stephens, Inc. Your line is now open.
Hey, good morning, everyone.
Good morning.
And a question Jeff.
Back to to mortgage real quick.
So I appreciate the guidance.
I guess the mix of the production Youre seeing in <unk>. I think you were at 50 446 purchase refi is is that a similar mix as what youre seeing in <unk> has anything changed.
So it was a similar mix.
Okay, Okay, and what was what was the gain on sale margin for the fourth quarter.
I have it at 4% right, yes, 4% are we expecting that roll forward into Q1, and then it will we do forecast it to taper down as the year goes on.
Okay. Thank you for that.
What where average PPP loan balances for the quarter.
$1 billion almost even.
Okay, and what would you expect I think you've got a little you know like 646 debt to be somewhere in their left would you expect that to like I guess, where are we in the pipeline of forgiveness is a big chunk of that going to be forgiven in <unk> or how should I be thinking about that Jefferson can I answer that one so let me tell you on this is John.
Second draw on one of the important things that we did was we told our customers that in order for them to submit for a second draw they had to at least have their forgiveness submitted and it was amazing how much came in in the last two weeks. So we have just credit we did essentially $1 1 billion in fundings.
Yeah, United and then we also see side because that was they were under the different model at the time, but anyways. We just crossed the 1 billion Mark and for good forgiveness that has been submitted to the SBA and so we feel really good about that so we're near the end of this one.
Okay.
Would be close to zero and average will be I would think a little less than 500.
Okay, great. Thank you for that one.
The sub debt and Trups redemption that margin impact is just about like one basis point is that alright, Jefferson that's right that's not a not a huge impact those are pretty small transactions.
Okay and the loan growth guide for mid single digit is that ex PPP or inclusive of the PPP Runoffs, it's ex PPP.
Okay.
I guess I'm, having a hard time square and mid single digit.
For something closer to mid to mid to high I guess, just because it hasn't been knocking the ball off to cover in terms of gross and it doesn't sound like you expect that to slow down in the first quarter at all.
I'm being conservative I've been looking across my partners here, because that can be a little bit over optimistic, but it's a little hard to figure out what happens with stimulus.
I'm always a little wary of payoffs companies get bought but we do feel good about the opportunity and the activities. So right now I see the machine keep going and I really feel good about our hires but that's.
That's what that's what I'm, saying right now.
Okay fair enough.
Jefferson on the expense outlook, so $92 million for the first quarter.
Could you just remind us I think the convergence slated for this quarter sometime in February is that correct Thats correct.
So are the bulk of those cost saves are going to come post <unk> is that how I should be thinking about the run rate as we head into the second quarter.
Yes, so youll start seeing some here in the first quarter so maybe.
And you're only getting one youre getting some cost savings starting 12, 31, but full run rate in <unk>.
Second quarter.
And okay.
Okay. So, but we'll also have merit and some other things that will offset some of that.
Meredith.
And then I just got I just have two more Rob I just wanted to ask.
Specifically on the on the senior care credit it's the <unk>.
Second quarter in a row, I think you've called out some deterioration and just looking at it it looks like 30 30 per cent of the portfolio is criticized at this point is is that all still related just to the lease ups taken longer to reach stabilization or have you seen any change in occupancy levels at all.
That's a great question. The short answer is yes, it's related to the lease up properties are stabilized properties are running around 80% occupancy.
So we see it's more of a one off kind of thing if you have a property that develops a COVID-19 sort of comes in and you have some change in occupancy we have seen that in one or two properties.
But we've got 20 properties in the book and what we have seen it we've seen them come back.
Actually quicker than I would have expected in occupancy so the stabilized properties for the most part or are doing well all of them with the exception of two above.
70% occupied.
So.
So I feel good about that and it's really just the lease up.
Staging debt that is creating the challenge.
Okay, Great and then just on the veto.
You guys have had really strong growth there and I know that you know there was a bit of a pullback maybe in the number of participants earlier in the year just given the pandemic. So I wanted to get a sense for you know just broadly what the outlook kind of looks like have you seen competition increase and then as we think about the growth in the business model moving forward.
Is there anything kind of unique about what you all do here that I guess, maybe a focus on a certain niche that will continue to allow you to take market share at an above average rate.
So I'll start with that and see what other people have to to throw in there. So.
In the summer.
We saw.
Competition decreased a little bit when there was fears of liquidity, especially from non bank competitors.
We have seen the competition I would say normalized coming into now.
We have this momentum that we've had for my business perspective is continuing I think it's really due to the strong team we have great great hires. So it's so I think the.
The competitions normalize, but I think we should expect a strong strong growth. There. We are making we are continuing to make strong hires we think we have some market share takeaway.
Thesis happening as well there and we have some budget there for them too.
Hire people and grow that business in this.
This year.
We'd expect a return to selling well, it's where it's pretty far away from our 10% self imposed limit.
But just from.
Ask where do we think about risk quite a bit and we think about diversification quite a bit.
Mortgage coming down as well I would expect to see a greater amount of Nevada phone sales in 'twenty 'twenty, one versus 2020 and I feel like there's part of that question I might not have answer.
Okay.
The other part was just is there anything kind of unique and niche that you focus on within the beta is that sort of allow you to continue to take market share as.
Some other folks step back into the market.
Oh, no what I would say.
Theres no theres multiple niches within the business I think that's one thing that Gary and Mike and team is always focused on having a diversified approach I would just say, it's just I mean, it's a really extraordinarily well run well led company and Gary has got a tremendous reputation in the business.
Mike does as well the technology, which is largely the interfaces are self developed that's the same team that built our P. P. P portal.
Has this created a product that's easy for us.
Employees coming in to manage the process with in sales that can be more successful at novartis.
With the team than others. So it's it's no. One thing is just a lot of little things Theres No particular niche that is.
Is necessarily different.
Awesome. Thank you all for taking my questions I appreciate the time this morning.
Great questions. Thank you.
Yeah.
A C Chris in the queue.
He may have come out.
Hey, Jefferson can you hear me, Okay, welcome Alright, great.
Certainly announce they're worth waiting for.
So my question just with the updated disclosure on the fair value marks.
Mergers what's updated there for 31 okay.
Yes.
And the collection of all balance out.
They're an updated fair value Mark from <unk> saw it in past acquisitions I don't have one I don't have a lot of them were creating that currently for the for the Q. So I'll get back to U K at this time, so I will get back to you on that shortly.
No problem and just a follow up to Kevin's question earlier, when you look at the criticized ratio I'm just curious.
For capital and reserves are still strong.
Things do change and higher criticized happened you know, what's the sort of change in reserves based on that you saw for buffer I presume I don't know if it's necessarily a direct correlation just just curious if you do have some more criticized because of how that impacts reserves behavior.
So.
We would have to look at it youre right theres not a direct correlation.
<unk>.
But.
And we believe we're properly reserved for the losses that were projecting currently.
But there's you know the short answer is there's not a direct correlation there.
Particularly not on criticized because you don't have a specific reserve no yeah definitely not on criticized.
Great. Okay, just wanted to clarify that and we'll take it quarter to quarter.
Thank you very much for all the information this morning.
Thanks, Chris.
That's for a while.
Alright, it looks like that's the last question. So thank you all for being here and thank this team I think it was a great quarter. Thanks for the United team listen and Great loan growth great deposit growth for the revenue. Appreciate everything you all are doing and have a great day. Thank you so much.
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