Q1 2024 Columbia Banking System Inc Earnings Call

Okay.

Operator: Welcome to the Columbia Banking System's first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode.

Speaker Change: Welcome to the Columbia banking systems first quarter 'twenty 'twenty four earnings conference call.

At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message advising your hand, just raised to withdraw your question. Please press star one.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. At this time, I would like to introduce Clint Stein, President and CEO of Columbia, to begin the conference call. Thank you, Dede. Good afternoon, everyone.

Again, please be advised that today's conference is being recorded at this time I would like to introduce Clint Stein, President and CEO of Columbia to begin the conference call.

Clint E. Stein: Thank you <unk>. Good afternoon, everyone. Thank you for joining us as we review our first quarter results.

Clint E. Stein: Thank you for joining us as we review our first quarter results. The earnings release and corresponding presentation are available on our website at ColumbiaBankingSystem.com. During today's call, we will make forward-looking statements that are subject to risk and uncertainties and are intended to be covered by the safe harbor provisions of federal securities law. For a list of factors that may cause actual results to differ materially from expectations, please refer to the disclosures contained in our SEC filings. We will also reference non-GAAP financial measures and encourage you to review the non-GAAP reconciliations provided in our earnings materials with that.

Clint E. Stein: The earnings release and corresponding presentation are available on our website at Columbia banking system Dot com.

Clint E. Stein: During today's call, we will make forward looking statements, which are subject to risks and uncertainties and are intended to be covered by the safe Harbor provisions of federal Securities Law.

Clint E. Stein: For a list of factors that may cause actual results to differ materially from expectations. Please refer to the disclosures contained within our SEC filings.

Clint E. Stein: We will also reference non-GAAP financial measures and encourage you to review the non-GAAP reconciliations provided in our earnings materials.

Clint E. Stein: March 1st marked the one-year anniversary of the closing of our merger. It was a notable milestone for our company for many reasons. Importantly, it provided us with a full year of data points for what was working well within the combined organization and allowed us to identify redundancies and inefficiencies that are a natural byproduct of large mergers. Our one-year anniversary marked the conclusion of our merger integration phase and enabled us to start our operational effectiveness work.

Clint E. Stein: With that.

Clint E. Stein: March 1st marked the one year anniversary of the closing of our merger with a notable milestone for our company for many reasons.

Clint E. Stein: Fortunately provided us with a full year of data points for what was working well within the combined organization and allowed us to identify redundancies and inefficiencies that are a natural byproduct of large mergers.

Clint E. Stein: Our one year anniversary Mark the conclusion of our merger integration phase and enabled us to start our operational effectiveness work.

Clint E. Stein: Armed with the observations and learnings from the first year, we made significant progress on identifying opportunities for improving our expense profile. During the first quarter, we reduced our headcount by 91 FTE, with additional reductions communicated internally of 142 for the month of April. The FTE reductions, combined with other expense savings enacted in the first quarter, represent annualized reductions of $18 million.

Clint E. Stein: Armed with the observations and learnings over the first year, we made significant progress on identifying opportunities for improving our expense profile.

Clint E. Stein: During the first quarter, we reduced our head count by 91, FTE with additional reductions communicated internally of 142 for the month of April.

Clint E. Stein: The FTE reductions combined with other expense savings enacted in the first quarter represent annualized reductions of $18 million.

Clint E. Stein: These savings are reflected as of quarter end, not in the first quarter's normalized operating run rate of $286 million. The actions taken to date for the second quarter add an additional $25 million of savings annualized to the first quarter number. You have heard me say many times over the years that we target a top quartile level of performance across all financial metrics, and a lower cost structure moves us toward our goal and away from what has been, up to this point, average at best. The meaningful reductions to our associate base were done in a thoughtful manner. Eliminated positions and retirements spanned all departments and levels of management, including the executive team, which is now 15% smaller.

Clint E. Stein: These savings are reflected as of quarter end not in the first quarters normalized operating run rate of $286 million.

Clint E. Stein: Actions taken to date for the second quarter add an additional 25 million of savings annualized through the first quarter number.

Clint E. Stein: Yeah.

Clint E. Stein: You have heard me say many times over the years that we targeted top quartile level of performance across all financial metrics.

Clint E. Stein: And a lower cost structure moves us toward our goal.

Clint E. Stein: Wei from what it's been up to this point average at best.

Clint E. Stein: The meaningful reductions to our associate base were done in a thoughtful manner eliminated positions and retirement spanned all departments and levels of management, including the executive team, which is now 15% smaller.

Clint E. Stein: Over the past year, our leaders gained an in-depth knowledge of their teams, processes, and other factors, allowing them to identify areas for operational improvement. This full-scale review resulted in consolidated positions. Simplified Reporting and Organizational Structures, and an Improved Profitability Outlook. We believe these changes will enable us to operate more efficiently while preserving the premier levels of service we provide to our customers. Associated cost savings will continue to be realized during the second and third quarters, with the full benefit of our actions reflected in the fourth quarter expense run rate we outlined in our March update.

Clint E. Stein: Over the past year, our leaders gained an in depth knowledge of their teams processes and other factors, allowing them to identify areas for operational improvement is.

Clint E. Stein: This full scale review resulted in consolidated positions.

Clint E. Stein: Simplified reporting and organizational structures and an improved profitability outlook. We believe these changes will enable us to operate more efficiently while preserving the premier levels of service, we provide to our customers.

Clint E. Stein: Associated cost savings will continue to be realized during the second and third quarters with the full benefit of our actions reflected in the fourth quarter expense run rate, we outlined in our March update.

Clint E. Stein: We expect to incur roughly $13 million in related restructuring expenses in the second quarter, which will be fully mitigated by the associated expense reductions within the current year. Our organizational review resulted in a swift elimination of redundancies, but our work is not complete. Our process identified many longer-term initiatives to enhance operational efficiency and further drive franchise value. As many of you know, Columbia has always operated in a cost-conscious manner, and we will continue to seek out additional opportunities to optimize our performance from a revenue, expense, and profitability standpoint.

Clint E. Stein: We expect to incur roughly $13 million in related restructuring expense in the second quarter, which will be fully mitigated by the associated expense reductions within the current year.

Clint E. Stein: Our organizational review resulted in a swift elimination of redundancies, but our work is not complete.

Clint E. Stein: Our process identified many longer term initiatives to enhance operational efficiency and further drive franchise value.

Clint E. Stein: Many of you know Columbia is always operated in a cost conscious manner, and we will continue to seek out additional opportunities to optimize our performance from a revenue expense and profitability standpoint.

Clint E. Stein: I hope our actions year-to-date demonstrate that we are laser-focused on regaining our placement as a top quartile bank as we drive towards long-term, consistent, and repeatable performance. Upon completion of this initiative, our ability to reinvest in our people, our franchise, and our suite of products and services will remain intact. We believe these investments, along with a lower expense base, will continue to drive additional long-term shareholder value. Now, I'll turn the call over to Ron. Okay. Thank you, Clint.

Clint E. Stein: I hope our actions year to date demonstrate that we are laser focused on regaining our placement at the top quartile bank as we drive towards long term consistent and repeatable performance.

Clint E. Stein: Upon completion of this initiative, our ability to reinvest in our people our franchise and our suite of products and services will remain intact.

Clint E. Stein: We believe these investments along with a lower expense base will continue to drive additional long term shareholder value.

Clint E. Stein: And now I'll turn the call over to Ron.

Ron Farnsworth: We reported first-quarter EPS of 59 cents and operating EPS of 65 cents per share, and our operating return on average tangible equity was 16%, while the operating PPNR was $201 million. Please refer to non-GAAP reconciliations provided at the end of our arrangement and presentation for details related to our calculation of operating metrics. On the balance sheet, we had $200 million of loan growth and $100 million of deposits. For deposits, we had a decline in unsparing demand that occurred in January.

Ron: Thank you Clint we reported first quarter EPS of <unk> 59, and operating EPS of <unk> 65 per share and our operating return on average tangible equity was 16%, while the operating <unk> $201 million.

Ron: Please refer to non-GAAP reconciliations provided at the end of our earnings release and presentation for details related to our calculation of operating metrics.

Clint E. Stein: On the balance sheet, we had $200 million of loan growth and $100 million of deposit growth.

Clint E. Stein: Deposits, we had a decline in non sparing demand that occurred in January but we're encouraged to see those balances flat for both February and March.

Ron Farnsworth: But we're encouraged to see those balances flat for both February and March. Our net interest margin of 3.52% was within our estimated range of 3.45% to 3.60%, and the expected reduction from the prior quarter was driven primarily by the deposit shifts that occurred in Q4 and January. Our NIM increased to 3.55% in the month of March due to pricing reductions on wholesale and promotional funding.

Clint E. Stein: Our net interest margin of 352% was within our estimated range of $345 to $3 six zero percent.

Clint E. Stein: And the expected reduction from the prior quarter was driven primarily by the deposit shifts that occurred in Q4 in January.

Clint E. Stein: Our NIM increased to 355% in the month of March due to pricing reductions on wholesale and promotional funds.

Ron Farnsworth: Our cost of inspiring deposits was 2.88% for the quarter. Within the quarter, this cost was 2.90% for both February and March, but ticked down to 2.89% at the very end of March. Our projected interest rate sensitivity, under both ramp and shock scenarios, remains in a liability-sensitive position, and we expect our rates down to positive betas to approximate those experienced on the. Now, our provision for credit loss was $17 million.

Clint E. Stein: Our cost of interest bearing deposits was 288% for the quarter.

Clint E. Stein: Within the quarter. This cost was $2 nine zero percent for both February and March.

Clint E. Stein: It ticked down to $2, 89% at the very end of March.

Clint E. Stein: Our projected interest rate sensitivity.

Clint E. Stein: Under both ramp in shock scenarios remains in a liability sensitive position.

Clint E. Stein: And we expect our rates down deposit betas to approximate those experienced on the way up.

Clint E. Stein: The provision for credit loss was $17 million for the quarter.

Ron Farnsworth: We updated our commercial CECL models this quarter to better reflect historical and expected future losses. In 2023, the methodology for our combined company will be structured to reflect the historical UNPWA portfolio composition. The outcome was increased volatility in our provision expense that wasn't characteristic of the granularity and quality of our combined commercial portfolio. Recalibrated commercial models, which now integrate additional data and operating knowledge, have effectively reduced our commercial allowance for credit. It's important to note that the increase in our CRE and multifamily ACF...

Clint E. Stein: We have David our commercial seasonal model this quarter to better reflect historical and expected future losses.

Clint E. Stein: In 2023 of the methodology for our combined company the structure to the historical Umpqua portfolio composition.

Clint E. Stein: The outcome was increased volatility in our provision expense that wasn't characteristic of the granularity and quality of our combined commercial portfolio.

Clint E. Stein: Our recalibrated commercial models, which now integrate additional data and operating knowledge.

Clint E. Stein: And effectively reduced our commercial allowance for credit losses.

Clint E. Stein: It's important to note that the increase in our CRE and multifamily ACL as a response to the transient market conditions in western downtown cores.

Ron Farnsworth: There was a response to the transient market conditions in Western Downtown Corp, where we maintain a minimal presence in our portfolio. Despite these adjustments, our overall allowance for credit loss remains robust, closing the quarter at 1.16% of total loans, or 1.36% when including the remaining credit. Total GAAP expenses for the quarter were $288 million, while operating expenses were $277 million.

Clint E. Stein: While we maintain a minimal presence in our portfolio.

Clint E. Stein: Despite these adjustments our overall allowance for credit loss remains robust closing the quarter at one 1% to 6% of total loans or 136% when including the remaining credit discount.

Clint E. Stein: Total GAAP expenses for the quarter were $288 million, while operating expenses were 277.

Clint E. Stein: We've reflected the FDIC special assessment as nonoperating item in the press release.

Clint E. Stein: Of note, we had a number of one off items in the quarter that benefited our expense level apps.

Ron Farnsworth: We've reflected the FDIC special assessment as a non-operating item in the pressure. Of note, we had a number of one-off items in the quarter that benefited our expense. Absentees, IPEG, or Normalized Level of Operating Expense at $286 million. As a reminder, on the expense front, we expect to record a restructuring charge of approximately $13 million related to the efficiency initiatives that Clint discussed as non-operating expense in Q2. And with respect to our cap for regulatory capital position, our risk-based capital ratio has increased as expected in Q1.

Clint E. Stein: Absent these I peg, our normalized level of operating expense of $286 million.

Clint E. Stein: As a reminder, on the expense front, we expect to record a restructuring charge of approximately $13 million related to the efficiency initiatives that Colin discussed as non operating expense in Q2.

Clint E. Stein: With respect to our capital regulatory capital position, our risk based capital ratio has increased as expected in Q1.

Clint E. Stein: We expect to build capital above all long term targets, which will provide for enhanced future flexibility.

Clint E. Stein: I'll close with our outlook for 2020 for several key financial statement items.

Clint E. Stein: These are consistent with those included in our early March Investor presentation.

Ron Farnsworth: We expect to build capital above all long-term targets, which will provide for enhanced future flexibility. I'll close with our outlook for 2024 on several key financial statement items. These are consistent with those included in our early March investor presentation. Average earning assets are expected to remain in the $48 to $49 billion range.

Clint E. Stein: Average, earning assets are expected to remain in the 48 to <unk> $49 billion range.

Clint E. Stein: Our NIM is expected to remain in the 345% to 360% range, which includes stability in deposit balances.

Clint E. Stein: For discount accretion, we continue to expect $130 million to $140 million of securities rate related accretion.

Clint E. Stein: 90 million to $100 million of loan rate related accretion and $15 million to $20 million of loan credit accretion.

Clint E. Stein: Accretion.

Clint E. Stein: We expect full year operating expense, including CDI amortization.

Clint E. Stein: In the $975 million to $1 <unk> $5 billion range.

Ron Farnsworth: Our NIM is expected to remain in the 3.45% to 3.60% range, which includes stability and deposit. For discount accretion, we continue to expect $130 to $140 million of securities rate-related accretion. $90 million to $100 million of loan rate-related accretion, and $15 to $20 million of loan credit-related accretion. We expect a full year operating expense of $975 million to $1.025 billion.

Clint E. Stein: With the cost savings that Glen discussed earlier, we expect our Q4 operating expense <unk>.

Clint E. Stein: Excluding CDI amortization to.

Clint E. Stein: To be in the $965 million to $985 million range on an annualized basis.

Clint E. Stein: We expect to see the amortization of $120 million for the year was about $29 million in each of the remaining quarters of 2024.

Clint E. Stein: Merger related expense of $10 million to $15 million and our effective income tax rate at 26, 5%.

Clint E. Stein: With that I'll now turn the call over to Frank.

Frank: Thank you Ron.

Frank: Loan portfolio of credit performance continues to demonstrate the strength of our through the cycle underwriting process and discipline together with the quality of our borrowers and sponsors.

Frank: The trends, we are observing in delinquency and nonperforming loans are consistent with the shift towards a more standard credit environment, which follows an extended period of outstanding credit quality.

Frank: The $30 million increase in nonperforming assets this quarter, primarily attributed to our SBA portfolio and a single C&I related property is within expected parameters and reflects the dynamic nature of the credit landscape.

Ron Farnsworth: With the cost savings that Clint discussed earlier, we expect our Q4 operating expense, excluding CDI amortization, to be in the $965 million to $985 million range on an annualized basis. We expect CDI amortization of $120 million for the year, with about $29 million in each of the remaining quarters of 2024, merger-related expenses of $10 to $15 million, and our effective income tax rate at $26.5 million. With that, I will now turn the call over to Frank. Thank you, Ron.

Frank: After accounting for the government guaranteed portion the rise in non performing loans remains modest.

Frank: Our vigilant and ongoing monitoring of the portfolio is augmented by focus reviews, a specific asset classes, such as our multifamily and office portfolios.

Frank: These detailed analysis have consistently shown no systemic issues across different industry sectors or regions.

Frank: We have no delinquent loans in our multifamily portfolio and our office portfolio delinquencies remain extremely low at less than 50 basis points of the total office portfolio.

Frank: Neither portfolio at any charge off activity.

Frank: Net charge offs for the consolidated company were 47 basis points annualized for the quarter with 22 basis points attributable to the bank and 25 basis points to Fintech.

Frank: We remain very satisfied with the quality of our granular and diversified loan portfolio, which is highlighted in greater detail in our investor presentation, I'll now turn the call over to Chris.

Chris: Thank you Frank for obvious reasons deposits remains a key focal area for our teams this quarter, we adjusted how we evaluate and improved deposit pricing during the first quarter.

Chris: Comprehensive review of exception and other pricing authorities resulted in tighter controls and a renewed discipline around deposit pricing is.

Frank Namdar: The Loan Portfolio's credit performance continues to demonstrate the strength of our through-the-cycle underwriting process and discipline together with the quality of our borrowers and sponsors. The trends we are observing in delinquency and non-performing loans are consistent with the shift towards a more standard credit environment, following an extended period of outstanding credit quality. The $30 million increase in non-performing assets this quarter, primarily attributed to our SBA portfolio and a single CNI-related property, is within expected parameters and reflects the dynamic nature of the credit landscape.

Chris: These changes directly contributed to the stability of our interest bearing core deposit rates late into the quarter.

Chris: We also reduced our promotional rates on money market and CD accounts.

Chris: And the CD repricing impact in the first quarter was significantly lower than it was in the fourth quarter.

Chris: Beyond our actions related to deposit pricing. The teams are also focused on bringing new relationships to the bank. Our branches are wrapping up a three months small business campaign launched in early February.

Chris: Which contributed $225 million and deposit generation to our first quarter results and then an additional $75 million to date in the second quarter.

Frank Namdar: After accounting for the government guarantee portion, the rise in non-performing loans remains moderate. Our vigilant and ongoing monitoring of the portfolio is augmented by focused reviews of specific asset classes, such as our multi-family and office portfolios. Detailed analysis has consistently shown no systemic issues across different industries, sectors, or regions.

Chris: The campaign includes bundled solutions for customers without promotional pricing for special products. Additionally, 25% of the balances are noninterest bearing <unk>.

Chris: Total cost of funds for these deposits was 195% and in addition, we have seen an increase in our commercial card and merchant card activity from the increased referrals.

Frank Namdar: We have no delinquent loans in our multi-family portfolio, and our office portfolio delinquencies remain extremely low at less than 50 basis points of the total office portfolio. Neither portfolio has to have any charges.

Chris: These actions all contributed to a significantly slower pace of increase in our cost of interest bearing deposits, which was $2 eight 9% as of March 31 <unk>.

Christopher M. Merrywell: Net charge-offs for the consolidated company were 47 basis points annualized for the quarter, 22 basis points attributable to the bank and 25 basis points to FinPay. We remain very satisfied with the quality of our granular and diversified loan portfolio, which is highlighted in greater detail in our investor presentation. I'll now turn the call over to... Thank you, Frank.

Chris: Compared to 275% as of December 31.

Chris: 227% as of September 30th.

Chris: So our first quarter's increase was a less impactful 14 basis points compared to the 48 basis point increase during the fourth quarter.

Chris: While these recent pricing and balance trends are encouraging we expect continued declines in noninterest bearing deposit balances during the second quarter due to seasonal pressures that include customer tax payments.

Christopher M. Merrywell: For obvious reasons, deposits remained a key focal area for our teams this quarter. We adjusted how we evaluate and approve deposit pricing during the first quarter. A comprehensive review of exception and other pricing authorities resulted in tighter controls and renewed discipline around deposit pricing.

Chris: Noninterest bearing balances were down 3% on an end of period basis in the first quarter.

Chris: They were down 7% on an average basis due to seasonal declines late in the fourth quarter.

Chris: The higher rate environment, and inflationary pressures have contributed to noninterest bearing balance migration over the past two years with the fed funds rates seemingly stabilized and given our proactive pricing discussions we expect deposit pricing pressures to remain moderated when compared to 2020.

Christopher M. Merrywell: These changes directly contributed to the stability of our interest-bearing core deposit rates late into the quarter. We also reduced our promotional rates on Money Market and CDX, and the CD repricing impact in the first quarter was significantly lower than it was in the fourth. Beyond our actions related to deposit pricing, the teams are also focused on bringing new relationships to the bank. Our branches are wrapping up a three-month small business campaign launched in early February that contributed $225 million in deposit generation to our first quarter results and an additional $75 million to date in the second quarter. The campaign includes bundled solutions for customers without promotional pricing or special products.

Chris: Great.

Chris: But persistent inflation continues to drawdown customers account balances, which may exacerbate the tough seasonal deposit flows we typically experience in the second quarter.

Chris: That said our teams are focused on generating new business to offset these headwinds and their success will be key to containing our deposit costs, regardless of where we see any rate cuts from the fed this year.

Chris: Turning to the loan portfolio relationship driven growth remains our primary focus.

Chris: Loan balances increased 2% on an annualized basis during the quarter.

Christopher M. Merrywell: Additionally, 25% of the balances are non-interest bearing. The total cost of funds for these deposits was 1.95%. And in addition, we have seen an increase in our commercial card and merchant card activity from the increased referrals. These actions all contributed to a significantly slower pace of increase in our cost of interest-bearing deposits, which was 2.89% as of March 31st, compared to 2.75% as of December 30. 2.27% as of September 30. Therefore, the first quarter's increase was a less impactful 14 basis points compared to the 48 basis point increase during the fourth quarter.

Chris: Commercial lines of credit and owner occupied commercial real estate drove half of the quarter's expansion and what are the primary drivers of the new originations.

Chris: Lastly on the loan book I will note that our customers had a number of projects in process, which resulted in construction drawdowns and the transition from construction financing to permanent financing during the quarter.

Chris: This activity accounted for the remaining portfolio growth.

Chris: Our bankers remain focused on the activities that drive balanced growth in customer deposits core core fee income and relationship based loans and with that I'll now turn the call back over to Clint Thanks, Chris.

Christopher M. Merrywell: While these recent pricing and balance trends are encouraging, we expect continued declines in non-interest-bearing deposit balances during the second quarter due to seasonal pressures that include customer tax. Non-interest-bearing balances were down 3% on an end-of-period basis in the first quarter, but they were down 7% on an average basis due to seasonal declines late in the fourth. The higher rate environment and inflationary pressures have contributed to non-interest-bearing balance migration over the past two years.

Clint E. Stein: We're committed to optimizing our financial performance to drive long term shareholder value in line with our expectations. Our total capital ratio has increased more than 100 basis points over the past year since we closed our merger with Umpqua.

Clint E. Stein: 12% for the parent company, we are now at our long term target the.

Clint E. Stein: The bank remains modestly below at 11, 7%.

Clint E. Stein: So we're on the cusp of all regulatory ratios exceeding our long term targets.

Clint E. Stein: However, our TCE ratio was six 6% at quarter end, and we would like to see that ratio grow closer to 8% before considering meaningful options for deploying excess capital.

Christopher M. Merrywell: Given the Fed Funds Rate seemingly stable, and given our proactive pricing discussion, we expect deposit pricing pressures to remain moderated when compared to 2023, but persistent inflation continues to draw down customers' account balances, which may exacerbate the tough seasonal deposit flows we typically experience in the second quarter. That said, our teams are focused on generating new business to offset these headwinds, and their success will be key to containing our deposit costs regardless of where we see any rate cuts from the Fed. Turning to the loan portfolio, relationship-driven growth remains our primary focus. Loan balances increased by 2% on an annualized basis during the quarter.

Clint E. Stein: We still expect to organically generate capital well above what is required to support prudent growth and our regular dividend, providing us longer term flexibility for additional returns to shareholders.

Speaker Change: This concludes our prepared comments.

Speaker Change: Chris Ron Frank and I are happy to take your questions now DD. Please open the call for Q&A.

Chris: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.

Chris: And our first question comes from David Feaster of Raymond James Your line is open.

David Pipkin Feaster: Hi, good afternoon everybody.

David Pipkin Feaster: David.

Christopher M. Merrywell: Commercial lines of credit and owner-occupied commercial real estate drove half of the quarter's expansion and were the primary drivers of new origination. Lastly, on the loan book, I'll note that our customers had a number of projects in process, which resulted in construction drawdowns and the transition from construction financing to permanent financing during the quarter. This activity accounts for the remaining portfolio growth. Our bankers remain focused on the activities that drive balance growth in customer deposits, core fee income, and relationship-based loans. And with that, I'll now turn the call back over to Chris. Thanks, Chris.

David Pipkin Feaster: You guys have been extremely busy.

David Pipkin Feaster: Since announcing the cost saving initiatives.

David Pipkin Feaster: Cost savings have come through a lot earlier than I think we had expected I was hoping maybe you could help us think through some of the initiatives that are in place and where you're reinvesting some of those savings.

David Pipkin Feaster: Talked about opening a few de novo branches I know youre always looking for new talent and have had several announcements and then just kind of how you think about that expense line trending over the course of the year would you expect to be fairly steady improvement or more heavily weighted towards the fourth quarter to get to those targets.

David Pipkin Feaster: At the top end of the range right now.

Clint E. Stein: We're committed to optimizing our financial performance to drive long-term shareholder value. In line with our expectations, our total capital ratio has increased more than 100 basis points over the past year since we closed our merger with Umpqua. At 12% for the parent company, we are now at our long-term target. The bank, however, remains modestly below at 11.7%, so we're on the cusp of all regulatory ratios exceeding our long-term target. However, our TCE ratio was 6.6% at quarter end, and we would like to see that ratio grow closer to 8% before considering meaningful options for deploying excess capital.

Speaker Change: Well David is as we've come to expect from your pack a lot into.

Speaker Change: Question and there are several of US here at the table that.

Speaker Change: Can provide insight so so I'll kick it off and then Youll, probably hear from Tory, Chris enrolling as well.

Speaker Change: I'll start with with in my prepared comments.

Speaker Change: We had a year of running the company.

Speaker Change: We set the original organizational design in place in January of 'twenty two so.

Speaker Change: Almost 14 months before we could actually start operating the company on a combined basis.

Clint E. Stein: We still expect to organically generate capital well above what is required to support prudent growth and our regular dividend, providing us longer-term flexibility for additional returns to shareholders. This concludes our prepared comments. Tori, Chris, Ron, Frank, and I are happy to take your questions now.

Speaker Change: And what we didn't want to do at that point in time was.

Speaker Change: Cut too deeply do things that make cuts that would have.

Chris: <unk> impact on customer facing areas of the company.

Operator: Dede, please open the call for Q&A. Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again.

Chris: And we also kept some redundancy in place because as you know when you go through any any type of merger let alone one of this size and what we blended the.

Operator: Please stand by while we compile the Q&A roster. And our first question comes from David Feaster of Raymond James. Your line is open. All right, good afternoon, everybody. Hey David.

Chris: The teams.

Chris: Some people self select out and so we just felt like it was prudent to.

Chris: Ill take the first year.

David Pipkin Feaster: You guys have been extremely busy. Since you announced the cost saving initiatives, the cost savings have come through a lot earlier than I think we expected. You know, I was hoping maybe you could help us think through some of the initiatives that are in place and where you're reinvesting some of those savings. You talked about opening a few de novo branches. I know you're always looking for new talent and have had several announcements.

Chris: Continually evaluate what was working well more importantly, what we could do better.

Chris: And then make an assessment as to if it's in the leadership role, which leaders are going to be able to help push us forward.

Chris: To the level and degree that we expect.

Chris: And then if we have processes that didn't work in that kind of alluded to that in my prepared remarks there.

David Pipkin Feaster: And then just kind of how you think about that expense line trending over the course of the year, would you expect it to be a fairly steady improvement or more heavily weighted towards the fourth quarter to get to kind of those targets? I mean, you're already at the top of the range right now.

Chris: The opportunity I think longer term too.

Chris: Reengineer, some processes and enhance and improve some automation that's going to be.

Chris: A much lesser degree just kind of.

Chris: <unk> improvement and get better everyday type of mentality like what.

Clint E. Stein: Well, David, as we've come to expect from you, you pack a lot into a question. And there are several of us here at the table that can provide insight. So, I'll kick it off, and then you'll probably hear from Tori, Chris, and Ron as well.

Chris: Like what you've expected from from Columbia over the years, the real what I'll call right sizing the expense base work.

Chris: Some of it.

Chris: What's done in the first quarter before we even started talking about it.

Clint E. Stein: You know, I'll start with my prepared comments. You know, we had a year of running the company; we set the original organizational design in place in January of 22. So, you know, almost 14 months before we could actually start operating the company on a combined basis. And what we didn't want to do at that point in time was cut too deeply, do things that made cuts that would have a direct impact on customer-facing areas of the company.

Chris: Some some of the we did some branch consolidations.

Chris: Had some miscellaneous contracts that we're able to.

Chris: To renegotiate at their maturity.

Chris: And then we had the FTE initiative.

Chris: Which came towards the end.

Chris: And then.

Chris: Really the big number.

Chris: Mentioned.

Chris: $25 million.

Chris: Annualized savings.

Chris: <unk> been announced just this month.

Clint E. Stein: And we also, you know, kept some redundancy in place. Because, as you know, when you go through any type of merger, let alone one of this size and where we blended the teams, some people self-select out.

Chris: And that work started.

Chris: The first of the month end.

Chris: Associates for notified.

Chris: And then we started that process. So I would say that it's going to trickle through the third quarter, but.

Clint E. Stein: And so, we just felt like it was prudent to take the first year continually evaluate what was working well, and more importantly, what we could do better. And then make an assessment as to, you know, if it's in a leadership role, which leaders are going to be able to help push us forward to the level and degree that we expect. And then, you know, if we have processes that don't work, and I kind of alluded to that in my prepared remarks, there's the opportunity, I think, longer term, to re-engineer some processes and enhance and improve some automation.

Chris: The bulk of.

Chris: The effort.

Chris: It will happen and be concluded in the second quarter.

Chris: But.

Chris: By the time you get.

Chris: A full clean run rate of the entire scope of this initiative it will be the fourth quarter. So that's why we put that number out there and David. This is Ron just one thing I mentioned, we've already achieved it today I would just reiterate that as we look back at Q1, we did have some one off credits in the operating expense number that ended at $277 million, we pegged the normalized number.

Ron: 86, when you think about go forward quarters part of the saves kicking in.

Clint E. Stein: That's going to be, to a much lesser degree, just kind of a continuous improvement, get better every day type of mentality, like what you've expected from Columbia over the years. The real, what I'll call right-sizing the expense base work, you know, some of it. We had some miscellaneous contracts that we were able to renegotiate at maturity. And then we had the FTE initiative, which came towards the end.

Speaker Change: And the metal and then I expected range of $965 million to $985 million of Q4 2020 for operating expense, excluding CDI amortization.

Speaker Change: So sitting here today with with the numbers I throughout.

Speaker Change: $43 million annualized that's that's.

Speaker Change: Done.

Speaker Change: So if that helps you as you're as you're kind of thinking about how to in your model going forward.

Clint E. Stein: And then really the big number I mentioned, the FTE initiative, which came towards the end. And then really the big number I mentioned. $25 million of annualized savings that were announced just this month. And that work started at the first of the month, and Associates were notified. And then we started that process.

Speaker Change: Terrific that's helpful.

Speaker Change: And then maybe just as we think about the margin I think Chris alluded to it I mean, obviously one of the primary keys to to the margin is going to be the core deposit trends. So I guess I'm curious maybe your thoughts on core deposits and some of the initiatives you've got in place. It sounded like there was some really encouraging trends from that targeted deposit campaign $300 million.

Clint E. Stein: So I would say that it's going to trickle through the third quarter. But the bulk of the effort will happen and be concluded in the second quarter. But you know, by time you get a full clean run rate of the entire scope of this initiative, it will be the fourth quarter. So that's why we put that number out there. And David, this is Ron.

Speaker Change: Core deposit growth.

Speaker Change: I'm curious what else are you working on and maybe some other campaigns or initiatives that you are considering.

Ron: To help support core deposit growth, especially on the <unk> front.

Ron Farnsworth: Just one thing, because you mentioned we've already achieved it today. I would just reiterate that as we look back at Q1, we did have some one-off credits in the operating expense number that ended at $277 million. We pegged the normalized number at $286.

Ron: Yes, David I can't this is Chris.

Chris: I won't give you a complete playbook, but I can give you some color I can give you some color to it.

Chris: The retail campaign.

Chris: What can be done with a little over 300 branches and focus and really going out and looking at that small business market, we will see.

Ron Farnsworth: When you think about going forward quarters prior to the safe, in the metal, and then the expected range of $965 to $985 million of Q4 2024 operating expense, excluding CDI. And so sitting here today with the numbers I threw out, you know, it's 43 million annualized. It's that, done.

Chris: There's a lot of work involved in that.

Chris: There is a lot of referrals to follow up on getting customers on boarded the teams worked extremely hard during that time. So we will look to take a little breather and I'd say look into the second quarter later into the quarter and we'll announce.

Ron Farnsworth: You know, so if that helps you as you're kind of thinking about how to tune your model going forward, terrific. That's helpful.

Chris: Another focus.

Ron: It's something very similar.

Ron: So thats one piece as far as the gathering of new names and.

David Pipkin Feaster: And then maybe just as we think about the margin, I think Chris alluded to it. I mean, obviously, one of the primary keys to the margin is going to be core deposit trends. So I guess I'm curious, maybe your thoughts on core deposits and some of the initiatives you've got in place. It sounds like there were some really encouraging trends from that targeted deposit campaign, you know, 300 million in core deposit growth. I'm curious, what else are you working on and maybe some other campaigns or initiatives that you're considering to help support core deposit growth, especially on the NIB. Yeah, David, I can't.

Ron: Pretty excited about the noninterest bearing balances that are coming in on that specific customer segment.

Ron: To date or I said in the prepared remarks actually as of last night, we're up to about 5300 accounts and $314 million in deposits and those counts are maintaining their balances are higher than our average balance that we currently have.

Ron: And they continue to come in at.

Ron: At a nice pace got another five days or so to run the other pieces are really around.

Ron: We talked in the fourth quarter and we talked after the in the first quarter about those results about Cds and things of that nature.

Christopher M. Merrywell: This is Chris. I won't give you our complete playbook. But I can give you some color; I can give you some color on that retail campaign. And the retail campaign shows what can be done with a little over 300 branches and focus and really going about and looking at that small business market. We'll see. There's a lot of work involved in that. There were a lot of referrals to follow up on and get customers on boarded. The team worked extremely hard during that time.

Ron: Really looking at the role on all of those where they are coming in.

Ron: There is a lot less coming due in the second quarter as we had previously talked about.

Ron: The Delta on that tour today's rates are is nowhere near as great, which is good news and then on the other side as we move throughout the year. There are some opportunities all things being equal with rates as they are today.

Ron: We have some opportunities to begin to lower a lot of those rates as well. So I don't have the specifics that I can share with you right. This second but as I said as we go throughout the year, we will start to see that CD base change and start to.

Christopher M. Merrywell: So, you know, we'll look to take a little breather and, I'd say, look into the second quarter later into the quarter, and we'll announce probably another focus, maybe something very similar. So that's one piece as far as the gathering of new names and, you know, pretty excited about the non-interest-bearing balances that are coming in on that specific customer segment. To date, or as I said in the prepared remarks, actually, as of last night, it worked about 5,300 accounts and $314 million in deposits.

Ron: Bringing those rates those rates down as well Hey, David This is Tory I wanted to just add a couple of things to it on a commercial side. We have identified a couple of big places and the commercial side of the house, where we've got a lot of opportunity for some deposit growth I mean, most notably our fintech portfolio and our multifamily portfolio, which traditionally have been more.

Tory: Transactional and kind of put a plan in place.

Tory: Go after and make them full fledge customers and relationships for the company. So we feel very good about.

Speaker Change: Just kicking that off and hoping to see some really strong results as the year progresses.

Christopher M. Merrywell: And those accounts are maintaining their balances. They're higher than our average balance that we currently have, and they continue to come in at a nice pace. We've got another five days or so to go.

Speaker Change: Okay, Great and then.

Speaker Change: Maybe just touching on credit more broadly.

Speaker Change: You talked about Recalibrating the CSO model.

Christopher M. Merrywell: The other pieces are really around, we talked in the fourth quarter and we talked in the first quarter about those results, about CDs and things of that nature. We're really looking at the role of all of those, where they're coming in. There's a lot less coming due in the second quarter, as we had previously talked about. The delta on that to where today's rates are is nowhere near as great, which is good news.

Speaker Change: Could you maybe touch a little bit about.

Speaker Change: What went into that and kind of the methodology. There. It looks like we increased reserves on CRE and maybe reduce a little bit to commercial and then but more broadly it seems like fin pack is kind of stabilized a bit.

Speaker Change: Curious, what what happened to that one commercial credit, which was the larger driver of losses, and then just again broader commentary on what youre seeing on the credit front.

Christopher M. Merrywell: And then on the other side, as we move throughout the year, there are some opportunities, all things being equal with rates as they are today, we have some opportunities to begin to lower a lot of those rates as well. I don't have the specifics that I can share with you right now, but as I said, as we go throughout the year, we'll start to see that CD base change and start to bring those rates down. Hey, David, this is Tory.

Speaker Change: Yes, Dave This is Ron I'll start off on that front in terms of.

Ron: Some models themselves I would characterize it is.

Ron: Just a better reflection of the combined company's historical loss experience.

Ron: Within the commercial and the Recalibration of those models to drive towards that reduction, but you're right. It was a bit of a shift right a little bit lower in commercial just given lower historical loss rates and a little bit higher in the commercial real estate categories.

Ron: Again, those are based off of not loan level.

Ron: Items those are based off economic forecasts for.

Torran B. Nixon: I want to just add a couple things to it on the commercial side. We've identified a couple big places on the commercial side of the house where we've got a lot of opportunity for some deposit growth, I mean, most notably our FinPAC portfolio and our multifamily portfolio, which traditionally have been more transactional, and kind of put a plan in place to go after and make them full-fledged customers and relationships for the company. So I feel very good about just kicking that off and hoping to see some really strong results as the year progresses. Okay, great.

Ron: Rents and vacancies in western downtown core slightly deteriorated quarter over quarter. So that's something we're seeing on the ground with our customers just given the composition of the portfolio.

Ron: It is one of the drivers with Vascepa models, Frank alternative use for the second half of that about.

Ron: Credit overall and feedback.

Ron: Yes.

Ron: <unk>.

Ron: Continues to perform as we expected it to.

Speaker Change: To your point I mean, it is the losses have peak they are leveling out.

Ron: And we will have a period of leveling out before we see a notably drop and we expect that dropped somewhere around the third quarter continuing on through through the year and as we migrate back down to that 3.5% ish.

David Pipkin Feaster: And then maybe just touching on credit more broadly. You know, you talked about recalibrating the CSO model. Could you maybe touch a little bit on what went into that and kind of the methodology there?

Ron: Run rate and charge offs.

Ron: We consistently do a deep dive within that portfolio and slice and dice. It every which way looking for patterns of any other systemic type activity.

David Pipkin Feaster: It looks like we increased reserves on CRE and maybe reduced them a little bit on commercial. And then, but more broadly, you know, it seems like FinPAC is kind of stabilized a bit. I'm curious what happened to that one commercial credit, which was the larger driver of losses. And then just, again, broader commentary on what you're seeing on the credit front. Yeah, David, this is Ron.

Ron: <unk> within the portfolio and we see that it's really not.

Ron: What we are seeing is in particular in the 61 to 90 day delinquency bucket, which is a key delinquency range.

Ron: A great deal of those feed into nonperforming and eventually the loss, we're seeing that decrease.

Ron: Those levels are at the lowest levels that we've seen in several quarters. So that's very encouraging that a lot of the work we did.

Ron: Many quarters ago to tighten up underwriting standards.

Ron Farnsworth: I'll start off on that front. Just in terms of the Cecil models themselves, I'd characterize it as just a better reflection of the combined company's historical loss experience within the commercial and the recalibration of those models to drive towards that level of reduction. But you're right, it was a bit of a shift, right?

Ron: Model.

Ron: R&D working so that is encouraging and with regard to the.

Ron: CRE in particular multifamily office.

Speaker Change: I can.

Ron Farnsworth: Continue to be just extremely impressed at the resiliency of the portfolio, especially in those two verticals that are that are under the watchful eye of so many right now.

Ron: Really.

Ron: Nothing exciting going on within either one of those portfolios, it's really quite boring, which somebody like me loves to love to see.

Ron Farnsworth: A little bit lower in commercial, just given lower historical loss rates, and a little bit higher in the commercial real estate categories. Again, those are based not on loan-level items; those are based on, you know, economic forecasts for, You know, rents and vacancies in the western downtown core are slightly deteriorating quarter to quarter. So not something we're seeing on the ground with our customers just given the composition of the portfolio, but... It is one of the drivers from the... Frank will turn it over to you for the second half of that on credit overall.

Ron: And so.

Ron: Aye.

Ron: I am very pleased.

Ron: And in.

Frank Namdar: We continue to watch.

Ron: Watch all these portfolios extremely closely for changes and for US. It's important to stay ahead of it and that's what we're doing.

Speaker Change: Terrific I appreciate it thanks for the color everybody. Thank.

Speaker Change: Thank you.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And our next question comes from Jared Shaw of Barclays. Your line is open.

Jared Shaw: Hey, good afternoon. Thanks for the question.

Jared Shaw: You may be looking at first of all capital.

Jared Shaw: You have been able to grow capital really nicely and then as you said get your long term targets does this provide the opportunity to maybe.

Frank Namdar: Yeah, FinTech continues to perform as we expected it to, you know, to your point, I mean, the losses have peaked, they are leveling out, and we'll have a period of leveling out before we see it notably drop, and we expect that drop somewhere around the third quarter, continuing on through the year end as we migrate back down to that three and a half percent-ish run rate in charge-offs. We consistently do a deep dive within that portfolio and slice and dice it every which way looking for patterns of any other systemic type activity developing within the portfolio, and we see that it's really not.

Jared Shaw: Yes.

Jared Shaw: Look at accelerating our growth.

Jared Shaw: Better growth on the loan side earlier than expected or is the outlook for earning asset growth really more market driven than capital driven at this point.

Jared Shaw: Yeah.

Frank Namdar: Yes.

Speaker Change: From my perspective, it's more market driven.

Speaker Change: We continue to see even.

Speaker Change: It's a psychological.

Speaker Change: Phenomenon with our customers and some of them were rather than then borrow money at high eights low nines, even though they're getting fours and fives in terms of their cash so from a net spread standpoint, its really not much different than before the fed started.

Frank Namdar: What we are seeing is, in particular, in the 61 to 90 day delinquency bucket, which is a key delinquency range that a great deal of those feed into non-performing and eventually loss, we're seeing that decrease. So those levels are at the lowest levels that we've seen in several quarters.

Speaker Change: Tightening.

Speaker Change: But psychologically they haven't.

Frank Namdar: So that's very encouraging that a lot of the work we did many quarters ago to tighten up underwriting standards in the model is indeed working. And with regard to CRE, in particular, multifamily office, you know, I continue to be just extremely impressed at the resiliency of the portfolios, especially in those two verticals that are under the watchful eye of so many right now. Really, nothing exciting is going on within either one of those portfolios. It's really quite boring, which somebody like me loves to see.

Frank Namdar: For over a decade.

Frank Namdar: Borrowed money at those rates and so they're just using their own cash. Some are just kind of sitting on the sidelines waiting for opportunities.

Speaker Change: To see if maybe some of their competitors struggle and theyre able to do some things there. So there's a little bit of people keeping keeping some dry powder.

Speaker Change: Using their own cash and then just.

Speaker Change: More of a demand.

Frank Namdar: And so, you know, I'm very pleased and, you know, let's continue to watch all these portfolios extremely closely for changes, and for us, it's important to stay ahead of them, and that's what we're doing. Terrific. I appreciate it. Thanks for the call, everybody.

Frank Namdar: Demand side I would say.

Speaker Change: It's the funding side more than anything.

Speaker Change: We are.

Speaker Change: We saw an influx of deposits and we might.

Frank Namdar: Look at ways of growing earning assets, but right now.

David Pipkin Feaster: Thank you. Thank you. Thank you.

Speaker Change: Our focus is.

Operator: One moment for our next question. And our next question comes from Jared Shaw of Barclays. Your line is open. Hi, good afternoon.

Speaker Change: The loan to deposit ratios at a level that we're comfortable with we could see that go a little higher and we'd be comfortable with that but.

Speaker Change: But we're we're not really actively looking to.

Jared Shaw: Thanks for the question. First, capital. You've been able to grow capital really nicely and, as you said, meet your long-term targets. Does this provide the opportunity to maybe, look at accelerating or seeing better growth on the loan side earlier than expected? Or is the outlook for earnings asset growth really more market driven than capital driven at this point?

Speaker Change: To grow the balance sheet, it's more.

Speaker Change: Along the lines of the expense initiatives and everything else.

Speaker Change: About driving improved profitability for the company.

Speaker Change: I don't know if.

Speaker Change: Tori or Chris or Ron have a different perspective or an additional perspective no same same thing. Obviously this story I just think that talk a little bit about the pipeline <unk> pipeline has been pretty steady over the last two or three quarters, but the shift the mix has changed and.

Clint E. Stein: Yeah, it's, from my perspective, it's more market driven. You know, we continue to see even a psychological phenomenon with our customers and some of them where, you know, rather than borrow money at high 8s, low 9s, even though they're getting 4s and 5s in terms of their cash. So from a net spread standpoint, it's really not much different than before the Fed started tightening. But psychologically, they haven't, you know, for over a decade borrowed money at those rates.

Clint E. Stein: It has kind of shifted where we've got some nice growth on the C&I front and the pipeline and then a reduction in real estate, which is absolutely in line with.

Speaker Change: Everything we've been talking about for a while.

Speaker Change: It really fits the strategic direction for the company so feel.

Speaker Change: Positive about the opportunity throughout the franchise to grow the C&I book.

Speaker Change: Okay. Thanks, Adam actually I guess sort of a corollary to that.

Clint E. Stein: And so they're just using their own cash. Some are just kind of sitting on the sidelines, waiting for opportunities, you know, to see if maybe some of their competitors struggle, and they're able to do some things there.

Speaker Change: It looks like the the CRE capital concentration.

Clint E. Stein: As below sort of that 300% threshold now would you like to see that continue to trend lower or do you feel comfortable with.

Speaker Change: With where the mix of the loan portfolio is here and future growth.

Clint E. Stein: So there's a little bit of people keeping some dry powder, using their own cash, and then just more of a demand. I would say it's the funding side more than anything, you know. We're, If we saw an influx of deposits, then, you know, we might, uh, uh, look at ways of growing earnings assets. But right now, you know, our focus is on the loan to deposit ratios at a level that we're comfortable with.

Speaker Change: <unk> will be dependent on the market or should you should we expect you to continue to bring that concentration lower.

Speaker Change: I think over the long term you will see that that debt.

Speaker Change: That drift down and Thats back to Tories comment regarding.

C&I pipeline the relationship aspect.

Our C&I customers.

Clint E. Stein: We could see that go a little higher; we'd be comfortable with that. But But, you know, we're not really actively looking to see if Tori or Chris or Ron have a different perspective or an additional perspective. No, same thing. Obviously, this is Tori.

Speaker Change: No.

Speaker Change: They own real estate, we have relationships. Some are wealth management customers are in the real estate business.

Speaker Change: We're always going to.

Speaker Change: To be active in the CRE space, but.

Speaker Change: But I think that the focus on.

Clint E. Stein: I just want to talk a little bit about the pipeline, because the pipeline has been pretty steady over the last two or three quarters, but the mix has changed, and it's kind of shifted where we've got some nice growth on the CNI front in the pipeline, and then a reduction in real estate, which is absolutely in line with everything we've been talking about. Okay, thanks. And actually, I guess, you know, sort of a corollary to that, it looks like the CRE capital concentration is below sort of that 300% threshold. Now, would you like to see that continue to trend lower?

Speaker Change: As a combined company the things that we're able to do now that individually maybe.

Speaker Change: We couldnt or we couldnt fully due I think youre going to see.

Speaker Change: That level of concentration level.

Clint E. Stein: Will.

Clint E. Stein: Stay under that 300% over the long run that doesn't mean, there won't be variability from quarter to quarter. We have commitments out there that are funding right now and driving some balances on the CRE side.

Clint E. Stein: But if we're fast forwarding 12, 24, $36 60 months.

Speaker Change: I would fully expect to see that under 300.

Clint E. Stein: Or do you feel comfortable with where the mix of the loan portfolio is here and future growth will, you know, just more be dependent on the market, or should we expect you to continue to bring that concentration lower? I think over the long term, you will see that drift down. And that's back to Tori's comment regarding CNI pipeline, the relationship aspect, you know, our CNI customers, you know, they own real estate, we have relationships; some of our wealth management customers are in the real estate business.

Speaker Change: Thank you.

Clint E. Stein: Okay.

Speaker Change: Thank you one moment for our next question.

Clint E. Stein: Yes.

Speaker Change: And our next question comes from Jeff <unk> of D. A Davidson your line is open.

Speaker Change: Thanks, Good afternoon, I wanted to try to chase down that the loan and deposit growth expectations for this year.

Clint E. Stein: You've talked about relationship driven loans and the moves you've made on the deposit side, but just trying to get at.

Clint E. Stein: Good direction.

Clint E. Stein: We're, we're always going to, to be active in the in the CRE space. But I think that that the focus on as a combined company, the things that we're able to do now that individually, maybe well, 24, 36, 60 months. I would fully expect to see that under $300,000. Thank you. One moment for our next question. And our next question comes from Jeff Rulis of D.A. Davidson.

Jeff: Is that kind of low single digit growth for for boats.

Jeff: Yes, Jeff This is Tory I'll start and Chris can chime in.

Chris: Thank you.

Jeff Rulis: I think thats, well said low single digits for both.

Tory: With the mix on the on the loan growth side as best as we can to make that C&I focused.

Jeff Rulis: Said there is there is some growth this quarter that is just construction.

Jeff Rulis: Your line is open. Thanks. Good afternoon.

Tory: Projects in draws in construction, but.

Jeff Rulis: I wanted to try to chase down the loan and deposit growth expectations for this year. You know, I think you've talked about relationship-driven loans and the moves you've made on the deposit side, but just trying to get a good direction for that kind of low single-digit growth for both. Yeah, Jeff, this is Tory. I'll start, and Chris can chime in.

Jeff Rulis: The lending side that the primary focus is going to be C&I in its full banking relationships. So what comes with that is.

Tory: As much on the deposit front as possible.

Tory: Operating accounts of noninterest bearing balances and then I think it really strong robust core fee income pipeline. So Chris do you want to add to that no.

Torran B. Nixon: I think that's a low single digit for both, with, you know, the mix on the loan growth side as best as we can to make that CNI focused. As Clint said, there was some growth this quarter that was just construction. Projects, you know, draws of construction, but the lending side that was the primary focus. C&I and its full banking relationship. So what comes with it is, [inaudible] How long will inflation remain where it's at, Jeff, and how much money keeps coming out of the system? Those are obviously going to impact it.

Tory: And then on the loan side, but on the deposit side.

Torran B. Nixon: That's a good target.

Speaker Change: Look at Theres, a lot of variables that could come into that.

Torran B. Nixon: How long does inflation remain where it is that Jeff and how much money keeps coming out of the system. Those are obviously going to impact. It. So we're focused on if we can drive the new relationships across the bank boots retail wealth and into commercial as well and drive relationship deposit growth and it's really focusing much more on what that.

Tory: Mix is and keeping our cost as low as possible.

Torran B. Nixon: If we were to go out and run a promotion and put up a great out there we could certainly drive deposits, but those wouldn't be necessarily the right type of deposits for the long term.

Christopher M. Merrywell: So, you know, we're focused on if we can drive the new relationships across the bank, retail wealth, and into commercial as well, and drive relationship deposit growth, then it's really focusing much more on what that mix is and keeping the cost as low as possible. You know, if we were to go out and run a promotion and put a big rate out there, we could certainly drive deposits, but those wouldn't necessarily be the right type of deposits for the long term.

Christopher M. Merrywell: Strategic plan at the company.

Christopher M. Merrywell: But again, a good place to start I think theres a lot of variables, but the teams are going to roll up their sleeves and work really hard to keep driving relationships.

Speaker Change: Thanks, and one quick one on the margin.

Speaker Change: I think in the deck, you kind of caution that maybe havent seen the cycle floor, you added and that would be reflective of your your.

Christopher M. Merrywell: The strategic plan of the company. But again, a good place to start. I think there are a lot of variables, but the teams are going to roll up their sleeves and work really hard to keep driving relationships. Thanks. And one quick one on the margin.

Speaker Change: Your guide.

Christopher M. Merrywell: The range is right in the middle.

Speaker Change: Of the $3 45 to $3 60, I wanted to just.

Christopher M. Merrywell: If we were to pick that apart it sounds like.

Speaker Change: Second quarter, given seasonality that maybe you would caution maybe on that.

Jeff Rulis: I think on the deck, you've kind of cautioned that maybe you haven't seen the cycle floor yet. And that would be reflective of your guide, the range is right in the middle of 345, 360. I want to just, if we were to pick that apart, it sounds like, second quarter, given seasonality, that maybe you'd caution maybe on the, if you were to be in that range, you'd be on the lower side and be sort of exiting the year, potentially trending towards the higher end. Is that correct in terms of thinking more pressure up front in the year and easing, especially given sort of deposit rates and what's occurring Hey Jeff, this is Ron.

Ron Farnsworth: If you were to be in that range would be on the lower side and b sort of exiting the year.

Speaker Change: Potentially trending towards the higher end is that correct in terms of thinking.

Speaker Change: More pressure upfront in the year and easing.

Speaker Change: Easing, especially given sort of deposit rates and what's occurring in the first quarter.

Jeff Rulis: Hey, Jeff This is Ron yes, that's close and again the bigger driver over the course of the year, where we end up in that range as you can maybe just office.

Ron Farnsworth: Core deposit flows even more so than if the fed.

Ron Farnsworth: <unk> three times your doesn't move right. That's given how neutral we are relatively neutral slightly liability sensitive it would be more so based off deposit flows so seasonally.

Speaker Change: C tax time, DDA outflows and then they rebuild.

Speaker Change: Q3, so you can see that fluctuation within the range driven by that let's say.

Ron Farnsworth: Yeah, that's close. And again, the bigger driver over the course of the year where we end up in that range is gonna be based on those core deposit flows even more so than if the Fed cuts three times or doesn't move, right? That's given how neutral we are, relatively neutral, slightly sensitive.

Speaker Change: Okay. Thanks.

Speaker Change: Thank you one moment for our next question.

Ron Farnsworth: And our next question comes from Ben Garlinger of Citi. Your line is now open.

Speaker Change: Hey, good afternoon, everyone.

Speaker Change: Yes.

Ben Garlinger: I know you guys gave quite a bit of color on the market already but.

Ron Farnsworth: The repricing of deposits those are clearly the biggest hit from this one Q I know you gave guidance.

Ron Farnsworth: It's gonna be more so based Unknown Executive, Robert Terrell, Unknown Executive, Unknown Executive, Unknown Executive. Okay, thanks. Thank you. One moment for our next question. And our next question comes from Ben Gerlinger of City. Your line is open. Hey, good afternoon, everyone.

Ben Garlinger: Yes.

Ben Gerlinger: Kind of pig in the Python here in March.

Ben Gerlinger: But it was.

Ben Gerlinger: And deposit pricing I was just curious.

Ben Gerlinger: Can you quantify what the next I don't know.

Ben Gerlinger: Six months or so in terms of what the yield might be and any sort of specials that are running on rig hour just on pricing any I don't know about six months.

Ron Farnsworth: So Ben this is Chris I'll start with the pricing aspect of it that.

Ben Gerlinger: Good afternoon. I know that you guys gave quite a bit of color on the margin already, but the repricing of deposits is clearly the biggest hit for this 1Q. I know you guys get that. The PIG in the Python here is much less than it was, and Deposit Pricing. I'm just curious, can you quantify the next, I don't know, six months or so in terms of what the yield might be and any sort of specials that are running right now or just on pricing in general for the next six months? So Ben, this is Chris.

Ben Gerlinger: Yes, there is no plan for promotional types of true promotional special types of pricing. It's really it's the pricing that we have out there we continue to monitor it to monitor the market and where we want to be within that range. Some of it obviously depends on what competitors do and what's out there.

Ben Gerlinger: We have the ability to exception price, if we need to match a competitor or something like that.

Ben Gerlinger: I think that.

Christopher M. Merrywell: I'll start with the pricing aspect of it. Yeah, there's no plan for promotional types of true promotional special types of pricing. It's really, it's the pricing that we have out there. We continue to monitor it to monitor it to the market and where we want to be within that range. Some of it obviously depends on what competitors do and what's out there. We have the ability to exception price if we need to match a competitor or something like that.

Speaker Change: If you look at some of the other things and you look at the peak of the rates money.

Christopher M. Merrywell: Money markets were around 5% they are down to $4, one 5% to $4 three Cds peaked at about five and a quarter.

Christopher M. Merrywell: We're down to three nine to $4 five size and that includes a lot of factors that are in there and those are really just kind of the posted rates.

Christopher M. Merrywell: Over the course of the year, we've talked previously about second quarter.

Christopher M. Merrywell: We have a lot lower repricing.

Christopher M. Merrywell: I think that if you look at some of the other things and you look at the peak of the rates, money markets were, you know, around 5%, they're down to 4.15 to 4.3, CDs peaked at about 5.25, those are down to 3.9 to 4.55, and that includes a lot of factors that are in there, and those are really just kind of posted rates. I think over the course of the year, we've talked previously about the second quarter. We have a lot lower repricing of CDs. And then we'll build it back into the third quarter and into the fourth quarter.

Christopher M. Merrywell: Cds.

Christopher M. Merrywell: And then it will build back into the third quarter and into the fourth quarter now when it builds into the third and the fourth quarter. Those are on at rates that are I'll call them higher than they are today and so all things being equal we should have a nice reduction.

Ben Garlinger: From where they're currently at to where they would renew and continue to move forward. So hopefully that answers your question.

Speaker Change: Yes, no that's helpful color.

Christopher M. Merrywell: And then I saw.

Ben Garlinger: On pages five six.

Christopher M. Merrywell: Broadening our presence.

Christopher M. Merrywell: The Phoenix, Denver, Las Vegas, automated kind of West coast things that you don't have a huge presence more of just kind of.

Ben Garlinger: Any kind of aspirational, but thats probably.

Ben Gerlinger: Now, when it builds into the third and the fourth quarter, those are rates that are, I'll call them, higher than they are today. And so, all things being equal, we should have a nice reduction from where they're currently at to where they would renew and continue to move forward. Hopefully, that answers your question. Uh, yeah, that was a helpful caller. Um, and then I saw... [inaudible] across Phoenix, Denver, Salt Lake, Vegas.

Christopher M. Merrywell: In the next 12 months to really kind of dig in whether it be the next target stages to think about it I'm just trying to how to frame it relative to that.

Ben Gerlinger: We're in all of those cities.

Ben Gerlinger: All the dots you see on the map.

Ben Gerlinger: We're there we've been been there.

Ben Gerlinger: We put our first <unk>.

Ben Gerlinger: Retail location in the Utah market.

Ben Gerlinger: Last.

Ben Gerlinger: Last fall.

Ben Gerlinger: We've.

Ben Gerlinger: <unk> had teams in Colorado, we actually have.

Ben Gerlinger: All the major kind of West Coast cities that you don't have a huge presence in, is that more of just kind of, Not to use the term aspirational, but that's not like the next 12 months to really kind of dig in? Will there just be the next target stages to think about? I'm just trying to figure out how to frame it relative to today. We're in all of those cities, all the dots you see on the maps, we're there, we've been there.

Ben Gerlinger: Yeah.

Ben Gerlinger: Yes.

Ben Gerlinger: The next phase of that is to support those those teams with the retail banking capabilities and deposit taking capabilities.

Ben Gerlinger: And we have we have.

Ben Gerlinger: The projects in flight.

Ben Gerlinger: Do that Colorado actually this quarter, we will.

Ben Gerlinger: Open two retail locations in.

Clint E. Stein: We put our first retail location in the Utah market last fall. We've had teams in Colorado, and we actually have, You know, the next phase of that is to support those those teams with retail banking capabilities and deposit taking capabilities. And and we have, we have, we have the projects in flight to do that in Colorado. Actually, this quarter, we will open two retail locations in the Phoenix Metro Market.

Ben Gerlinger: In the Phoenix met.

Clint E. Stein: Metro market.

Clint E. Stein: It's really it's.

Clint E. Stein: I think how how to think about those markets is.

Speaker Change: Got it.

Clint E. Stein: It's full banking services, but it's really leading leading with commercial banking and so it's a branch light type model that's different than what we have in our legacy markets here in the northwest where we've been for 70 years.

Clint E. Stein: It's really it's a, I think how to think about those markets is that it provides full banking services, but it's really leading, leading with commercial banking. And so it's a branch light type model. It's different than what we have in our legacy markets here in the Northwest, where we've been for 70 years, and where we built our market share by acquiring a lot of banks. So in this instance, we're able to specify exactly which locations and communities we want to be in, which ones are conducive to our strategy and our business model.

Clint E. Stein: And where we build our market share by acquiring a lot of banks. So in this instance, we were able to.

Clint E. Stein: Specify exactly which locations, which communities, we want to be and which ones are.

Clint E. Stein: Conducive to.

Clint E. Stein: To our strategy and our business model.

Clint E. Stein: Some of the work that we're doing on the on the expense front is really too.

Ben Garlinger: It's just a reallocation of resources.

Clint E. Stein: How do we free up resources so that.

Clint E. Stein: Some of the work that we're doing on the expense front is really just a reallocation of resources. It's how do we free up resources so that we're not an outlier from an expense standpoint but that we're able to also drive future shareholder value and franchise value by having the appropriate presence in these very, very robust, desirable Western markets. Hey, Ben, this is Tory.

Clint E. Stein: We're not an outlier on an expense standpoint.

Ben Garlinger: But we're able to also drive future shareholder value of the franchise value by.

Tory: Having the appropriate presence in these very very robust desirable western markets.

Clint E. Stein: Hey, Ben this is Tory I, just want to add something to <unk> comments, I think youre spot on.

Tory: This idea of expansion into markets like Utah, Colorado, and Arizona are.

Torran B. Nixon: I just want to add something to Clint's comments, which I think are just spot on. This idea of expansion into markets like Utah and Colorado and Arizona is very comparable to what I think both banks have done over the course of time, just find a really good commercial team and put them in the market, and then have a supporting cast around them, which eventually is a retail presence and some deposit taking capabilities to support it. It's interesting, we've been in these markets, all of them, for about 18 months or less, maybe a couple of years at the very, very most, and all three are operating in the black and are very successful. So it's a great strategy. I think it's a minimal investment out of the gate, and then we just build on it from there. So I think we're all really happy.

Torran B. Nixon: Very comparable to what I think both banks have done over the course of time, just find a really good commercial team.

Tory: And put them in market and then have a supporting cast around them, which essentially is a retail presence in some deposit taking capabilities to support it.

Torran B. Nixon: Interesting we've been in these markets all of them for about 18 months or less maybe a couple of years at a very very most and all three are operating in the black and our very successful so it's.

Tory: It's a great it's a great strategy.

Torran B. Nixon: I think it's minimal investment out of the gate and then we did build on it from there. So I think we're all really happy with the way those things are working out and and then and then click on Southern California is a place where we've done that over the course of the years that have been very very successful and there's just so much opportunity with the density and number of customers or companies that.

Torran B. Nixon: Down in Southern California.

Clint E. Stein: The way those things are working out, and then I think Clint kind of alludes to Southern California is just a place where we've done that over the course of the years and have been very, very successful, and there's just so much opportunity with the density of the number of customers or companies that exist down in Southern California that it's just a logical further continued investment for us. Gotcha. That's helpful, Carl.

Tory: Just a logical.

Torran B. Nixon: Further continued investment for us.

Speaker Change: Got it that's helpful color.

Speaker Change: Thank you.

Speaker Change: Thank you. Thank you one moment for our next question.

Clint E. Stein: And our next question comes from Timur Brasilia of Wells Fargo. Your line is open.

Speaker Change: Hi, good afternoon.

Clint E. Stein: Paul.

Timur Felixovich Braziler: Good afternoon, maybe looking at.

Clint E. Stein: Looking again at the margin.

Timur Felixovich Braziler: I just wanted to see the $3 55 margin for the month of March is that fully baking.

Ben Gerlinger: Thank you. Thank you. Thank you.

Timur Felixovich Braziler: One moment for our next question. And our next question comes from Timur Braziler of Wells Fargo. Your line is open. Hi, good afternoon.

Ben Gerlinger: And the price reductions on the wholesale promotional fundings or does that actually trend higher maybe as that affect fully kicks in and then you get some of the more moderate pricing pressures off of that base.

Timur Felixovich Braziler: Good afternoon. Maybe looking again at the margin, I just want to see the $3.55 margin for the month of March. Is that fully baked in the price reductions on the wholesale and promotional funding? Or does it actually trend higher, maybe as that effect fully kicks in, and then you get some of the more moderate pricing pressures off of that base? This is Ron.

Timur Felixovich Braziler: This is Ron it makes it a good chunk of it just given the majority of that those adjustments were in February. So when you look at the month of March felt theyre still reductions throughout the month, but the majority occurred.

Speaker Change: Prior to.

Timur Felixovich Braziler: Okay got it and then on the <unk> side. It looks like just the one off items mentioned in the appendix that core expense of $2 76, Ron you had mentioned that normalizes at $2 86, but it kind of cutoff as you had.

Ron Farnsworth: It makes a good chunk of it, just given that the majority of those adjustments were in February. So when you look at the month of March itself, there were still reductions throughout the month, but the majority occurred prior. Okay, got it. And then on the inside, it looks like just the one-off items mentioned in the appendix, and that's a core expense of $276. Ron, you had mentioned that normalizes at $286, but it kind of dropped off as you mentioned what that driver was.

Ron Farnsworth: Mentioned, what that driver was just what's the tie back from the $2 76 that looks to be core versus the 286 normalize we should be using.

Ron Farnsworth: Yes, 286 are definitely the number to be using and just a handful of one off items that happen to be credit. So.

Ron Farnsworth: Just various credit entries, whereas in the fourth quarter, they were mostly dividends yours.

Speaker Change: Okay got it and then just last for me the migration of credit.

Timur Felixovich Braziler: Just what's the tie back from the $276 that looks to be core versus the $286 normalized we should be using? Yeah, 286 is definitely a number to be using, and it's just a handful of one-off items that happen to be credits. So just various credit entries, whereas in the fourth quarter, they were mostly debidential. Okay, got it.

Timur Felixovich Braziler: SBA specifically, we saw another competitor today talked to similar trends I know you guys are a big SBA lender in your geography could you just remind us the size of that portfolio and maybe some nuances about it what portion of that is guaranteed and maybe some other characteristics of that portfolio.

Timur Felixovich Braziler: It's about this is Frank it's about $600 million.

Ron Farnsworth: And then, just last for me, the migration of credit on the SBA. Specifically, we saw another competitor today talk about similar trends. I know you guys are a big SBA lender in your geography. Can you just remind us the size of that portfolio and maybe some nuances about it? What portion of that is guaranteed, and maybe some other characteristics of that portfolio?

Timur Felixovich Braziler: They've historically done a lot of business acquisition type financing and Thats really where the losses have been centered as in that specific space.

Ron Farnsworth: And.

Ron Farnsworth: Obviously business acquisition smaller borrowers those are the ones in a rates up environment.

Ron Farnsworth: At a higher rate environment are going to be.

Ron Farnsworth: Adversely impacted in and Thats, what youre seeing.

Frank Namdar: It's about this is Frank, it's about 600 million. And they they've historically done a lot of business acquisition type financing. And that's really where the losses have been centered in that specific space. And, you know, obviously, business acquisitions, smaller borrowers, those are the ones in a rates up environment and in a higher rate environment are going to be adversely impacted, and that's what you're seeing. I mean, it's in no way indicative of a more of a spread than that.

Ron Farnsworth: In no way indicative of a more of a spread than that.

Frank Namdar: And the guarantees on those on those.

Frank Namdar: Those credit obligations can run anywhere from from 50% to 90%. So the escalation that you saw on the Npls attributable to SBA is I mean should they should they go to loss.

Frank Namdar: They will generally be guaranteed by by some portion.

Frank Namdar: On average it's about 75%.

Frank Namdar: And the balance of the increase TMR is really centered in a single credit.

Frank Namdar: And, you know, the guarantees on those credit obligations can run anywhere from 50% to 90%. So the escalation that you saw in the NPLs attributable to SBAs, I mean, should they go to loss, they will generally be guaranteed by some portion. On average, it's about 75%, and the balance of the increase. Timur is really centered on a single credit in the C&I space, of which we are well collateralized, and there is significant interest in this particular property, and I expect this one will probably be gone within the next quarter or two at the latest. Timur, this is Tori.

Frank Namdar: In the C&I space.

Tori: Of which we are we are we are well collateralized and there is there is significant interest in this particular.

Tori: Property and I expect this one will probably be gone within the next quarter or two at the latest.

Tori: Timur This is Tory I think it would be good just to kind of highlight.

Tori: Our strategic shift in our SBA business.

Tori: We had historically been a more.

Frank Namdar: <unk>.

Tori: I think full fledge nationwide lender looking for gain on sale in and kind of restructured.

Torran B. Nixon: I think it'd be good just to kind of highlight a strategic shift in our SBA businesses. You know, we had historically been a more, I think, full-fledged nationwide lender looking for gain on sale, and it kind of restructured and through a strategic initiative to have the SBA group focus exclusively on referrals from retail banking and commercial banking and customers of the bank and just kind of changing the business model a bit, which I think will bring us in and have us focus quite nicely like we do everywhere else in the company where it's So this is a shift for us, but I think it is a really good shift. Great Thanks for the questions.

Torran B. Nixon: <unk> restructured and through our strategic initiative to have it focus the SBA group to focus exclusively on referrals from retail banking and commercial banking and customers of the bank.

Torran B. Nixon: And just kind of changing the business model, a bit which I think will bring us in footprint and have us focus.

Torran B. Nixon: Quite nicely like we do everywhere else in the company, where it's about full relationship banking units about our existing customers or new prospects that we bring into the company. So a shift for us, but I think a really good shape.

Speaker Change: Great. Thanks for the questions.

Speaker Change: Thank you one moment for our next question.

Torran B. Nixon: Okay.

Torran B. Nixon: And our next question comes from Brandon King of <unk>. Your line is open.

Torran B. Nixon: Hey could.

Torran B. Nixon: Could you please characterize the deposit.

Torran B. Nixon: Noninterest bearing deposit outflows, you're still seeing I believe some of the commentary was around inflationary pressures, but I'm wondering if some of that is also attributed to mix shift.

Timur Felixovich Braziler: Thank you. One moment for our next question, and our next question comes from Brandon King of Truist. Your line is open.

Timur Felixovich Braziler: Hey, Brian This is Ron I'd say here early in the second quarter is going to be mostly tax related seasonally.

Brandon King: Hey, could you please characterize the deposit and non-interest bearing deposit outflows you're still seeing? I believe some of the commentary is around inflationary pressures, but I'm wondering if some of that is also attributed to the mixture. Hey, Brandon, this is Ron.

Ron Farnsworth: We're both bankruptcy met combined in the first quarter again it was.

Ron Farnsworth: Some of the trends from Q4 in the month of January but then initiatives underway helped in February and March those balances were flat, which was great to see.

Ron Farnsworth: I think, you know, here early in the second quarter, it's going to be mostly tax related seasonally. We're both banks have seen that combined. In the first quarter, again, it was a continuation of the trends from Q4 into the month of January, but then initiatives underway helped in February and March; those balances were flat, which was great. Yeah, the mix, you know, it continues to have some shifting in it higher for longer, and customers are going to continue to look at that, continue to make choices and decisions. We follow it on, does the money actually leave?

Brandon King: Yes. This is Chris ill add to that.

Ron Farnsworth: Yes, the mix. It continues to have some shifting minute higher for longer is going to continue that customers are going to continue to look at that and continue to make choices and decisions. We follow it on just the money actually leave.

Ron Farnsworth: Or does it leave our balance sheet and we're seeing it either be spent or receiving its shift into higher earnings.

Ron Farnsworth: Higher new products.

Speaker Change: Okay, and what would you attribute I guess.

Ron Farnsworth: The portion of those into higher earning products versus being experience.

Speaker Change: But Brendan I have just on the commercial side of the house, which is a little bit who has talked about it's really closer to three quarters of what.

Christopher M. Merrywell: leave our balance sheet, and we're seeing it either be spent, or we're seeing it shift into higher earning products. Okay, and what would you attribute, I guess, the portions of into higher earning products versus being spent? Like Brandon, I have it on with just on the commercial side of the house, which is a little bit this talks about how it's really closer to three quarters of what exits non-interest bearing just gets repriced into an interest-bearing account, whether money market or whatever.

Ron Farnsworth: Exits noninterest bearing just gets repriced into interest bearing account, whether money market or whatever and then the balance of that at this point over the last couple of quarters has been spent on either distributions.

Christopher M. Merrywell: Taxes dividends et cetera, so that's a rough ballpark of what we've seen.

Christopher M. Merrywell: Okay. Okay very helpful and then with the changes in how youre pricing certain deposits could you talk about the retention of those same deposit categories has that been affected at all.

Brandon King: And then the balance of that, at this point, over the last couple quarters, has been spent on either distribution, taxes, dividends, etc. So that's a rough ballpark of what we have. Okay, okay. Very helpful. And then with the changes in how you're pricing certain deposits, could you talk about the retention of those same, you know, deposit categories? Has that been affected at all?

Brandon King: If the goal is to kind of wherever you moves from a retention standpoint to kind of make up with these new initiatives.

Brandon King: Yes that and most of that comes in Brandon in the CD portfolio that and we track that to wear.

Brandon King: Pretty much on a given month, we renew approximately 80, 788% of our Cds either renew.

Brandon King: And I guess the goal is to kind of make up for whatever you lose from a retention standpoint to kind of make up for the, Yeah, that most of that comes in Brandon in the CD portfolio that we track that to where, Pretty much on a given month, we renew approximately 87, 88% of our CDs either renew, move into a different term, or they auto renew. And so, that number has been very consistent over time. But it can vary.

Brandon King: Moving to a different.

Brandon King: Tom or the auto arena and so that number has been very consistent over time it can vary.

Brandon King: It can vary based on what our rates are at the time, but we can lay that over that out over the next 13 months and really kind of have a good idea all things being equal where we want to be and so we can we can control a bit of that renewal activity.

Brandon King: It can vary based on what our rates are at the time, but we can lay that over the next 13 months and really kind of have a good idea of all things being equal where we want to be. So we can control a bit of that renewal activity. That's a pretty solid number for what rolls over each and every one of us. Okay, thanks for taking my question. Thank you. Thank you. And as a reminder, if you have a question, please press star 11.

Brandon King: That's a pretty solid number for what rolls over.

Brandon King: Each and every month.

Speaker Change: Okay. Thanks for taking my questions.

Speaker Change: Thank you and as a reminder, if you have a question. Please press star one line one moment for our next question.

Brandon King: Yeah.

Brandon King: And our next question comes from Andrew <unk> with Stephens. Your line is open.

Speaker Change: Hey, good afternoon.

Brandon King: Yes.

Brandon King: <unk>.

Operator: One moment for our next question. And our next question comes from Andrew Terrell of Stevens. Your line is open. Hey, good afternoon.

Glenn: Glenn just.

Speaker Change: Quickly on the I think I heard in your prepared remarks.

Andrew Terrell: Discussion around kind of the TCE ratio and targeting.

Andrew Terrell: Clint, just quickly on the I think I heard in your prepared remarks, discussion around kind of the TC ratio and targeting, 8% there versus I think you're at 6.6% today. We've talked about kind of this total risk-based capital target of 12% for a few quarters now. I guess I just am curious what drove the kind of change in the line of thinking and maybe more of a focus on the TCE ratio now, given we've talked about the total risk base for a while.

Andrew Terrell: 8% there versus I think six six today, we've talked about kind of the total risk based capital target of 12% for a few quarters now I guess I just I'm curious what what kind of drove the kind of change in the line of thinking and maybe more of a focus on the TCE ratio now just given we've talked about the total risk base for a while.

Andrew Terrell: Yes.

Clint: It's a good clarifying question.

Speaker Change: I don't I don't know its Ben.

Andrew Terrell: Probably 15 years since.

Clint E. Stein: Yeah, that's a good clarifying question. You know, I don't, I don't know, it's been probably 15 years since Columbia kind of set its long-term target capital ratios. And what we always said was 12 percent total risk base or 8 percent TCE. Now, where we've been focused on are those regulatory ratios. They're not really out of alignment.

Andrew Terrell: Colombia.

Andrew Terrell: Its long term target capital ratios and what we always said was 12% total risk base or 8% TCE and where we've been focused on.

Clint E. Stein: Those regulatory ratios.

Clint E. Stein: They are not really out of alignment if you look at.

Clint E. Stein: I think were roughly 11 seven is what we expect to.

Clint E. Stein: If you look at it this way, I think we're roughly 11.7 is what we expect to be the total risk base at the bank level. Parent company, as I mentioned, is 12%. Next quarter, quarter and a half, the bank should move to that 12% level. At the same time, that's going to push TCE up.

Clint E. Stein: To be total risk base at the bank level parent company as I mentioned, 12%.

Clint E. Stein: <unk>.

Clint E. Stein: Next quarter quarter, and a half the bank.

Clint E. Stein: <unk> should move to that 12% level.

Clint E. Stein: At the same time it is going to push TCE up and then if you just look at where we're at with iOS and.

Clint E. Stein: When you add that back in you are pretty much in the ballpark of an 8% TCE ratio. So.

Clint E. Stein: And then if you just look at where we are with AOCI and you add that back in, you're pretty much in the ballpark of an 8% TCE ratio. So I don't think it's too far off, but I just think that it's something that we should monitor. We have monitored them for a long period of time. I think it's artificially lowered because of the capital impact of The Great Marks with Purchase Accounting and then just where we're at right now with Current Rate Levels. That doesn't mean that it's a hard floor.

Speaker Change: I don't think its too far off but I just think that.

Clint E. Stein: It's something that.

Clint E. Stein: We do monitor we have monitored monitored for a long period of time I think it's artificially lowered because of the.

Clint E. Stein: The capital impact of.

Clint E. Stein: The rate marks with purchase accounting.

Clint E. Stein: And then just where we're at right now with.

Clint E. Stein: Current rate levels.

Clint E. Stein: That doesn't mean that that's a hard floor that doesn't mean that we won't.

Clint E. Stein: Look opportunistically the market.

Clint E. Stein: We believe the market has our valuation wrong and has four.

Clint E. Stein: That doesn't mean that we won't look opportunistically. You know, the market. I personally believe the market has our valuation wrong and has for the last couple of years. And so it doesn't mean that when there's volatility, and there are opportunities that we won't take strategic advantage of when we feel like that that's gotten even outsized from where it should be. But just broadly, we want to get that out there a bit. Anything that's very major or meaningful in terms of shifting numbers and calculations probably won't occur until we're within sight of that 8% TCE.

Clint E. Stein: The last couple of years and so it doesn't mean that when there is volatility and there is opportunities that we won't.

Clint E. Stein: Take strategic advantage of when we feel like that thats gotten even outsized from where it should be.

Clint E. Stein: But just broadly want to get that out there that.

Clint E. Stein: Anything thats very major or.

Clint E. Stein: Meaningful in terms of shifting numbers and calculations.

Clint E. Stein: Probably won't occur until were within ice side of that 8% TCE level.

Speaker Change: Yeah understood. Okay I appreciate the clarification there.

Andrew Terrell: Yep, understood. Okay, I appreciate the clarification there. And it may be just one, a lot of mine were asked and addressed already, but the 14 million commercial loan that was charged off this quarter, was that previously sitting in non-accruals? No, this is Frank.

Clint E. Stein: And then maybe just one a lot of my arm asked and addressed already the 14 million.

Frank Namdar: Commercial loan that was charged off this quarter was that previously setting in non accruals.

Andrew Terrell: Okay.

Andrew Terrell: No.

Frank Namdar: This is Frank.

Frank Namdar: During the quarter we had.

Frank Namdar: Yeah, during the quarter we had, really an extraordinary situation developed pretty quickly in which a C&I relationship self-discovered a pretty complex and significant internal fraud, which drove the company quickly into a bankruptcy situation. And so given the nature of the fraud, the uncertainty surrounding the true collateral, various pending investigations going on presently, and really future potential litigation, we took the, I would say, decisive, quick, and conservative move to charge off the outstanding balance now and really look to recover any proceeds as we move through the process. And, you know, given what's going on, I think, you know, that's probably really all I can talk about with regard to the subject right now. But that's really what drove me.

Frank Namdar: Really an extraordinary situation develop pretty quickly in which our C&I relationship.

Frank Namdar: Self discovered.

Frank Namdar: A.

Frank Namdar: A pretty complex and significant internal fraud, which drove the company quickly into a bankruptcy situation.

Frank Namdar: So given the nature of the fraud, the uncertainties surrounding the true collateral.

Frank Namdar: Various pending investigations going on presently and really future potential litigation, we took the.

Frank Namdar: I would say decisive quick and conservative move to charge off the outstanding balance now.

Frank Namdar: And really look to recover any proceeds as we move through the process and.

Frank Namdar: And given given what's going on I think that's probably really all I can all I can talk about with regard to the subject right now.

Frank Namdar: Okay, understood. I appreciate the added color there, and thanks for taking the questions. Thank you. One moment for our next question. And our next question comes from Chris McGratty of KBW. Your line is open.

Frank Namdar: That's really what drove that.

Christopher Edward McGratty: Okay understood I appreciate the added color there and thanks for taking the questions.

Christopher Edward McGratty: Thank you one moment for our next question.

Christopher Edward McGratty: And our next question comes from Chris Mcgratty of <unk>. Your line is open.

Christopher Edward McGratty: Oh, great. Thanks. Um, Clint, maybe on the disclosure in the deck about a couple billion of loans that you don't view as long-term strategic, but the right environment doesn't lend to moving them. I guess what is it about these loans?

Christopher Edward McGratty: Great. Thanks.

Christopher Edward McGratty: Clint maybe.

Christopher Edward McGratty: The disclosure in the deck about.

Christopher Edward McGratty: A couple of billion of loans that you don't view as long term strategic but the rate environment doesn't lend to moving them I guess what is it about these loans and I guess what would it take for you to.

Clint E. Stein: And I guess what it would take for you to, to kind of flip, flip the switch on those and dispose of them or look to sell them? Well, that, that, that, that kind of plays into the earlier question about CRE levels and where we see those over the long run. A checking account?

Clint E. Stein: To kind of flip the switch on that we can dispose of those or look to sell them.

Clint E. Stein: Well.

Clint E. Stein: That kind of plays into the earlier question about.

Clint E. Stein: CRE levels, and where we see those.

Clint E. Stein: Over the long run.

Clint E. Stein: A Wealth Management Relationship, an Operating Account, anything of that nature would change how I view the segment of the portfolio that we've kind of highlighted there in the slide deck. Those are predominantly The Multifamily Division portfolio, and Tori shuttered that about a year ago. You know, so that's a wind-down portfolio. The other one would be single-family resi loans that we don't have any other relationship with.

Clint E. Stein: A checking account.

Clint E. Stein: Our wealth management relationship and operating account anything of that nature would change how I view.

Clint E. Stein: The <unk>.

Clint E. Stein: Segment of the portfolio that we've kind of highlighted there in the slide deck.

Clint E. Stein: Those are predominantly.

Clint E. Stein: Sure.

Clint E. Stein: The multifamily division portfolio.

Clint E. Stein: Tori shuttered that.

Clint E. Stein: About a year ago.

Clint E. Stein: So thats a wind down portfolio.

Clint E. Stein: The other one would be single family <unk> loans that we don't have any other relationship with them.

Clint E. Stein: And that's kind of a legacy product from when the home lending group was structured more like a mortgage company as opposed to how we have it structured today or how it was restructured just shortly before the merger closed, which is truly a mortgage division of a bank that supports our customers and their activities and needs. So those are some of the initiatives that I know Chris and Tori are working on. The rate environment buys them, affords them time to go out, and we have loans with these individuals and organizations, so can they convert them into a relationship? And if they can, then great; that helps us on the deposit front, and it would be something we would keep.

Clint E. Stein: Kind of a legacy product from from.

Clint E. Stein: When the home lending group was structured more like.

Clint E. Stein: Our mortgage company as opposed to how we have it structured today or how it was restructured just shortly before the merger closed which is truly a mortgage division of the bank supports our customers in their activities and needs. So that's some of the initiatives that I know, Chris and Tori we're working on is.

Clint E. Stein: <unk>.

Clint E. Stein: Sure.

Clint E. Stein: The rate environment.

Clint E. Stein: His them affords them time to go out and we have loans with.

Clint E. Stein: With these individuals and organizations and so.

Clint E. Stein: Can they convert them into a relationship and if they can.

Clint E. Stein: Great that helps us on the deposit front and it would be something we would keep but if they can't then win.

Christopher M. Merrywell: But if they can't, then when market conditions are right, well, then we'll take a very hard look at exiting those from the portfolio, which would then also lower that CRE concentration. Okay, great. And then, as I followed Clint, if we just zoom out like normalized charge-offs, right, you've got the FinPAC book that's running higher, but normalizing. What should I think about normalized charge-offs in this environment for the bank on a consolidated basis?

Christopher M. Merrywell: Market conditions are right.

Christopher M. Merrywell: We'll take a very hard look at exiting those out of the portfolio, which then would also lower that CRE concentration level.

Speaker Change: Okay, Great and then as my follow up Glenn.

Christopher M. Merrywell: If we just zoom out like normalized charge offs right you've got the.

Christopher M. Merrywell: Impactful running higher but normalizing how do I think about it.

Christopher M. Merrywell: Normalized charge offs in this environment for the bank on a consolidated basis.

Christopher M. Merrywell: Yeah, I think that's one of the things we talk about even internally is that, you know, the normalized level for FinPAC is what, three and a half percent, roughly? I would say three and a half to four percent. And, you know, and it was running, what, five? Five and a half. Five and a half or so.

Speaker Change: Yes, I think thats one of the things, we talk about even internally as debt.

Christopher M. Merrywell: The normalized level for Finn pack is what three 5% roughly let's say, 354% and it was running 55555 or so and so we see that kind of coming back, but then it skews. The overall bank numbers. So as we move forward, we'll do a better job at.

Clint E. Stein: And so we see that kind of coming back, but then it skews the overall bank number. So as we move forward, we'll do a better job at trying to bifurcate so you can see kind of where FinPAC's at on a normalized level, as well as where the bank is at. I think from an expectation standpoint, correct me if I'm wrong, but I mean, you know, what we're seeing in terms of credit, what we're seeing in terms of the output of our CECL model, probably, you know, look at that normalization in FinPAC, and then just carve out, you know, what the bank's experience has been over the last three or four quarters. If I were running a model, that' That's fair. I would say that's a fair representation of what you should do. Okay, thank you.

Clint E. Stein: Trying to bifurcate. So you can see kind of where if impacts at on a normalized level as well as where the banks at I think from an expectation standpoint.

Clint E. Stein: Me, if I'm wrong, but I mean.

Clint E. Stein: What we're seeing in terms of.

Clint E. Stein: Credit what we're seeing in terms of the output of our seasonal model.

Clint E. Stein: Probably.

Clint E. Stein: Look at at that normalization in fin pack.

Clint E. Stein: And then just carve out what the experience has been over the last three or four quarters.

Clint E. Stein: If I was running a model that's probably what I would model going forward. That's fair I would say that's a fair representation of what you should do.

Speaker Change: Great. Thank you.

Christopher Edward McGratty: Thank you. One moment for our next question, and our next question comes from John Arfstrom of RBC Capital Markets. Your line is open.

Speaker Change: Thank you one moment for our next question.

Jon Arfstrom: And our next question comes from John Armstrong of RBC capital markets. Your line is open.

Jon Arfstrom: Hey, thanks, everyone. Question for you guys, maybe the other thing that hasn't been touched on is seed income and your expectations there. I know it's a smaller revenue contribution, but I think maybe that's the only thing we haven't touched on from the P&L. What kind of expectations do you have there? And I guess I'm somewhat interested in the wealth business and mortgage in particular. Hey, John, this is Tory.

Jon Arfstrom: Okay.

Jon Arfstrom: Everyone.

Jon Arfstrom: Okay.

Tory: Question for you guys that maybe other thing that hasn't been touched on as Susan and your expectations. There I know, it's a smaller revenue contribution but.

Tory: I think maybe that's the only thing we haven't touched on from a P&L what kind of expectations do you have there and then I guess.

Jon Arfstrom: Someone interested in the wealth business and mortgage in particular.

Jon Arfstrom: Hey, John This is Tory I'll kick it off and then turn it over to Chris on the wealth side.

Tory: I think when the two banks came together there were a few places.

Tory: Where there are a lot of places we are excited about the there is a few places we were really really excited about and one of them is the fee.

Tory: Income side, because there were some products and some capabilities that I think Umpqua bank brought in that the Columbia Bank customers had had a need for and just not a product set to kind of serve it so.

Torran B. Nixon: I'll kick it off and then turn it over to Chris on the wealth side. You know, I think when the two banks came together, there were a few places where there were a lot of places we were excited about, but there were a few places we were really, really excited about. And one of them is, in particular, treasury management. Commercial Card and then International Banking would be kind of the three that I would see followed probably closely by... And again, the pipeline is.

Chris: We our pipeline on the fee income side, you just continues to grow every single month.

Chris: It is a byproduct of a lot of hard work by all of the folks in the bank, whether it's retail or commercial or anywhere else in the growth has been I think I'd, probably point out three areas in particular Treasury management.

Torran B. Nixon: Commercial card and then international banking would be kind of the three that I would see followed probably closely by merchant.

Torran B. Nixon: <unk>.

Torran B. Nixon: 10 million bucks, and it's moving, it's moving up every day, and, you know, it's a really good thing for the company and for our customers, and so we feel pretty confident about where we are and where we're going. Yeah, John's Chris.

Chris: Again, the pipeline is 10 million Bucks and its moving its moving up every day and and.

Chris: It's a really good thing for the company and for our customers and so we feel pretty confident about where we are and where we're going with it.

Christopher M. Merrywell: Yeah, I would say in the mortgage industry where we're at, if you look back over the past couple quarters, is a really good spot. It's kind of settled into that range over the last couple quarters, focused much more on help for sale. And as Clint mentioned, taking care of our customer base, we still have portfolio products, and we will do that for customers. But the mix is definitely, definitely shifted there.

Torran B. Nixon: Yes, Johnson, Chris Yeah, I would say in the mortgage where we're where we're at if you look back over the past couple of quarters is a really good spot kind of settled into into that range over the last couple of quarters focus much more on <unk>.

Christopher M. Merrywell: Held for sale and as Clint mentioned, taking care of our customer base, we still have portfolio of product and we will do that for our customers, but the mix is definitely definitely shifted on there.

Christopher M. Merrywell: You know, as we move into the summer season, when you're looking at, it's predominantly purchase business, there's a bit of refi in there still. But as you start moving into the summer, a little bit, we may see a bit of an uptick in the overall production second quarter, third quarter, and all things being equal with rates as they are today. The wealth business, if you recall, we did our platform conversion during the fourth quarter last year in October. And I'm pretty happy to say that that's settled in extremely well. The advisors understand the system.

Christopher M. Merrywell: As we move into the summer season, when you're looking at.

Christopher M. Merrywell: It's predominantly purchase business, there is a bit of refi and their scale.

Christopher M. Merrywell: You start moving into the summer a little bit we may see a bit of an uptick in the overall.

Christopher M. Merrywell: Production second quarter third quarter, and all things being equal with rates as they are today.

Christopher M. Merrywell: The wealth business, if you recall, we we get our platform conversion.

Christopher M. Merrywell: During the.

Christopher M. Merrywell: Fourth quarter last year in October and I'm pretty happy to say that.

Christopher M. Merrywell: That settled in extremely well.

Christopher M. Merrywell: The advisors understand the system they are communicating with their customers. The customer experience has improved dramatically from the system. We were the broker dealer with before and so I think that shows some real signs of upward mobility as we continue to move beyond that conversion.

Christopher M. Merrywell: They're communicating with their customers. The customer experience has improved dramatically from the system we were using, the broker dealer we were with before. And so I think that shows some real signs of upward mobility as we continue to move beyond that conversion. And then, on the trust side, we're getting more and more opportunities working with our partners within the bank, especially on the commercial side where we've got business sales, we've got lots of owners, and that is really becoming a part of the teams working together.

Christopher M. Merrywell: And then on the trust side, we are getting more and more opportunities working with our partners in within the bank, especially within the commercial side, where we've got business sales got lots of owners and that is really becoming a part of the teams working together and the pipeline there is.

Christopher M. Merrywell: And the pipeline there is... is better than it's been in the past. So pretty exciting, we'll look to move into some of our newer markets in those spaces. It's a matter of finding, Thank you. Thank you on that. And then, maybe Clint, one last one for you.

Christopher M. Merrywell: Is better than it's been in the past so pretty exciting there.

Christopher M. Merrywell: We will look to move into some of our newer markets in those spaces, it's a matter of finding the talent.

Clint: Good. Thank you. Thank you on that.

Clint: And then maybe one last one for you.

Jon Arfstrom: You know, you seem pretty laser focused on top quartile type performance. And I would just ask, what do you look at specifically for that? And I know you're frustrated with evaluation. But, you know, as analysts, we look at return on tangible and how that, you know, your price tangible book looks. And if you can continue to put up these kinds of ROTCs, your stock price should clearly go up. But you know, what are you looking at?

Christopher M. Merrywell: <unk> seen.

Jon Arfstrom: It seemed pretty laser focused on top quartile performance.

Jon Arfstrom: I would just ask what do you look at specifically for that.

Jon Arfstrom: Youre frustrated with the valuation but.

Jon Arfstrom: As analysts look at return on tangible and how that how you price to tangible book looks unless you can continue to put up.

Jon Arfstrom: These kinds of Rotten.

Jon Arfstrom: When your stock price should clearly go up but what are you looking at how do you measure that success.

Clint E. Stein: How do you measure that success? And, you know, how does that stuff look, you know, by the end of the year when the sufficiency program is fully kicked in? Yeah, well, we certainly do look at our return on tangible assets, and that has been, you know, on a pure comparison level, it has been favorable. But, you know, we also have a lower ratio.

Clint E. Stein: How do you think that stuff looks.

Clint E. Stein: We ended the year when the sufficiency program was fully kicked in.

Clint E. Stein: Yes.

Clint E. Stein: Well, we certainly do look at our.

Clint E. Stein: Our return on tangible and that has been on a peer comparison level. It has been has been favorable but we also have a lower ratio.

Clint E. Stein: Our view is, and I think in my prepared remarks, I said across all financial metrics, our view is pick a metric because, from time to time, things will look different. You know, there's things that are in focus at different times, as you know. But, you know, wherever our peer set is, then we want to screen in the top quartile. And if it's return on tangible, if it's ROAA that somebody's looking at, if it's deposit mix, composition, you know, pretty much anything along those lines.

Clint E. Stein: Our view is is and I think in my prepared remarks, I said across all.

Clint E. Stein: Financial metrics, our view is pick a metric because from time to time things will look different.

Clint E. Stein: Things that are in focus at different times as you know but.

Clint E. Stein: Wherever our.

Clint E. Stein: Our peer set is.

Clint E. Stein: Then we want to screen in the top quartile and if it's if it's on return on tangible.

Clint E. Stein: ROA that somebody is looking at if it's deposit mix composition.

Clint E. Stein:

Clint E. Stein: No.

Clint E. Stein: Pretty much anything along along those lines and so.

Clint E. Stein: And so, that's, I guess, where we're focused. The franchise that we thought we could create with this merger is here. It's in front of us. We've been running it for a year, and now what we're doing is internally, we talk about it. Operational, And what are the things that we can do to improve those operations and right-size the expense base? We were an outlier. You know, if we looked at the expense ratio, we were an outlier. We knew that. You know, we had year one, which was, you know, keep our people, keep our customers, and drive value across the organization. Now we're in year two, and the IMO is shut down.

Clint E. Stein: So thats I.

Clint E. Stein: I guess, where we're focused is.

Clint E. Stein: The franchise that that we thought we could create with this merger.

Clint E. Stein: Is here.

Clint E. Stein: Front of US we've been running it for a year.

Clint E. Stein: Now what we're doing is internally we talk about it.

Clint E. Stein: Operational excellence and what are the things that we can do to improve those operations.

Clint E. Stein: And right sizing the expense base, we were an outlier if we looked at the expense ratio.

Clint E. Stein: We were an outlier we knew that.

Clint E. Stein: We had year, one which was keep our people keep our customers and drive value across the organization now we are in year two the <unk> was shut down.

Clint E. Stein: We're focused on now delivering the full capabilities and the full financial performance and earnings power of this company. It's a difficult environment. It's difficult for everybody, but that's okay. That's one of the reasons that we did this merger was to give ourselves additional scale and resiliency to navigate through any type of business cycle. So, probably more than what you wanted on this, but I would say pick a metric.

Clint E. Stein: We're.

Clint E. Stein: Focused on on now delivering the full capabilities and therefore financial.

Clint E. Stein: Performance and earnings power of this company, it's a difficult environment, it's difficult for everybody, but thats okay.

Clint E. Stein: That's one of the reasons that we did this merger was to give ourselves additional scale resiliency.

Clint E. Stein: To navigate through any type of a business cycle, so probably more than what you wanted on this but I would say pick a metric and if we're not there. We're looking at how do we how do we get our company into that top quartile.

Jon Arfstrom: And if we're not there, we're looking at how we get our company into that top core. Okay. All right. Fair enough. Thank you very much. I appreciate it. Thank you. I'd now like to turn it back to Clint Stein for closing remarks. Thank you, DeeDee, and thanks for joining us on this afternoon's call. We hope you have a good rest of your afternoon or evening, depending on where you're at. Goodbye. This concludes today's conference call. Thank you for participating, and you may now disconnect.

Clint E. Stein: Okay, Alright fair enough. Thank you very much I appreciate it.

Joe: Thanks, Joe.

Clint E. Stein: Thank you I'd now like to turn it back to Glenn.

Clint E. Stein: Time for closing remarks.

Clint E. Stein: Thank you Didi and thanks for joining us on this afternoon's call. We hope you have.

Clint E. Stein: Good rest of your afternoon or evening, depending on where you are at.

Jon Arfstrom: Goodbye.

Clint E. Stein: This concludes today's conference call. Thank you for participating and you may now disconnect.

Jon Arfstrom: Okay.

Jon Arfstrom: Yes.

Jon Arfstrom: Okay.

Jon Arfstrom: [music].

Jon Arfstrom: Okay.

Jon Arfstrom: Okay.

Jon Arfstrom: [music].

Jon Arfstrom: Okay.

Jon Arfstrom: [music].

Jon Arfstrom: Okay.