Q1 2021 First Western Financial Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the first Western financial first quarter two anyone earnings conference call.
At this time, all participants are in listen only mode.
Later, we will conduct a question and answer session and if.
He would like to ask question during the session you will need to press star one on your telephone keypad.
And once you require assistance during the conference. Please press Star zero.
I would now like to turn the conference and Richard host, Mr. Tony Rossi with financial profiles. Please go ahead Sir.
Thank you Alexander good morning, everyone and thank you for joining us today for first Western Financial's first quarter 2021 earnings call.
Joining us from first Western's management team are Scott Wylie, Chairman and Chief Executive Officer, and Julie Core Camp Chief Financial Officer, We will use a slide presentation as part of our discussion. This morning, if you've not done so already please visit the events and presentations page of first Western's Investor Relations website to download a copy of the presentation.
Before we begin I'd like to remind you that this conference call contains forward looking statements with respect to the future performance and financial condition of first western financial debt.
Ralph risks and uncertainties, including the impact of the COVID-19 pandemic.
Various factors could cause actual results to be materially different from any future results expressed or implied by such forward looking statements.
These factors are discussed and the company's SEC filings, which are available on the company's website I would also direct you to read the disclaimers and our earnings release and Investor presentation. The company disclaims any obligation to update any forward looking statements made during the call. Additionally.
Additionally, management may refer to non-GAAP measures, which are intended to supplement but not substitute for the most directly comparable GAAP measures. The press release available on the website contains the financial and other quantitative information to be discussed today as well as the reconciliation of the GAAP to non-GAAP measures and with that I'd like to turn the call over to Scott Scott.
Alright, Thanks, Tony and good morning, everybody.
Our first quarter results reflects the continuation of the significant increase in profitability that we began generating last year.
Net income of $6 million and earnings per share of 74 center, both more than 300% increases.
And where our financial results from the first quarter of 2020.
We're also seeing substantial improvement in our level of returns with our away coming in at one one and 6% for the quarter on ROE at just about 15% and on road TCE coming in at 17, 5%.
Well, it's still operating and fire from a normalized environment, we continued to make exceptional progress on our path to becoming a high performing institution.
Our new client acquisition activity remains very strong with the resulting in strong inflows of low cost deposits deposits and further improvement and our deposit mix.
Given our business model and the types of clients, we target, we often get large deposit accounts and sit on our balance sheet temporarily until some of the funds are placed investment manager and accounts and we saw quite a bit of that activity and the first quarter well. This creates excess liquidity that's negatively impacting on net interest margin on the short term we believe the.
Additionally, these clients and low cost deposits, they provide and fee income they generate significantly enhance long term value of the franchise.
In the fourth quarter last year, we had the highest level of loan production and our history.
Lift our loan pipeline and relatively small to start the year.
And so we spent the first quarter rebuilding the pipeline as well and focusing on helping our clients access the second round.
PPP funding.
Over the last few quarters, we've made some adjustments and our loan pricing to try and improve our average yield on new production.
Whereas the first quarter progressed, we realize that other banks were continuing to be very aggressive and their pricing.
And in order to put their excess liquidity to work.
This also ended up impacting our loan production and the first quarter.
And what we're going to continue to be disciplined and our underwriting we have made some adjustments and our pricing requirements to be more competitive.
We aren't going to win deals by being the lowest priced offer but we're now on a range where our pricing is more in line with the market and this should help enable our loan production and get back on track.
And our last earnings call, we talked about some processing constraints and our mortgage business that limited our loan production and the fourth quarter.
We were able to resolve those constraints and our processing times and now return to normal.
As a result, we were able to capitalize on the continued strong demand we're seeing for residential mortgages and this business continues to make a significant contribution to our profitability.
Our net gain on mortgage loans and the quarter was $5 $2 million, which was up 20% from the prior quarter and up 109% from the first quarter of last year.
From an asset quality perspective.
Also continue to see very good trends.
All of the COVID-19, nomads and we've made last year have now returned the regularly scheduled payments and our nonperforming assets have continued to decline and <unk>.
Once again, we had zero net charge offs, which continues our long history of exceptionally low credit losses.
Moving to slide four our.
Our improved financial performance is not only driving significant earnings growth.
But also strong increases and our book value and our tangible book value.
During the first quarter, our book value per share increased four 1%, while our tangible book value per share increased four 9%.
Turning to slide five we've recently added a new slide to our deck that shows our pretax earnings per share excluding the mortgage segment.
This reflects the performance of our private banking commercial banking trust and investment management businesses.
Obviously last year was an extraordinary year for the mortgage business, but we didn't want that to overshadow the progress we've been making and the other areas. So this slide provides a better sense for the foundation that we've built that's producing the sustainable path to higher earnings and profitability.
And the first quarter, our pre tax earnings per share and the non mortgage segment increased 9% from the prior quarter and was the highest level in our history.
Turning to slide six we'll look at the trends and our loan portfolio.
On a period end basis.
Total loans held for investment increased 12, 6%.
$12 6 million from the prior and to the prior quarter and up $504 million or 48% year over year.
On an average basis, including mortgage loans held for sale, our loans were up $87 4 million or five 3% from the prior quarter.
Including P. P. P loans, we had loan production of $144 6 million.
It was the third highest quarter ever but down from a very high level that we had and the fourth quarter.
Payoffs remained higher than we've historically seen and totaled $122 6 million and the quarter.
Payoffs included one and $50 million pay off of a low yielding cash secured loans that occurred right at the end of the quarter and brought down our period end balances.
During the quarter, we saw the strongest growth and our non owner occupied commercial real estate lending portfolio.
On a construction loan balances were down and following the payoff of projects that were recently completed.
Moving to slide seven and we'll take a closer look at our deposit trends.
Our total deposits increased $187 9 million or 11, 6% from the end of the prior quarter.
And I mentioned earlier, the primary drivers and deposit growth was new client relationships.
We continue to see significant improvement and our deposit mix with noninterest bearing deposits increasing to 32, 8% of total deposits from 23 per cent a year ago.
Moving to slide eight we'll look at our progress and building our commercial banking platform.
Which is providing more loan diversification and improving our deposit base by adding low cost transaction deposits.
Due to the payoffs and pay downs, we saw on the quarter commercial loans were down a bit from the end of the prior quarter, but up 45 per cent from a year ago.
<unk> deposit inflows continue to be very strong partially related to the PPP funding and increased 236 million or <unk> 24 per cent from the end of the prior quarter.
Turning to trust and investment management on slide nine our total assets under management increased $230 3 million.
From the end of the prior quarter. The increase was due to a combination of improved market conditions, new client accounts and additional contributions made to existing client accounts.
Now I'll turn the call over to Julie for further discussion of our financial results Julie.
Thanks Scott.
Turning to slide 10, we have provided an update on our participation and the PPP program and how it impact on various metrics and the first player there.
Approximately 30 million and P. P T.
And so I keep forgetting that the and the first quarter.
And also submitted and near the $100 million and loan applications for the second round and the PPP program and have received approval on 82 point and a half million and these loans through the middle of April.
And that's resulted in 190 and a half million of PPP loans remaining on our balance sheet and at the corner.
And $3 1 million and fees remaining to be recognized.
With a relatively small amount of accelerated fee recognition and the first quarter, the low yielding PPP loans had a negative impact on our net interest margin of six basis points.
While we have plenty of liquidity, resulting from our strong deposit inflows.
Continue to utilize the PPP liquidity facility to fund our PPP loan origination and that we can continue to get the preferred capital treatment on these loans.
Turning to slide 11, and we'll look at our gross revenue.
And had a very strong quarter and revenue growth with increases coming and both net interest income and non interest income.
And it relative to the first quarter of 2020. Our net interest income was up 46, 2%, while our non interest income was up 36 seven.
And while we are very pleased that we are able to continue to generate this level of revenue growth, while keeping our expense relatively stable.
Turning to slide 12, well look at the trends and net interest income and margin.
Our net interest income decreased 3% from the prior quarter.
Decrease was due to lower P. P. P related fee income and two fewer days and interest accrual.
Given the pay offs, we saw and other areas of the portfolio lower yielding PPP loans and one to four family residential loans.
Price day large percentage of our total non next quarter.
Which resulted and a decline in our average and so on Yelp on.
On a reported basis, our net interest margin was down 17 basis points from the prior quarter to 2.9%.
When the impact of PPP loans and purchase accounting adjustments are excluded our net interest margin decreased by 22 basis points from the prior quarter.
And this was primarily due to the excess liquidity that we are carrying the increase on liquidity this quarter impacted our net interest margin by approximately 15 basis points.
And the short term we are doing a few things will help support our net interest income and margin such as holding our residential mortgage loans about longer before selling them into the secondary market.
But we arent doing anything to lock ourselves into longer term low yielding assets.
Some of the liquidity from the deposit and close will be eliminated certain balances are transferred into investment management accounts, and taxis and always generate from outflows as well.
And we anticipate still having plenty of liquidity debt put to work and our loan portfolio as loan growth increases later in the year, which should have a positive impact on our net margin.
Turning to slide 13, our net interest and non interest income was up six 6% from the prior quarter and $36 seven per cent from the first quarter of last year.
Relative to the prior quarter noninterest income was up due to a higher net gain on mortgage loans and the fourth quarter. We generated approximately 115000 of fee income from our fixed income team first for the sale was completed.
This amount is excluded our trust and investment management fees were up from the prior quarter.
On slide 14.
And have provided some additional detail on our mortgage operations.
As Scott mentioned earlier, we resolve the processing constraints that impact on our performance last quarter, and we had a record quarter of origination.
However, our mortgage locks, which is when revenue is recognized we're down a bit from the prior quarter.
Our profit margin and this business remained relatively consistent with the prior quarter and we generated $2 1 million and net income on revenue of $5 2 million and the first quarter.
Refinancing accounted for 77% of our originations and the first quarter.
Although we started to see fewer refis as we move through the quarter and interest rates increase.
We expect some of the lower volume from Refis to be offset by higher purchase volumes and the spring and summer months.
Turning to slide 15, and our expenses.
Our non interest expense was essentially unchanged from the prior quarter. However, our first quarter expense was reduced by approximately $1 million and deferred loan origination costs related to the second round of PPP loans.
Without this impact on non interest expense would have been and the range that we projected to start 2021.
Given our balance sheet growth and a higher fee income, we continue to see improvement and our efficiency ratio relative to the prior year and.
And the first quarter, our efficiency ratio was 66% down from $84 four per cent and the prior year.
We continue to expect our quarterly run rate for noninterest expense to be and the range of 16 to $16 5 million during the first half of 2021.
Turning to slide 16, well look at our asset quality, we saw positive trends continue across the portfolio and the first quarter.
Our nonperforming assets decreased by approximately 200000 and declined to 18 basis points of total assets.
We entered the quarter with one loan remaining on modification and that loans has since returned to its regularly scheduled payments.
Once again, we continue to see a very low level of losses, and the portfolio and had immaterial net charge offs this quarter.
Given our stable asset quality and immaterial charge offs, we did not require any provision for loan losses and the quarter. However, our adjusted allowance for loan loss, which includes PPP and acquired loans, which excludes P. P. P and acquired loans increased to 1.0% to 1% of total loans from 98 basis points.
At the end of the prior quarter.
Now I'll turn the call back over to Scott Scott.
Okay. Thanks Julie.
Turning to slide 17, I'll wrap up with some comments about our outlook.
Start with some general comments about the macro environment and our markets.
We've seen a very efficient rollout of the vaccines and as of last evening about 27, 2% of the population and Colorado is fully vaccinated and about 42%.
Has at least one dose.
And we're definitely seeing this have an impact on our level of confidence that our clients have and the economic recovery.
And from an anecdotal perspective, we're having more clients asked for in person meetings, which is an encouraging sign that things are getting back to normal.
We continue to work on rebuilding our loan pipeline and since we made the adjustment and our pricing requirements, we're getting more traction.
It will probably take another quarter of building the loan pipeline and to put us and are positioned for higher loan production and stronger loan growth and the second half of the year.
Stronger loan growth will enable us to profitably redeploy our excess liquidity and well.
Also see some of that liquidity starts to generate fee income and its transferred into investment management accounts.
We're also making nice progress and adding mmos.
Mortgage loan officers ahead of the seasonal seasonally strong spring and summer months.
Yeah on the loans, we're adding.
Focus on purchase originations it will enable us to capitalize on the high level of population growth and strong housing trends and our markets.
As a result, we expect the mortgage segment to continue to make a significant contribution to our overall profitability.
With the higher revenue that we generate as we redeploy or excess liquidity and drive additional growth and our fee income we should realize additional operating leverage and further increases and our level of profitability.
Well, we're well positioned to drive additional organic growth.
The environment for acquisitive growth is also becoming more favorable M&A discussions and our markets are starting to increase and give us more opportunities to evaluate deals that could enhance the value of a franchise and <unk>.
Given the success we've had over the past year I think we're now being viewed as a very desirable merger partner was certainly helps our efforts.
From an earnings perspective, we got off to a good start this year without the benefit of strong loan growth that we've seen over the past few quarters.
We're confident that we'll return to more normalized level of loan growth later in the year and as we do we should see further earnings improvements.
We will look to continue supplementing with additional M&A transactions that can further accelerate our growth and our profitability.
And with that we're happy to take your questions. Alexander Please open up the call.
Thank sir at this time I would like to remind everyone in order to ask a question. Please press star one on your telephone keypad again debt is the star one to ask a question.
We have your first question from Matthew Clark with Piper Sandler Your line is open.
Hey, good morning.
Maybe just first on.
The.
The expense outlook I think you mentioned, 16% to 16 and a half for the first half does that imply that there might be a step up and the second half and if so.
You know what are your thoughts and what's driving it.
And secondly on that one.
And I and.
And I think that there will be some amount of increase but it's nothing and.
And that wasn't intended to imply that there that increased step up happening and the second half and was just trying to give guidance for the first half from I would expect.
As we continue to grow the balance sheet that we will have.
Moderately increase and expensive debt.
And nothing above you know the kind of normal pace up and you would expect for total expense increases that we've given guidance for <unk>.
Okay, and then just on the mortgage piece I think you guys had targeted 20%.
I think a 20% reduction for the year, obviously going the other way to start the year.
Given the mix of refi versus purchase and kind of the outlook from our purchase going forward and the and the spring and summer like what are your overall thoughts on kind of mortgage volume and gain on sales.
Well clearly.
Q1 was stronger than Q1, a year ago, but we don't expect.
On the giant boom that we saw in Q2 and Q3 of last year.
Which was refi driven.
We're doing.
And <unk>.
25% or so purchased money and 25% refi historically.
And then over the last.
Four quarters now we've seen that flip to.
Some number like 60, or 70% refi, even higher and some months and and then in Q1, we've seen a big drop and the refi activity and and we wouldn't expect that to continue in fact, we were looking at the April production.
This week and and.
And we're back on.
Number more like 70 30 purchase to refi.
But the good news is that this is the time of year.
When we see a big increase and purchase activity because of the seasonality factor. So I think that the 20% decrease from last year that we had talked about.
Seems like a reasonable estimate from where we sit today.
Okay.
And then maybe just on the.
The revenue we generate on the on your U S.
AUM, which was up this quarter can you just remind us is there a lag in terms of the realization of that revenue should we see kind of a.
On a similar step up and fees from the increase and <unk>.
And this quarter.
And.
I think technically no.
We recognize the income.
As it gets.
As we take over the management of the assets.
But in reality, yes, because what happens and it just takes forever to get the accounts.
Old and closed and moved and implemented into the investment activity that they're gonna have yeah, and I mean and stay forever, but you know.
And it's a three months process or.
Including the sales cycle can be much longer than that so so I think you know probably the technical answer to your question is no, but I think realistically we're going to see.
And some benefit in future quarters and fee income from the activity, we've seen and the first quarter.
Okay. Okay. Thank you hope that book.
We have your next question from Woody lay with <unk>. Your line is open.
Hey, good morning, guys.
Good morning.
Just wanted to touch on loan growth I appreciate the color you provided.
Earlier in the call and the call on.
And how's the pipeline shaping up so far and the and the second quarter and do you think we can get.
Get growth back up and that high teen range and the back half of the year.
Well.
And I could try to answer that and then we could get every bottle from Julie but.
Yeah, you know last year I think we grew loans, depending how you want to look at it something like 50% silo.
And and and so we don't expect that level of growth this year.
<unk>.
We had a $50 million.
On March 31st that kind of skews the numbers.
For a period and quarter over quarter.
But you know.
Theres, nothing thats changed and our markets and in fact, I would say conditions got more favorable for us.
Economic activity and.
New clients and loan growth and all that stuff so I mean.
To me.
Core organic loan growth this year in the teens mid teens like we've historically produced seems like a very reasonable number first quarter and notwithstanding we've talked before about how.
And our size, which is relatively small for a regional bank.
You know small changes can smile.
And numbers that looked like the example of the $50 million loan on March 31st can have a big impact on the overall.
Appearance, but if you look at the underlying.
Average loans outstanding and we saw good growth I think we're going to continue to see good growth. The pipeline is actually up a little bit in April and and as I say have any economic.
Underpinnings here are very strong so I think we'll be fine.
Julian and there are other color you'd want to add to that.
No and you you touched on the pipeline and part of his question was related to that and we have seen this and growth.
Growth and the pipeline every month since January so I feel like you know what.
And we're starting to see that momentum going into the second quarter and more business activity typically happens more in the second and third quarter and our season and our area and so I think pipelines are showing them that train and told them out too.
Got it that's good color.
And then as you mentioned it does seem that the loan pricing side is really intense right now could you just give some color on where new loans are coming on the balance sheet at this point.
Yeah. So.
Julia.
I'll start and then.
Oh cool call U S. After we're done so.
But for me.
And we made a conscious decision last year, which I think we talked about on these calls to increase pricing because we thought that we had the ability to do that and what we have seen and the first quarter is the competitive market has tightened quite a bit and.
And so.
We've been reluctant to.
Match, what we would consider to be unreasonably low pricing.
Historically and last quarter.
And and so.
That's definitely been a factor for us this year I think we've taken a look at that and said we don't want to lose good deals on price and.
So we're being a little more competitive going into Q2.
But generally I would tell you.
Debt you know pricing has been a challenge now having said that.
Our pricing was quite a bit stronger.
In Q1, and then it was in Q4 and again part of that is kind of one time things but.
Our new production I think average rate was $3 57, and Q1, which is a good number for us.
Alright, that's on the other things you're going on ahead now.
Okay. That's helpful.
And then last from me on the ACL or yards reserve levels, they saw a little bit of and increase due to the loan shrinkage.
And I think they're currently running about the reserves running about 15 basis points higher than where it was pre pandemic on it.
Credit quality seem really strong do you envision having.
Having that reserve dropped back to sort of pre pandemic levels over over the next couple of quarters.
You know, we're not we're not budgeting for that.
You're absolutely right, we have seen a strong credit quality.
On a continuing and in fact improve over the last 12 months considerably by any measure that we use internally but.
But we know we have ceased all ahead of us and we're not sure what the impact of that is going to be and so I think you know the strategy for us is more to grow into the reserve that we have and.
And we are starting to see some work now so we can figure out what that's going to mean for us and and start prepping for that but we don't really and anticipate.
The release and frankly, we don't really anticipate a big increase and our level of reserves.
Net of P. P P and.
Purchase accounting for acquired loans were over 1% now which is a very adequate for the level of.
Critical right.
And can you just remind me of Stifel at 2020 three event for you all.
Correct Yep.
Alright, Thanks, guys. That's all from me.
Yeah. Thank you would it.
We have your next question from Bill Desert loans from Titan capital and your line is open.
Thank you I have a couple of balance sheet questions and then.
A more and more.
More broad question on accounts receivable and.
And was up a little more than 5 million versus December what was driving that.
Julie and normal activity for us and normal business activities as well as some day interest rate lock commitment and valuation of the and mortgage portfolio. So that typically drives a bit of a change and the valuation on that receivable.
And other assets.
Yeah.
And and Julie did you just say other assets.
Yes, and there's different lines within their receivables and assets.
Well you just are you just jump to my next question and which was other assets dropped approximately a $10 million versus December. So yeah is that somehow related to accounts receivable are increasing and if so would you which would you walk through kind of how the mechanics work, there and if you'd prefer to take it offline that's totally fine.
And I'm happy to take it offline as well, but yeah. It's just the difference in net the activity with and then.
And mortgage pricing.
Alright, let's jumped to your growth anticipated. This a year how many offices are you planning on opening in 2021.
Yeah.
Well I think it depends.
We have depending how you count on in terms of the trust offices and loan production offices and 17 offices today and of course, you know our main focus is on organic growth we believe that.
Getting each one of these offices are growing and reaching maturity and once they are mature continuing to grow as kind of a key to our operating leverage story, we think that these offices can eat and b.
Eight or $10 million businesses with 70 to 80 per cent contribution margin and I think the.
Rapid increase in profitability that we've seen.
And accelerating last year, and and I think you know again on that slide I think for this time.
That excludes mortgages.
Those are more of that happening are.
Going into 2020, one and so I mean, that's kind of the first piece of that the second piece is that we have.
Started over the last couple of years incubating new offices.
And in existing offices, and then when they reach a certain level of revenues that they can operate as a breakeven contribution will move into their own office until the most two recent most examples of that we just moved Vale out of a temporary space into their permanent space. That's been a nice success story for us over the last year or so and then.
We've got Broomfield, but we've been incubating and up in.
Boulder and we.
We've got permanent space for them that they'll be moving into.
From tank late Q2 early Q3.
We have a couple of other incubator projects going now so maybe another two offices this year in terms of.
You know kind of the incubated expansion.
Yeah that would be our our general target and then the third leg of that would be our acquisition activity and we commented on that and we're seeing.
And more activity more opportunities.
So you know there could be new offices that come out of that.
Eventually sometime in 'twenty, one or 'twenty two.
And just following up on that piece from what you are currently seen with the acquisition chatter with would you suspect that you would be adding offices. If you were to do a deal and really is infill within some of your more.
And densely office markets or are you thinking that it would be more likely that you would be adding a really adding geographic dispersion.
We work on both we have a list of markets that are of interest to us and summer fill in markets and some are new markets.
And we actually are.
And I don't think a adjusted his acquisition and we think of it as corporate development and so we work on lift out.
Recruiting teams.
As you know Bill we've talked about the fact that first western is unique and that we can buy a bank and <unk>.
Desperate and trust services to their branches, we can buy and IRI, a N and banking services to their location and then we can just do de Novo and we've done all those things successfully at first western over the years.
Great. Thank you both.
Yep. Thank you.
Again, if you would like to ask a question. Please press star one on your telephone keypad again debt its star one to ask a question.
We have your next question from Ross Haberman from <unk> investments your line is open.
Good morning on next quarter.
Really I have a quick question on slide 21 that 73 cents.
Non mortgage income.
If you backed out the.
TPP fee and fee income from it.
Quarter, what do we get to on how much touch on lower the 73 cents.
And so I think we have a PPP slide and therefore, you that talks about the net interest income. So net interest income for the PPP program with 88.
$800000 mm six basis points of net interest margin impact.
If you take the 800000 off of that got it and.
To get there.
Okay and Scott just a quick question for you could you talk about the competition a little bit.
And the likes of slack and Alpine bank and people.
Guys like that how difficult or competitive are they both on the loan and then the deposit side and.
Thanks for your time guys.
Okay.
So.
Julia I know he didn't ask me about the P. P P fees and the first quarter, but.
I think the fees that we recognized in Q1 were quite a bit less than we would have anticipated because you don't really book any new fees.
And with the P. P two until they either amortize or pay offs and get get.
Forgiven and and with PPD won the forgiveness was delayed.
And so the fee income recognition from P. P. P was minimal I think and Q1 does.
Is that a correct statement jewelry.
Yes.
So anyways.
Ross I think your question for me was more about the competitive environment and I am actually we've seen I think two or three basis point improvement and you know.
Reduction and our deposit costs in Q1, and so I think we're doing a nice job on managing that.
In terms of the competitive.
Landscape for loan pricing I mean, I spoke to that I think what we're seeing is a lot of banks, having a lot of liquidity and.
And be willing to bid down.
On pricing.
And Fortunately, we don't do project financing and we don't do like competitive bid financing, we have to obviously be and the market or a per hours can borrow anywhere they want but we tend to do relationship based kind of private banking borrowing and so I think we do have probably more.
<unk>.
<unk>.
Ability than maybe another retailer community bank might and and I think we probably get.
Somewhere between five and 15.
On basis points of benefit from that and a typical loan structure that we do here at first western.
Okay, Alright, guys. Thanks, a lot appreciate it I hope you're going to shop and take care.
Thank you Ralph.
Yeah.
We have your next question from Matthew Clark with Piper Sandler Your line is open.
I thought we should touch on the margin outlook, just given the latest pressure and the potential for loan growth to start picking up do you I guess.
I'm thinking it through I mean is there do you have I think last time, we spoke there was an expectation that.
Interest bearing deposit costs would start to level out and maybe around 30 basis points as they're renewed.
And sort of renewed I thought there to maybe press on those.
Those costs, a little further and I guess, what's your overall view of the 288 core NIM going forward.
Looking.
Looking month by month, NIM seems to have bottomed out for US you know.
And it's so difficult.
I'm sure from the outside and particular to and.
Adjusted for all of the debt.
And the noise that's in that number right now you know what I think.
You've got to factor and the P. P P situation, which keeps getting I would say more complicated with the with the additions there and then and you've got to factor out the cost of the excess liquidity and so are.
Our internal projections are that we should improved NIM. This year, we think that.
We can operate first western and kind of the three.
The mid teen range.
<unk> three per cent.
10, 315 is probably going to take us the rest of the year to get there, but we do think that we could do better than 288, and we think that that has bottomed out. So what we're looking for some nimbler and improvements during the rest of the year.
Having said that we don't really manage for NIM, we manage for net interest income and so you know if we continue to see rapid deposit growth that creates liquidity that we can't use that we can invest profitably in the short term that are reducing them then that would have that impact of course, but.
Zinc price for right now the liquidity, we have is kind of a nice problem and we.
And we don't anticipate.
The NIM to continue to decline and the way we've seen on last quarter.
Julie is there other color you'd add to the NIM story.
Particular to deposit costs, our spot rate for deposits and March was 21 basis points switches.
Just a few basis points down from where we were seeing it in December So I think on your and interest expense question I think we're Julie.
Feeling like we're kind of where we are but as you have seen and our numbers, we continue to grow and and Nixon and better. So we continue to grow our non interest bearing deposits more than the other deposits, which will continue to help them with deposits and talking about.
Okay, great. Thank you.
And.
I'm showing no further questions at this time I would now like to turn the conference back to management for any closing remarks.
Great. Thank.
Thank you Alexander.
And just just to wrap up here, obviously, it's another strong quarter.
I think the key to understanding this quarter is the underlying trends, which.
One we continue to grow assets and revenues and fees much faster than expenses. There's some noise in there from P. P P and mortgage and onetime activity, but underlying business is very strong you know on.
Net income is up 4.6 times year over year total assets are up 48% of total loans up 55, 7% gross revenues up 42% those are big numbers.
Number two you know mortgages is performing well, it's a strategic core business for us that fits with our private banking and now we're entering the strong.
And six months of the year seasonally strong six months of the year and I think the third point that we touched on their last with.
And that was the core NIM is actually holding up pretty well and.
Should recover as we continue to put liquidity work and produce our P. P. P balances so.
I think.
We're really pleased with the underlying performance here and share appreciate everybody's time and questions today dialing and thanks. Thanks, So much for your interest and first western.
Ladies and gentlemen, this concludes today's conference call and thank you for your participation.
Have a wonderful day and you may all disconnect.
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And.
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