Q1 2021 Altabancorp Earnings Call
Good day on thank you for standing by.
Welcome to the <unk> Bancorp Q1 earnings call.
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I would now like to hand, the conference over to your Speaker today, Mark Olson Executive Vice President and Chief Financial Officer.
Thank you. Please go ahead Sir.
Thank you and good morning.
Thank you for joining us today to review our first quarter 2021 financial results. Joining me. This morning on the call is Len 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 or presentation. Please visit our website at Www Dot Bancorp Dot com.
Our earnings release contains forward looking statements all statements other than statements of historical fact are forward looking.
Such statements involve 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 $19 95.
Forward looking statements speak only as of the day. They are made and we assume no duty to ups.
Such statements, except as required by law.
On the call over to Lynn.
Thank you Mark.
Good morning, and welcome to our call. We appreciate your interest investment and feedback.
For an incredibly interesting and challenging year in 2020, we're pleased to start up year with solid results all of our branch lobbies and drive up windows have been safely reopened.
And we are starting to bring our employees back on the remote work to our operational facilities.
In 2020, we provided substantial financial relief to our clients through participation in government programs as well as our own payment relief programs.
We continue to offer additional funding from the second round in the SBA PPP program.
While our payment relief programs are substantially <unk>.
<unk> 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 negative effects of the pandemic.
We continue to receive significant funds for our clients related to financial relief programs.
From us and government agencies as well as normal organic growth.
As a result, our deposits have grown by over $1 billion.
Year over year, which represents a 49% increase from last year.
This unusually high growth rate as reflected in our loan to deposit ratio declining to 56% at the end of the first quarter.
While core deposits on our natural resources that allow us to grow it has been challenging to quickly and safely deploy this additional liquidity on.
Our low yielding investment securities portfolio has grown over $920 million for 160% from the prior year, which has negatively impacted our overall net interest margins.
We're hopeful that the first quarter was the peak for our investment securities portfolio and anticipate that we will start seeing the balance of the decline as our loan portfolio continues to grow in future quarters.
Loans held for investment increased over $154 million or nine 4% for first quarter compared with the prior year for.
For the past couple of years, we've been we have completed several initiatives to improve the overall credit quality, including low are lowering our loan concentrations. Both in terms of product type and asset class tightening our overall underwriting standards, improving our sales on credit processes and enhancing.
Knowledge, you used in our commercial lending space.
With these initiatives substantially complete our existing and recently hired commercial lenders have the tools and processes in place to aggressively on safely grow our loan book.
The bank generated over $465 million on low volume in the first quarter.
For over one 8 billion on an annualized basis each of our divisions retail banking commercial banking and mortgage banking generated over $100 million in new volume on the first quarter.
Our unfunded commitments grew by $176 million for 30% to $769 million at March 31, compared to a year ago.
And our 90 net our 90 day loan pipeline has grown by $200 million or 61% to $530 million of March 31, compared with the same period a year earlier.
Our business verticals Homebuilder finance and investment real estate are fully staffed on generating significant loan pipelines on volume.
The Utah economy looks strong with unemployment at two 9% at the end of the quarter compared with 6% for the nation.
Utah experienced just under 1% year over year growth in total jobs, while total jobs declined by four 4% nationwide.
Fastest growing state in the nation over the past decade at 18 for.
4% based on the U S Census Bureau.
As a result of the substantial completion of our strategic initiatives and the strong Utah economy, we anticipate achieving high single digit loan growth for all of 2021.
We reported net income of $9 4 million for the first quarter of 2021, compared with $10 8 million for the first quarter of 2020 day.
Diluted earnings per common share were <unk> 50 for the first quarter of 2021, compared with 57 for the first quarter of 2020.
Our return on average assets was 113% and return on average equity was 10, 3% for the first quarter of 2021, compared with one 8% and 13, 5% for the first quarter of 2020.
As stated earlier.
Substantial client financial relief was provided to our clients in 2020 through participation in different programs as well as through our own payment relief programs.
We participate in and continue to participate in the two rounds of the SBA paycheck.
Protection program under round one of the program, we funded 333 loans totaling $85 million.
Thus far we are.
241.
For giving us applications on balances balance was totaling $62 million with the SBA.
We've received loan forgiveness on 228 loans.
Total of $56 3 million or 67% of all SBA PPP loans funded.
We have not received for the denial on any application submitted for ESP for loan forgiveness.
And around two of the program. We funded we funded 172 loans totaling $29 5 million.
Other bank also offered temporary loan payment relief to borrowers impacted by the COVID-19 pandemic.
We offer payment related to 445 businesses on a 118 individuals totaling approximately $345 million.
To address borrowers potential cash flow challenges to date. The deferral period has ended for 556 borrowers are 99% of the loans differed totaling $329 million.
Only three borrowers with balances totaling $135000 have not made a loan payment for 30 days or greater after their deferment agreement expired.
We have entered into further loan payment deferment agreements with five borrowers and balances totaling around $10 million for them, which are on hotel properties with owners, who have extensive experience in managing hotels on was strong net worth on solid financial performance.
Our overall asset quality trends have performed better than expected given some of the negative effects of the pandemic.
Total delinquent loans were only $9 $2 million of just five 1% of total loans nonperforming assets were $7 3 million for 0.21 percentage of total assets at the end of the first quarter.
Total annualized net charge offs were only five basis points or $200000 for the first quarter.
Our allowance for credit losses was $41 million for two 3% for total loans.
While our allowance for credit losses is significantly higher than our peers. This is not because of underlying credit issues of our portfolio, but rather the intentionally conservative nature of our organization.
If we exclude PPP loans and other government guaranteed balances from the loan totals this percentage increases to two 5%.
Total assets growing by over $1 billion for.
For 42% year over year to $3 $5 2 billion at March 31, 2021, we've become the 12th largest bank headquartered in the Intermountain West, which we define as Utah, Idaho, Colorado, Arizona, Wyoming and Montana.
Salt Lake City is the center of this region with a delta hub at the Salt Lake are for our Salt Lake City Intermodal transportation terminal.
State has six universities with over 25000 students, which helps to build a well educated workforce.
Linkedin recently analyzed the change of address for individuals who use their service and identified Salt Lake City as having has been to see what the biggest gain in net new arrivals with a 12, 3% increase during the pandemic.
Lastly, 96% of all industrial Bancshares headquartered in Utah. This offers a great pool of financial professionals for us to tap as we continue to growth.
We have aggressively built a fortress balance sheet to weather economic uncertainty and we believe our balance sheet strength is reflected in our level of allowance for.
Credit losses are strong liquidity.
And regulatory capital position. These results could not have been achieved without our adaptable.
<unk> centric associates on <unk>.
Proud of the financial performance of our.
Our strategic plan is shown to date and even more proud of our resilient bankers.
While maintaining a strong balance sheet, we have consistently achieved above peer returns.
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 and safely grow organically.
And to be able to compete and posture well on the M&A business throughout the Intermountain West.
We've taken decisive steps over the last several years to put all the bank Corp. On a firm course for success and generate value for all of our stakeholders.
We have significantly increased our commercial retail on mortgage banking capabilities by providing growth opportunities among our existing exceptional team and by attracting high performing outside talent with significant significantly invested in new information technology to allow us to scale our business operations.
I'm grateful for our talented our talented and dedicated directors, who provide strong leadership and oversight, while always keeping all stakeholders interest front and center for.
Word of directors declared a quarterly dividend payment of <unk> 15 per common share the dividend will be payable on May 17, 2021 to shareholders of record as of May 10 2021.
The dividend payout ratio for earnings for the first quarter of 2020 was 30% which continues the company's over 50 year trend of paying dividends I will now turn the call back over to Mark to discuss more specifically our financial performance for the three months ended March 31 2021.
Thank you and pre tax pre provision income declined for two 4 million.
It declined to $4 million to $12 for.
$4 million for the first quarter of 2021, compared with $14 8 million for the same period a year earlier.
The decline in pre tax pre provision income was primarily the result of a $3 $6 million decline in net interest income due to the federal reserve, reducing benchmark rates to almost zero and an increase in the average amount of lower yielding cash and investment securities held by us.
This decline was offset by $1 6 million increase in noninterest income, resulting primarily from mortgage banking income.
The decline in net interest income is primarily the result of our net interest margin narrowly 188 basis points to 291% for the same comparable periods offset by interest, earning assets, increasing 1 billion or 44% for the same respective periods.
The yield on total loans declined to 89 basis points to 532% for the first quarter of 2021 compared with $6 two 1% for the same period a year ago year.
Year to date average loan increased $59 million for three 5% to $1 74 billion.
For the first quarter compared with the same period a year earlier.
The yield on investment Securities declined 184 basis points to <unk>, 67% for the first quarter compared with the same period a year ago.
Year to date average investment securities increased to $882 million or 177% to <unk> three 8 billion for the first quarter of 2021 compared with the same period a year ago.
Yields on investment Securities were negatively impacted by a significant increase in prepayment rates on mortgage backed securities due to borrowers refinancing their mortgages to lower interest rates.
In particular, we experienced significantly higher prepayment rates than modeled in Ginnie Mae Jumbo pool with coupons of two 5%.
The higher prepayments on these securities caused us to earn negative yields on these Q tips as well as the amortization of premiums paid on these securities significantly increased due to the higher prepayments.
The address some of the higher prepayment rates, we rebalanced, our mortgage backed securities portfolio by selling a $131 million in securities with the highest prepayment rates at the end of the first quarter and recording the gain on sale of <unk> $2 million.
This sale was offset by the purchase of $150 million on mortgage backed securities at par.
We expect the yield on our investment securities portfolio will be in excess of 1% on the second quarter of 2021.
And the yield on our investment Securities portfolio remained at 1.15% as earned in the prior quarter. We would have recorded an additional $1 7 million in interest income, which would have provided another <unk>.
Net income for the quarter.
Our net interest margin would have been over 4%, even with the federal reserve, reducing benchmark rates to almost zero and a significant reduction in yield on our investment securities portfolio Newark to higher prepayments rates, if we're only holding 15% of our interest earning assets and lower yielding.
Cash and investment Securities, which is our normal level of liquidity.
And the rest of the excess liquidity withheld in total loans at lower interest rates, we yielded in the first quarter.
This highlights that the most negative effect of our net interest margin is the significant excess liquidity. We are currently holding.
We believe that the net interest margin we earned in the first quarter is that the narrowest level, we will experience in the foreseeable future.
Cost of on.
Of interest bearing liabilities declined 32 basis points to 0.32% for the first quarter compared with <unk>, 64% for the same period a year earlier, our total cost of funds declined 21 basis points for <unk> to 1% for the first quarter compared with zero point for 2% for the same period a year earlier.
Acquisition accounting adjustments, including the accretion of loan discounts and fair valuation on time deposits added four basis points net interest margin for the first quarter.
Moving to provision for credit losses, we did non recorded provision for credit losses for the first quarter compared with <unk> 7 million for the same period a year earlier.
A decrease in provision for credit losses is due primarily to a $9 3 million or 46% decline in loans individually evaluated for $10 8 million.
On the related allowance of $6 5 million.
Offset by a $160 million or nine 8% increase in loans Colquitt collectively evaluated to $1 7 billion and the related allowance of $34 $5 million.
In card net charge offs for zero point $2 million for the first quarter compared with net charge offs on zero point $3 million for the same period a year ago.
Our overall asset quality trends have improved throughout 2020 and into 2021, our charge offs across our portfolios have remained relatively low with continued stimulus programs provided by the federal government as well as us.
And the Utah economy, we anticipate that the impact of the pandemic to our loan portfolio has been significantly mitigated.
We believe our allowance for credit losses is adequate to cover our current expected credit losses. However, we will continue to monitor closely macroeconomic conditions. The overall performance of our loan portfolio and our loan growth to determine if we should adjust our expectations for credit losses.
Noninterest income increased $1 6 billion for 44% to $5 4 million for the first quarter compared with $3 7 million for the same period a year earlier. The increase was primarily due to a $1 1 million or 63% increase in mortgage banking income for $2 $8 million.
A total of $1 7 million for the same period a year ago.
Total mortgage loans sold increased $68 million or 135%.
$118 million for the first quarter.
Compared to the same period a year ago.
We also experienced wider margins on loans sold as we improved our loan pricing on such loans.
We also retain some single family residential loans generated on the mortgage banking division on our balance sheet in the first quarter.
We continue to see improvement improving noninterest income as we expand our mortgage banking operations, both in Utah and the surrounding states and reap the benefits of significant investments in technology made on our mortgage operations, which has improved operational efficiency as well as enhanced our our clients' experience.
In addition, we expect to see improved fee income from Treasury services pardon.
Pardon me as we rollout our new commercial Treasury management mobile application.
So our commercial clients in the second quarter.
Noninterest expense was $16 5 million for the first quarter compared with $16 2 million for the same period a year earlier.
Our efficiency ratio worsened for 57, 5% for the first quarter compared with 52, 2% for the same period a year ago.
The worsening of our efficiency ratio is primarily there so of lower net interest income.
The increase in non interest expense for the three months ended March 31, 2021 was primarily the result of higher data processing expenses due to the investments made in new technologies for the mortgage banking division.
Debt technology investments made in the commercial banking division, including costs for the for its card based commercial loan origination application Encino.
As well as automated processes for smaller ticket commercial loans title also express.
Cost for implementation of Salesforce CRM solutions cost per new cloud based commercial client Treasury management solution and costs for our new cloud based construction budget draw and expenses inspection management solution for both commercial and consumer clients.
We expect to continue to make significant investments in new technologies to enhance our clients' experience and empower them to transact more business or more business on the Companys mobile platform to lower the overall cost of our operating platform and to become more scalable as the company continues to grow.
The increase in noninterest expense was also the result of higher salaries employee benefits.
<unk> from annual Merit increases and higher incentive payments, particularly in the mortgage banking division.
In addition, the company did not incur FDIC premium payments for the first quarter of 2020 due to the application of the small bank assessment credit from the FDIC.
Lastly, the company incurred approximately <unk> $2 million in onetime additional legal costs during the first quarter.
We anticipate overall interest rates to remain near zero for the foreseeable future and the results. We continue to review our overall operating cost to determine how we can better leverage our platform, while retaining and improving our high touch client experience, we anticipate making changes over the next several quarters to improve our overall operating leverage.
Income tax expense was $3 million for the first quarter compared with $3 4 million for the same period a year earlier.
<unk> tax rate was 24, 1% for the first quarter compared with 23, 9% for the same period a year ago.
On the call back over to Lynn.
Thank you Mark.
2020, with a unique and challenging year for all of us and I'm proud of our team and how we started 2021 with strong earnings performance on significant growth both on our deposit and loan portfolios.
We put the right people in place improved our processes and enhanced our systems all of which will allow us to safely grow our balance sheet and expand our market share in one of the strongest economies in the nation.
We made good progress and that we are well positioned to succeed.
I appreciate everyone joining us and at this point I'd like to turn it back to the moderator Chris for.
For questions.
Thank you at this time I would like to remind everyone in order to ask a question for stars on the number one on your telephone keypad.
The first question comes from David Feaster of Raymond James Your line is open.
Hey, good morning, everybody.
Good morning, David how are you hi, David.
Well very well.
It was great to see the growth that you guys put up on the quarter quite frankly.
It's a huge number and you all are doing exactly what you said you guys were going to do.
Just wanted to get a pulse of where some of this growth came from I mean, it is broad based but how much of it do you think is from an improved economic outlook, giving clients more confidence to invest versus new client acquisition and just a more effective sales effort.
It's a combination of everything but.
One of the interesting parts, where this growth is coming from as we've talked on prior calls we've had a lot of success in hiring talent a lot of that talent has brought.
Pipelines with them and immediately began to be productive so.
The mortgage.
<unk> continues to grow and do well, but we also grew in our commercial banking and our branches and.
In our.
Real estate verticals.
A significant portion of it was.
Real estate, but you don't even see that in the totals yet as I mentioned in the dialogue that we have.
Increased on.
Our.
Unutilized or at least on our loans are available that.
But have not been drawn up by drawn up yet by $175 million first quarter is usually low on that so we anticipate continued growth just from those portfolios as well so.
A good portion of it is real estate stuff, we've done historically, but we cleared up the game a little bit and we're working a little bit higher quality stuff.
David I think the other the other thing that.
I think has helped us.
On a year now into <unk>.
<unk> and <unk>.
On the process itself I think has become much more efficient and effective.
Whether it's the sales process or just from from applications to close it's just much more efficient to get the loans completed and that certainly has helped as well.
Okay. That's helpful.
And then.
It sounds like really the key here is getting the margin back in profitability is just the excess liquidity weigh in on it in the short run.
Just need to put on earning assets and appreciate the guidance on the loan growth I would argue it seems pretty conservative just given the strength in the first quarter and in the pipeline that you guys have which are pretty strong.
I guess, how do you think about the opportunity to put on earning assets I think it makes all sense in the world to attain more.
For more of these mortgages.
Thank you willing to compete more on price.
All in rate in order to.
To drive more more growth what do you think you can hold the line there.
And just.
Any puts and takes on the margin it sounds like this is a trough, but just any thoughts on those.
The margin on the loan yield was around.
30, Yes March right around five three was the loan yield for the quarter, it's down a little bit from where it was a year ago, but it's only there. So we don't necessarily compete on price. We are certainly fair and we've taken into consideration, but that's not our driver.
We've got a pretty talented group of bankers that provides value speed and constant follow up and a lot of those relationship with debt enhanced and strengthened over the last year.
Other items that we brought in as a CRM process for <unk> sales force. So it's a lot easier for the.
For the bankers too.
Identified follow up that we just got better pump technology in place to stay on top of these things as well. So I appreciate your comments on the.
For loan growth conservativism, but you've known us long enough by now no we're not going to stretch.
Yes.
And then I just wanted to kind of follow up on the technology.
And the hiring market I guess.
You've done a great job, attracting new talent you highlighted the opportunity to continue to grow the bench in your market.
How conversations are going whether you've seen an increase in conversations with the bonus has now paid out some of the cool technology that you guys are putting in place.
And just thoughts on hiring and ultimately the impact of the technology that you've rolled out and building out that pipeline.
Yes, the technology pieces and important piece because first we got to have the strong people that understand the business and then you've got to be able to support debt with good products, which are here and have been here, but from there you've done on offer processes will allow them to be effective and efficient and that's where the technology comes in and in <unk>.
Today's world, where so much.
Pay is based on.
Production or in.
Incentives.
The ability to work through a process to get paid matters as well and the great News is smoothed bonus season, we didn't lose a person.
And the incentive plan stays in place to drive exactly what we're seeing now so it's been good we still have a pipeline of wheat.
<unk> identified the top bankers in every market and we have a pipeline that we continue to feed as we have needs.
Recently as a medical business for me yesterday, but not for up to one that will be an AD for staff just because of the pipeline opportunities. So great and this is another.
Larger bankruptcies and seek us out and we.
We've seen a lot of that.
We're feeling pretty good about where that sits today.
That's great. Thanks for the color.
You bet. Thank you.
Your next question comes from Jeff for reverse effect.
Your line is open.
Thanks, Good morning wanted to maybe dive into the.
The loan growth guide a little more specific I think year to date Youre already at five.
<unk> kind of mid single digit so.
We talk about the.
The expectations for the balance of the year, you mentioned conservative with debt.
Would signal a pretty big deceleration in net growth for the balance of the year.
What are you guys seeing there that keeps them.
Loan growth in a single digit number.
Yeah.
The unknown.
We're not we're not all the way through the pandemic, but you have to be honest with you. We don't see anything backing that growth rate down at this point, we just don't know what happens in Q3 and for.
Okay.
And then on the margin.
So a lot of puts and takes there, but $2 91 I guess.
Your take on direction of core margin, then I mean that sounds like a bright outlook on.
On growth, but.
Where do you anticipate the $2 91.
Yes.
Jeff as I mentioned.
If we had.
<unk> seen a higher prepayments for the quarter and that's not just.
A function that we're seeing.
Thanks.
Higher prepayments in the MBS Securities.
The rate as I mentioned.
If we were just back to $1 15 in the fourth quarter like we were in the fourth quarter on.
Margins would have been over 3%.
This quarter.
As we as we look forward I would expect that margin to be for the rest of the year probably around over 3%.
And going to around 310 $3 15.
<unk>.
It's difficult to take that Theyre going to have an investment securities.
And immediately changed that out into loans, but the whole reason why we got into mortgage backed securities in the first places because we wanted to buy amortizing securities. So the cash was coming back every month and we can redeploy that into loans as we knew the loan growth would be there now that we've finished our on our strategic initiatives. So.
It's what we expected.
We didn't expect to see as much liquidity come in but.
I don't think anyone expected multiple stimulus from programs from the fed but.
We will take in the securities portfolio right now that's the highest we believe it will it will get but having said that right now.
Getting back to about $50 million on cash every single month from the portfolio in <unk>.
Hopefully, we'll be able to take at least a portion of that and turn that into loans and grow that aggressively but safely.
Over the next several quarters.
Sounds good on $3 10 to $3 15, or 25 basis points expansion by the end of the year.
That's great.
The last one I had just the expenses.
Just wanted to make sure you talked about some of the investments Youre, making.
And.
In addition, kind of mindful of that expense.
Rates here, so wanted to get the message at 16 five for.
For the quarter.
Is that can you make investments and hold the line or what is the outlook for the expense grew.
Growth or.
Maybe keeping that flat.
Yes.
We think we can continue to.
To grow on the technology, we think we've got it funding available for it without increasing because we will continue to see more efficiencies for.
For the technology, we put in place for the last couple of years.
We haven't maximize our efficiency get on the commercial lending platform. So there are some opportunities there so.
We would expect moderate growth for modest growth on expenses around.
Probably your model, we don't expect anything extraordinary that we can fund out of efficiencies that are already coming on line.
Alright, well, thank you for the quarter.
Okay.
Slip backwards.
Thank you Jeff Thank you Jeff.
Your next question comes from Andrew Liesch of PSC. Your line is open.
Good morning, guys. Thanks for all day or the details surrounding.
Margin and growth outlook.
It sounds like you guys had some pretty good traction hiring bankers on attracting inbound interest.
For the organic growth should be continued to be strong.
Whats the chatter on on the M&A front and on the past you guys have wanted to do.
The new deals on a hopeful to do deals.
Good organic growth capabilities.
I guess like what's kind of the.
For the Canadian for prospective M&A, if you had some good loan growth.
Yes, certainly on the radar, but we're also on a pretty good economy.
And the smaller community banks in the market tend to be doing well on their own right. So we continue to carry dialog, but theres nothing imminent at this point, we continue to push to be organic and we do think there will be other opportunities down the road.
Got it nothing is good organic trends.
Any disruption that might happen there the organic trends consumer continues to be pretty strong.
That's right it out for about the integration risk.
And then just on the Securities book, It sounds like Thats going to top out at this level is that did I hear you correctly.
For taking on more build on that.
Yes, that's correct, we would expect it to remain flat to down as the loan book.
Growth.
We'd like to get that down.
Because we can and we will continue to purchase securities.
As I mentioned that our cash.
Cash flow coming back is significant and we wanted to make sure that we're getting some yield.
As the loan book growth will allow that security book the decline.
One caveat, though Andrew and that as we had anticipated deposits going down for three quarters now.
Programs keep coming into place and deposits continue to keep drilling where on a conservative market, it's not just us but.
We don't know what happens on a stimulus front going forward.
So far we've been wrong three quarters in a row on when that goes down.
So if things normalize we think that debt securities portfolio will start to drop but there is there is an unknown out there.
Got it yes currently spent ground for deposit growth confronted on I've been expecting.
You guys have covered all my other questions follow up step back. Thank you.
Thank you thanks, Andrew.
Again, if you would like to ask a question for stars on the number one on your telephone keypad.
Your next question comes from John <unk> of Janney. Your line is open.
Good morning, guys.
Morning, John John.
Hope you guys are doing well.
Just real quick just to clarify back to your your loan guidance does that include the impact of the runoff with the PPP loans.
Yes, it does it does.
It does okay.
The PPP loan program declined for.
For the fourth quarter, the first quarter.
Continuing to fund loans from round two but.
Our SBA team they've been fantastic and they filed.
A significant amount of forgiveness applications and we haven't lost one yet and so that portfolio continues to decline quickly even as we continue.
Continue to fund on round two.
Okay, So, but I guess back to a prior question and your guidance for high single digit overall growth.
You can grow core loans in excess of 10% and then net of run off youre going to be high single digits.
Okay.
Just on the on the mortgage front I guess, given your various investments and so forth.
The MBA forecast is mortgage mortgage volume is trending down from the first quarter, but it sounds like you still think given your new investments you can offset that and grow revenues growth.
Going forward from the first quarter.
Yes, we do expect with mortgage business slowed down a little bit as a matter of fact, we are seeing it forward now dropping off with debt.
That is offset a little bit just by the mortgage teams aggressiveness in bringing on bankers on growing the opportunity and they are self funding as they do that but we do anticipate some kind of a decrease there and as you will note this quarter a portion of our loans.
Rather than going out and buying mortgage backed securities.
Our own to a degree the increase yields on opportunities, but the volume was so great. This time that allowed it to happen if we get down to normalized on that growth will probably come predominantly from our commercial real estate portfolio and will continue to sell mortgages, because we don't want to we don't want to lose debt.
Net fee income base, either so yeah, we've got.
You heard the pipelines, where we are and we do have a little wiggle room in there for.
For mortgage business backing down a bit.
We also budgeted for.
When you look at the.
Mortgage.
Program, there, we budgeted for an increase in.
Mortgage loan officers for <unk>.
For the year, and we will continue to see that but we're doing it with incremental value for every time.
So we will see some growth there as well the other thing is construction.
On development here in Utah is really strong and we've got a business vertical.
Doing builder finance lending and we're getting more and more of that.
Residential long term residential loans through those areas as our mortgage team continues to focus on that area as well.
Okay. So the combination of all that you think mortgage revenues can actually be up a little bit from the first quarter, though just to be clear.
Yes, we do Okay, and then you mentioned the Treasury management product that you've got coming online just any sort of idea of the magnitude of what sort of revenue as you could see for a moment.
I think that's going to be.
For us relatively stable.
Growth mode, we brought on.
The functions of Treasury management, a couple years ago on it continues to gather steam as it goes with with mediocre products I guess I'll say, so they've been working for a good year and a half with the vendor to bring this new automated product into where all clients can match.
We saw business plans to manage cash and investments and wires and.
All through.
On their telephone app or online and we actually were there first client we had the bank go on to where all of our <unk>.
Mm wire approvals are done remotely via the authorized personnel.
And until we got it to the point, where we were comfortable that it would provide value was easy to work with.
We held back on the release, so we're thinking that should have a nice jump and we also believe that some of the deposit retention that we're seeing more than we anticipated. We would is due to the treasury management team already doing a good job and we've had a half dozen clients are best some of our best clients testing.
The product for a period of time, and we're getting pretty good reviews. So I'm not going on I'm, not going to guesstimate of growth rate, but it should over time, it shouldn't really make an impact on our fee income base.
Okay sounds good thank you guys.
Thank you thanks John.
There are no further questions at this time I will now return the call to Mr. Williams for closing remarks.
Very good thank you, Chris and again, thank you all for joining US we appreciate the interest.
As we push forward in 2021 wishing you all.
Safety and health and we look forward to our conversation next quarter. Thank you.
Goodbye.
This concludes today's conference call. Thank you for your participation you may now disconnect.
Okay.
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Net.