Q4 2020 Altabancorp Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the Altra Bancorp Q4 earnings Conference call.
At this time all participants lines are in a listen only mode of.
After the speaker's presentation, there will be a question and answer session to ask a question from the session you will need to press the star one on your telephone.
Please be advised that today's conference is being recorded.
You can record of any further assistance please press star zero.
I would now like to hand, the conference over to your speaker today Speaker embark Olson Chief Financial Officer. Thank you. Please go ahead Sir.
Thank you and good morning.
Thank you all for joining us today to review, our fourth quarter and year end 2020 financial results. So on.
Amy This morning on the call of Glenn Williams, President and Chief Executive Officer of all of the Bancorp.
Our comments today will refer to the financial results included in our earnings announcement and Investor presentation released last night.
A copy of our earnings release for presentation. Please visit our website at Www Dot also bancorp dot com.
Our earnings release contains forward looking statements all statements other than statements of historical fact.
Our forward looking statements such statements involve inherent inherent risks and uncertainties many of which are difficult to predict and beyond the control of the company.
We caution readers and listeners that a number of important factors could cause actual results to differ materially from those expressed in or implied or projected by such forward looking statements.
These forward looking statements are intended to be covered by the safe Harbor for forward looking statements provided by the private Securities Litigation Reform Act of 1995.
Forward looking statements speak only as the day they were made and we assume no duty to update such statements, except as required by law with that ill now turn the call over to Lynn.
You marks the happy new year and good morning, welcome to our call.
Ultra Bancorp reported solid earnings for the fourth quarter.
And for all of the 2020, demonstrating the strength of our organization to respond to difficult economic conditions.
Despite the negative effects of the pandemic of near zero interest rates, we reported net income of $11 $1 million for the fourth quarter of 2020 compared to $11 7 million for the fourth quarter of 2019.
Diluted earnings per common share were 58 for the fourth quarter of 2020 compared with 61 for.
For the fourth quarter on a year ago.
For all of 2020 net income was $43 5 million or $2 29 per diluted common share compared with $44 3 million or $2 33 per diluted diluted common share for the same period last year.
For a year earlier, our net income declined by only one 9% year over year. Despite the negative economic effects of the COVID-19, pandemic and interest rates near zero.
This performance speaks to our entire team working together to respond to these negative events and working diligently to solve our clients' financial needs. During this difficult time.
Our return on average assets was one point by of 2% and return on average equity was 12 four 4% for all of 2020, compared with $1 93, and $14 one for for 2019.
As we began the new year of reflected on what our team has accomplished over the past few years, we spent considerable time money and effort to address significant shortfalls in processes controls on technologies. So we could maintain and build market share and enhance the client experience and stay competitive in a rapidly changing industry.
We believe that it's imperative that we improve our ability as a company to execute and to innovate.
It's also critically important that we improve the ownership accountability and skill sets within our culture is we decentralized leadership in order to operate Maury.
Effectively in the larger evolving community banking organization.
To assist us in this day ever endeavor, we've made of three year commitment to retain or we know leadership development and cultural change management company to help us strengthen and build our culture that is accepting of these necessary changes. We've also contracted with the large national commercial banking training organization to sharpen and build world class.
You added technical and consultative banking skills.
We're driven by our passion to enhance our clients' experience with better processes newer technologies and of skilled workforce.
We continue to proactively manage credit and concentration risk to ensure the organization has the capacity and ability to safely grow our asset base.
We also separated the production and credit functions of the organization and improved our underwriting processes and procedures.
Additionally, we promoted and hired qualified credit administrators.
The field roles in our new credit Department.
These credit administrators have thoroughly reviewed our existing portfolio and actively manage the out clients with higher risk profiles.
Profiles than we were willing to assume particularly given that we were nearing the end of the credit cycle.
Lastly.
We continue to transform the organization from a primarily asset based lender that is focused on construction and commercial real estate lending to our business and real estate bank with high touch relationship management professionals.
And support staff, who add value to our clients by providing creative timely helpful business solutions.
The strategy has provided many opportunities for growth among our existing team while also attracting high performing talent from outside the organization.
Recent talent acquisition.
To complement our existing lending professionals include multiple experts from several of regional and national banking institutions.
Keep in mind that while we've been making these major changes our loan originations have exceeded one.
For $1 billion in each of the last three years.
As a publicly traded company, we know that we must adapt and improve to earn our independents every day.
We believe that we of the people processes and systems to safely grow our loan portfolio and expand our market share in Utah.
Over the past three years.
Our total assets have grown organically by approximately $1 $2 billion to over $3 $3 billion of 19, 5% annual growth rate.
Total deposits have grown by approximately $1 $1 billion of over $2 9 billion of 20% annual growth rate over the same period.
The bank has drilling to hold the six largest deposit share position in Utah.
Over the same period.
The aggressively built a fortress balance sheet to weather economic uncertainty we.
We believe our balance sheet strength is reflected in the level of allowance for credit losses held by us and our strong liquidity and regulatory capital position.
These results could not have been achieved without our adaptable client centric associates.
I'm proud of the financial performance of our strategic plan is shown to date, while maintaining a strong balance sheet, we have consistently achieved.
Bob.
<unk> <unk>.
Despite the near zero interest rates and a significant amount of liquidity, we hold our net interest margin is in the 96 percentile in our return on assets is in the 90 percentile among our peers.
We believe the combination of a fortress balance sheet.
Above peer returns and strong stock price currency value places us in a unique position to aggressively grow organically and to compete for mergers and acquisitions throughout the Intermountain West.
With historically low interest rates the market is forcing bank management to look at strategic combinations to improve operating leverage we believe this will provide us acquisition opportunities.
Over the past three years, our tangible book value per share has increased by just under $6 and almost 16% annual growth rate.
We also paid dividends totaling $1 46 per share over the same period when dividends paid of combined with the increases in tangible book value per share our shareholders have earned an annual return of over 20% totaling approximately proximately $140 million on total shareholder return over the same.
<unk>.
We're fortunate to operate in one of the strongest states in the nation from an economic perspective.
Utah's economy has consistently performed better in most states and the nation as a whole.
The unemployment employment rate for the nation was six 7% at December 31, 2020, while the unemployment rate for the state of Utah was three 6%, which was one of the lowest unemployment rates in the nation.
Nationally total jobs decreased by two 4% year over year at December 31, while jobs in Utah were flat. This was the second lowest year over year change of any state.
Despite the negative effects of the path that the pandemic has had on the overall year over year change in jobs in Utah at the end of the year construction jobs actually increased by four 4%, which we believe is the leading indicator of an economic recovery locally.
You talked continues to experience net in migration as individuals and families are able to work from home for an extended period.
We believe that Utah will continue to outperform other states in the nation as a whole lastly, the COVID-19 fatality rate in Utah is the lowest of any state in the nation, which we believe will also mitigate the negative effects of the pandemic.
We have provided substantial financial relief to our clients through participation in government programs as well as our own payment relief programs. We are participating with the second round of the SBA Paycheck protection program, although the demand has been muted compared to the first round.
We believe this is partly due to the stronger economy in Utah.
We will continue to work with our clients to provide financial solutions to assist them on their path to recovery as we all work together to overcome the pandemic.
At the bank funded over $85 million in PPP loans, helping over 333 small and medium sized businesses.
To date, 45% of our first round PPP borrowers have filed for loan forgiveness with the SBA.
And 81% of these have had their loans forgiven as of yesterday, we are proud of the processed $16 3 million in the second round PPP loans for 60 borrowers.
The company also offered the temporary loan payment relief program to borrowers impacted by the pandemic.
We offered payment relief to 415 businesses on 100 by of individuals' totaling approximately $320 million of 19% of total loans excluding the.
PPP loans to address borrower's cash flow challenges to date. The deferral period has ended for 439 borrowers or 87% of loans differed totaling $278 million.
This leaves 81 borrowers with loans totaling $42 million still on deferral. The only three borrowers with small balance loans totaling $185000, who have not made of payment for 30 days or greater after their payment deferment agreement expired, we have entered into another loan payment deferment.
The agreement with two borrowers with balances totaling $8 4 million.
As we finished 2020 and we are pleased with our overall asset quality trends total delinquent loans were only 0.81% of total loans nonperforming assets to total assets was only two 7% at the end of the year.
Total net charge offs for only 14 basis points or $2 4 million for all of 2020.
We finished the year with our allowance for credit losses, as a percentage of total loans at 243%.
If we exclude SBA PPP loans and other government guaranteed balances from the total loans this percentage increases to two 8%.
With continued government relief programs.
Our expectations that will continue to see more government stimulus programs, we anticipate the potential negative credit events will be muted or postponed until the stimulus programs and nevertheless, we believe our allowance is adequate to cover our current expected credit losses.
And we will continue to monitor closely macro on macroeconomic conditions and the overall performance of our loan portfolio to determine if we should adjust our expectations of credit losses.
As we look forward to 'twenty and 'twenty. One we believe that we are well positioned with our fortress balance sheet to take advantage of these market conditions to grow organically and through acquisition opportunities.
The Alta Bancorp Board of directors declared a quarterly dividend payment of <unk> 15 per common share the.
Dividend will be payable on February 16, 2021 to shareholders of record as of February nine 2021 the.
The dividend payout ratio for the earnings for the fourth quarter of 2020 was 25, 5%. This continues our over 50 year trend of paying dividends by the company I will now turn the call back to Mark to discuss more specifically our financial performance for the three and 12 months ended December 31 2020 Mark.
Total assets grew $960 million of 40% year over year to $3 37 billion at.
At December 31, 2020, which is primarily the result of the significant increase in deposits total deposits.
Total deposits increased to $860 million or 42% to $2 92 billion at the end of 2020.
Noninterest bearing deposits increased $320 million or 45% to $1 billion at the end of 2020 compared with the same period a year earlier in the interest bearing deposits increased $540 million or 40% to $1 9 billion.
At the end of the year compared with the same period a year ago non.
Noninterest bearing deposits to total deposits increased to 36% at the end of the year compared with 35% of your earlier.
The increase in total the deposits is primarily the result of both governmental and bank relief programs and of businesses and consumers actively conserving cash to try to counter the negative effects of the pandemic.
Last quarter, we mentioned that we anticipated deposits to decline throughout 2021.
The most recent stimulus program and additional programs proposed by the federal government. We now anticipate that our deposit balances will continue to growth throughout 2021.
Loans held for investment grew $15 million or <unk>, 9% to $1 7 billion at the end of the year compared with $1 six $8 billion a year earlier.
We originated over $1 4 billion in loans during 2020.
However, we are also actively managed out approximately $100 million of loans from clients with higher credit risk profiles that we were willing to assume particularly given our concerns about the economic cycle that we're in we anticipate strong loan growth growth during 2021, given our strong balance sheet and available liquidity.
The allowance for credit losses increased $9 8 million or 31% to $41 2 million at the end of the year compared with $31 $4 million for the same period a year ago. The.
Allowance for credit losses to total loans held for investment was two 4% at the end of the year compared with 187% at December 31 2019.
Nonperforming assets increased $250000 to $9 1 million at the end of the year compared with $8 8 million.
December 31, 2019, nonperforming assets to total assets declined to 0.27% at the end of the year compared with <unk>, 37%.
On a year earlier cash.
Cash and liquid investment securities grew $942 million or 152% year over year to $1 $5 6 billion.
Or 46% of total assets at the end of the year compared with 26% at December 31 2019.
Shareholders' equity increased $38 8 million or 11, 7% to $371 million at the end of the year compared with $332 million of your earlier.
The increase resulted primarily from net income earned during the intervening periods share.
And accumulated other comprehensive income, resulting from changes in the fair market value of the investment securities available for sale and.
Reduced by cash dividends paid to shareholders of.
The company's leverage ratio was 10, 4% at the end of the year compared with 12, 7% of your earlier.
For the risk based capital ratio was 19, 2% at the end of the year compared with 18, 4% a year ago.
Decline in our leverage capital ratio despite of double digit growth in the equity is primarily the result of significant deposit inflows for normal operations and from governmental relief programs.
Turning to the income statement pretax pre provision income was $14 5 million for the fourth quarter compared with $16 3 million for the same period a year earlier for the year pretax pre provision income declined $4 8 million or seven 5% the $60 million compared.
Compared with $64 8 million for the same period a year ago.
The decline in pre tax pre provision income was primarily the result of lower net interest income and higher non interest expense offset by higher noninterest income primarily from mortgage banking activities.
Net interest income decreased $2 2 million or eight 1% to $25 million for the fourth quarter compared with $27 million for the same period a year ago. The decrease is primarily the result of net interest margins narrowing of 152 basis points to 318% for the same comparable periods.
The narrowing of net interest margin is primarily the result of the federal reserve, reducing benchmark rates to almost zero and an increase of the average amount of lower yielding cash and investment securities held by the company stemming from average core deposits, increasing $747 million or 36% for the same respective period.
Average cash and investment securities increased $816 million for 136% to $1 $4 billion.
For the three months ended December 32020, cash and investment securities as a percentage of total average assets.
Average interest, earning assets increased to 45% for the fourth quarter compared with 26% of your earlier.
Yields on interest, earning assets declined 171 basis points to three 3% for the fourth quarter compared with five 9% for the same period of your earlier.
The yield on our loan portfolio declined 80 basis points of five 4% for the fourth quarter compared with six 2% for the same comparable periods.
The yield on cash and investment Securities declined 100 basis points to 1% for the fourth quarter compared with 2% for the same period a year ago.
Total cost of interest bearing liabilities declined 33 basis points of three.
Three 4% for the fourth quarter compared with <unk>, 67% for the same period a year earlier, our total cost of funds declined 22 basis points to two 2% for the fourth quarter compared with zero point for 4% for the same period a year earlier.
Acquisition accounting adjustments, including the accretion of loan discounts on fair value amortization added three basis points of net interest margin for the fourth quarter.
I think it's important to highlight that if we were to deploy fully of the excess liquidity on our balance sheet, meaning.
Many of the cash and investment Securities were only 15% of our total balance sheet and we held these funds and loans at our current rates. Our net interest margin would have exceeded for 2% for the fourth quarter.
For all of 2020 net interest income decreased $6 $2 million of five 6% to $104 million comp.
Compared with a $110 million for all of 2019 the.
The decrease was primarily the result of net interest margin narrowing of 127 basis points to 379% for the comparable periods.
For all of 2020 of our total core deposits grew $492 million or 25% to $2 5 billion.
Card with $2 billion for all of 2019.
Because of the of significant increase in deposits cash and investment securities increased $553 million or 113% the $1 billion for all of 2020 compared to the $488 million for all of the 2019.
For all of the 2020 of the percentage of average cash and investment securities to total average interest, earning assets increased to 38% compared with 22% for all of 2019.
For all of 2020 yields on interest, earning assets declined 143 basis points to for all 5% compared with $5 four 8% for all of 2019 the.
The yields on our loan portfolio declined 80 basis points to 565% for all of 2020 compared with $6 four of 5% for all of 2019.
The yield on cash and investment Securities declined 69 basis points to 145% for all of 2020 compared with $2 one 4% for all of 2019.
Total cost of interest bearing liabilities declined 27 basis points, the zero point for 4% for all of the 2020 compared with zero point set of 1% for all of 2019.
Our total cost of funds declined 18 basis points to 0.28% for all of 2020 comparable to the zero point for six for all of the 2019.
Acquisition accounting adjustments, including the accretion of loan discounts on fair value amortization added seven basis points to net interest margin for all of 2020.
Again, I think it's important to note that if we had fully the.
For the excess liquidity on our balance sheet for all of 2020 again, meaning the cash investment securities were only 15% of our total balance sheet and we held these funds in loans at our loan rates for all of the 2020, our net interest margin would have exceeded four 7% for all of the 2020.
Moving to provision for credit losses, we did not record any provisions for the fourth quarter. This compares with $1 2 million for the same period, a year earlier as calculated under the prior.
Herd loss model the provision for the current quarter reflect the expected lifetime credit losses based on current economic conditions on the potential effects from the forecasted deterioration of economic metrics due to the pandemic.
The decrease in provision for credit losses in the three months ended December 31, 2020, compared with the same period of your earlier is primarily due to three <unk>.
$33 million or <unk> 70 per cent decline in loans individually evaluated for impairment to $14 $2 million and the related allowance for impairment of $9 4 million.
Offset by a $37 million two 2% increase in loans collectively evaluated for impairment to $1 7 billion and the related allowance of $31 $9 million.
We incurred net charge offs of zero point $3 million for the fourth quarter compared with net recoveries of $0 2 million for the same period a year ago.
For all of 2020 provisions for credit losses were just $2 8 million compared with $7 million for the same period of your earlier.
As calculated on the prior on the incurred loss methodology.
For all of 2020, we incurred net charge offs of $2 4 million compared with net charge offs zero point of $8 million for all of 2019.
Our overall asset quality trends have improved throughout 2020 on charge offs across our portfolio remained low relatively low.
Continued stimulus programs announced by the federal government, we anticipate that a deterioration of asset quality trends will be delayed until the government stimulus and loan payment relief programs and.
We believe the allowance for credit losses is adequate to cover our current expected credit losses. However, we will continue to monitor closely macroeconomic economic conditions and the overall performance of our loan portfolio of determined if we should adjust our expectations of.
Of credit losses non.
Noninterest income increased $2 7 million or 71% the six 5 million for the fourth quarter compared with $3 8 million for the same period a year earlier.
The increase was primarily due to a $2 5 billion or of 153% increase in mortgage banking income of $4 1 million compared with $1 6 million for the same period, a year ago total mortgage loans sold increased $61 million for 99% to 122.
For the fourth quarter compared with the same period a year ago. We also experienced experienced wider margins on loans sold as we improved our overall loan pricing on such loan products.
For all of 2020, noninterest income increased $7 $2 million of 48% to $22 million.
Compared with $15 million for all of 2019.
The increase in noninterest income was primarily due to a $5 $9 million or 88% increase in mortgage banking income and a one for $4 million gain on the sale of investment securities.
Total mortgage loans sold increased $120 million for.
The 54%.
$341 million.
For all of 2020.
Our mortgage banking division in 2020 provided pre tax income of $5 million for.
For the year. This is the first time that our mortgage banking division had positive results in a year.
We expect to continue to see improving noninterest income as we expand our mortgage banking operations, both in the Utah and surrounding states and reap the benefits of significant investments on the technology used in our mortgage operations that improves operational efficiency efficiency and enhances our clients' experience. In addition, we expect to see improved fee income.
From Treasury services, as we rollout of new commercial Treasury management mobile application to our commercial clients this quarter.
Noninterest expense was $16 $8 million for the fourth quarter compared with $14 $6 million for the same period a year earlier.
Our efficiency ratio was 53, 7% for the fourth quarter compared with 47, 3% for the same period a year ago.
For the year noninterest expense was $66 $1 million compared with $63 million for the same period a year earlier on.
Our efficiency ratio was 52, 4% for the year compared with 48% for this.
Same period a year ago.
The increase of noninterest expense for the three and 12 months ended December 31 was primarily the result of higher salaries and associated benefits, resulting from higher incentive payments, particularly in the mortgage banking division.
In addition, we incurred higher data processing expense.
Due to investments made in new technologies for the mortgage banking.
And commercial banking divisions. This includes costs for our cloud based mortgage and commercial loan origination applications. In addition data processing costs included automated processes for smaller ticket commercial loan applications costs for the implementation of the Salesforce CRM solution.
Costs for our new cloud based commercial client Treasury management solution and costs for new cloud based construction budget draw and inspection management solution for both commercial and consumer clients. We expect to continue to make significant investments in new and new technologies to enhance the overall client experience and to empower our clients to transact more businesses on.
On our mobile platforms to lower the overall cost of our operating platform and to become more scalable as we aggressively evaluate acquisition opportunities.
We anticipate overall interest rates to remain near zero for the foreseeable future as the results. We continued to review our overall operating cost of to determine how we can better leverage our platform, while retaining our high touch client experience, we anticipate making changes over the next several quarters to improve our operating leverage income tax expense was $3.
$5 million for the fourth quarter comparable free for the same period a year earlier the effective tax rate was 23, 9% for the fourth quarter compared with $22 five for the same per year ago for the year income tax expense was $13 7 million compared with $13 $5 million for the same period earlier for the year of the effective tax rate was 24% compared with 23 for.
<unk> for the same period a year ago.
The call back to Len.
Mark.
On the catch your breath.
2020 was a challenging year for all of US I'm very proud of our team and how we've responded to the pandemic.
Focused on addressing our clients' needs during this unprecedented time.
Pleased with the financial performance, we achieved this year despite the headwinds from the pandemic of near zero interest rates.
The build a fortress balance sheet that will withstand the negative effects.
Of an economic downturn or a pandemic as we look forward to 2021, we've put into place the people processes and systems that will allow us to safely grow our balance sheet and expand our market share on one of the strongest economies in the nation.
As I mentioned before we earn our independence every day by the way our team executes our strategic plan I believe we made good progress in net we are well positioned to succeed. Thank you. So much for joining us today on at this point I will turn it back to the moderator to open up for analyst questions.
Thank you as a reminder to ask the question you'll need to press star one on your telephone and kind of data.
For the pound key please standby, while we compile the Q&A roster.
You have a question from the line of David Feaster with Raymond James Your line is open.
Hi, everybody thank David.
Hi, David.
Hey.
Growth was stronger than expected of all grew.
The C. Despite of challenging backdrop.
And I appreciate the commentary on in the release talking about focusing on a more aggressive growth going forward just curious the strategy to deploy the excess liquidity into loans and accelerate the growth whether it's the is it the new hires that you've mentioned the disorder called the growth or the new technology investment, allowing for more origination capacity.
And just just thoughts on the growth trajectory on the strategy for it.
David that's of Great question and actually the answer is the combination of pretty much everything you brought up.
We've spent the last three years trying to get the free.
Underwriting process management system in place where they are.
We've also done the same thing on the loan origination system on the automation to make the process consistent smoothed manageable measurable that is now in place.
Then over the last two months, it's been incredible we had the.
We've got like 40 positions, we had opened.
50% of those are new adds to staff to support the growth in its adds from both the commercial banker perspective to compliment who we have already.
And in the last month of the half we've added.
I'm not sure of the exact number seven to 10.
People, who have come to us from other institutions and broad portfolio as of the pipelines with them.
So on.
Our current lending pipeline as of this week is 30% higher than its been at any time since we've been here. So we're very.
It's been of Berry.
Kind of a slow consistent process building for that but safety is got to be first in this business as you know and those processes are in place now we've been fortunate to be able to.
The DN organization of people believe in and have been joining us.
One of the individual or a new leader in Salt Lake was the.
The prior head of commercial banking for a large org.
Organization for a couple of states and the <unk>.
He joined US just two weeks ago and already has.
On the eight figure pipeline, so we're pretty excited about where what the future looks like right now.
That's terrific I guess just in light of the obviously the challenges in a lot of payoffs and pay downs, what kind of growth trajectory do you think you keep on.
Is this the high single digits or is even the the low double digits of possibility here.
I'll, let you run your models on that I will tell you in the past we've talked about the numbers and we're pretty confident about those numbers.
Okay and then just.
But what about the margin in light of the the likelihood for additional liquidity build juxtaposed with the acceleration in loan growth and it sounds like Youre, saying you stayed pretty sort on the securities front has been non trochlear exclusive of the PPP.
So we expect core NIM expansion.
Just in light of the improved earning asset mix as we look forward.
It'll take a little while to get that asset mix completely changed and we're not necessarily short on those securities, but they are income producing securities. We've got the Mark can speak to the yes no.
David we are receiving about $50 million a month in.
Additional cash from from the Securities that we purchased.
We purchased <unk>.
Amortize in the security specifically for that reason, we wanted the cash to come back to us so that we could redeploy it in loans as we are ready to turn on the spigot there. So.
We're excited about that and frankly to the extent that our.
Loan growth is stronger than we anticipated right.
Right now we have of $15 billion.
Unrealized gain in the portfolio would be.
Would love to sell some of that.
If the growth is there. So we will look at that the other thing that we're doing David is is that our mortgage banking group continues to grow at rates higher than what we anticipated to the extent that the.
The beat their budget what.
With our volumes.
We've worked with them to try to retain as many of the of.
The loans that we're comfortable with on balance sheet to help grow our loan portfolio as well and provide a better return on you know, obviously going out and buying government guaranteed securities when you're originating here. It's just a lot cheaper to do it if we cut out the middleman. So that's our thought as well.
That makes a lot of sense and then just.
On the commentary about driving the operating leverage that you mentioned just.
And doing so while retaining the high touch the client experience you know you've done a great job investing.
The stay ahead of the competition with <unk> on the other automation initiatives, but as we look forward kind of contemplating the additional investments that you've talked about inflationary pressures, but opportunities to reduce costs. I mean, how do you think about operating leverage as it is it more.
Cost reductions or really leveraging your expense base for revenue growth.
David it's more leveraging the platform with the growth of that then.
And then cost saves.
We want to get more efficient and to the extent, the we're able to do that and.
And that.
Happens through growth, that's definitely the best way to do it but we'll have to evaluate that overall, obviously, we are not going to.
Make cost reductions in the front facing areas.
That's our bread and butter and Thats critical but.
We do want to be efficient on the backend and frankly, we want of growth. So that we got we just grow that platform a little more.
Slowly.
To speak to your point of little bit more David.
The expense in the technology growth, we implemented in the last few years.
It's made us scalable so even even makes the attraction of.
Of either picking up of portfolio lift out of the acquisition.
We don't need to add back room people to do that we're pretty well equipped with the technology. So as Mark stated, we've just got to leverage that and we'll continue to look.
And compare ourselves to the industry on on those costs, but.
It's a lot more fun to grow yourself into prosperity vs save yourself into it.
And frankly, David we were fortunate that we had implemented and it's you know when we had because of the with the pandemic that gave us the opportunity to be able to use that.
Use of our low pass anywhere.
Whether at home or with our clients and not Miss a beat so obviously.
<unk>.
The more that we spend on technology to make it easier for everybody I think of the better off we're going to be.
Absolutely that's great color thanks, guys.
Thanks, David.
Although the question from the line of Andrew Liesch.
Piper Sandler your line is open Sir.
Hey, good morning, guys.
Andrew.
I think Mark you referenced maybe you managed out of $100 million of loans last year of some higher risk profiles.
Where does that standard theres still more of that to come or do you feel comfortable with the portfolio right now and it's just going to be the growth from here on out.
Yes, we're comfortable with where we're at it should be growth from here on.
We spent a lot of time looking at the portfolio.
And Judd curriculum, our chief credit officer, and his team have done a fantastic job and cleaned it up and making sure that we're ready to expand and not have to worry about those credit issues. So no no we're done and we're ready for growth.
Great great.
And then just on on the optimism around non interest income and mortgage.
The growth for like the there's a lot of it going to be from market expansion and just the expanding your operations because obviously the seasonal factors.
I don't know if anybody is expecting the same refi volume that we saw last year.
So is it really just from the market expansion that is going to drive that.
Yes, that's the.
That's a great point actually the mortgage group has been built Andrew to be able to expand and contract based on market demand.
I agree with you that we'll probably see some shrinkage at some point, we're going to have to I would think of in the refi market. The flip side of that in Utah and the builder the cooperation with our builder Finance group.
In the in migration of the area, we still have an above average demand and opportunity for the new.
The new business in the in the mortgage arena, but that said the other part of our non interest income expansion opportunity really is through leveraging the treasury management system, that's going into place this quarter, it's not been measured in the past we spent the last year and a half getting that put in place.
That's ready to go and frankly, the new bankers that have joined us are a little bit more up tier from a market perspective from a size of loans the demand those treasury management services. So having those in place now with the bankers coming on at the same time, we think there's going to be some significant.
Treasury management noninterest income growth as well.
Yes, just to add.
True when you look construction jobs in Utah are up 5% year over year, even during the pandemic.
We've got inventories at all time low so so we believe there's going to be a lot of opportunities.
From the from the mortgage side.
With construction as well as term financing.
Okay very good.
That's encouraging to hear thanks.
Thanks, so much.
The covered all my other questions.
Thank you Andrew.
Once again, if you'd like to ask the question. Please press star one on your telephone keypad the.
Question from the line of generality of attaining your line is open.
Hey, guys good morning.
Jonathan.
Hope you guys are doing well interesting times actually I guess, Andrew basically asked my question on fee income I mean, I guess, just maybe just to say it another way on given your comment in the press release about improving net interest non interest I'm, sorry, improving non interest income.
So is it I guess just to be clear is it your expectation that you can that you think you can increase noninterest income year over year in 'twenty one.
Yes. It is.
It is okay, and again that would be the new Treasury management and.
Some combination of mortgage I guess.
Yeah. This is the time of the year, where you normally see more you start to decline and we haven't seen it. So we're we're hopeful at least for the near term in that area to continue at a at the record record breaking pace.
Okay.
Sure.
No. That's helpful guys. Thank you very much.
Thank you John.
Again, if you'd like to ask a question. Please press star one on your telephone keypad.
There are no further questions at this time presenters you May proceed.
Great. Thank you very much and again happy new year to all who have joined US. We appreciate the support and look forward to a fantastic 2021. Thank you so much.
Goodbye.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
[music].
Good day.